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Annual Report on European SMEs 2013/2014 A

Partial and Fragile Recovery


Final Report -July 2014
SME Performance Review 2013/2014

ContractNo.345/PP/ENT/CIP/13/F/N02C031

DirectorateGeneral for Enterprise and Industry, Directorate D: SMEs and


Entrepreneurship,UnitD4:SMEPolicyDevelopmentandSmallBusinessAct

Authors: Patrice Muller, Dimitri Gagliardi, Cecilia Caliandro, Nuray Unlu Bohn,
DemetriusKlitou

Editors: Hesham Zakai, David Vidal, Laurent Probst, Alexander Schiersch, Anselm
Mattes
Client: European Commission
July 2014

DISCLAIMER
EuropeanCommission,DirectorateGeneralforEnterpriseandIndustry

Theinformationandviewssetoutinthispublicationarethoseoftheauthor(s)and
donotnecessarily reflecttheofficialopinionoftheCommission.The Commission
does not guarantee the accuracy of the data included in this study. Neither the
Commission nor any person acting on the Commissions behalf may be held
responsiblefortheusethatmaybemadeoftheinformationcontainedtherein.

2014EuropeanUnion.Allrightsreserved.

ANNUAL REPORT ON EUROPEAN SMES 2013/2014:


A PARTIAL AND FRAGILE RECOVERY


PROJECT CONSORTIUM MEMBERS

Theprojectconsortiumiscomposedofthefollowingcompanies:

PricewaterhouseCoopersSocitcooprativeisthelargestprofessionalservices
firm in Luxembourg with over 2100 people employed from 57 different countries. It
providesaudit,taxandadvisoryservicesincludingmanagementconsulting,transaction,
financing and regulatory advice to a wide variety of clients from local and middle
marketentrepreneurstolargemultinationalcompanies.
CARSAisaleadingSpanishresearch,innovationandtechnologyconsultancy,with
25yearsofexperienceinmanagingprojects,carryingoutstudiesforpublicauthorities,
evaluating research funding programmes, and performing other research and
innovationactivities,withafocusonSMEs.
TheUniversityofManchester,ManchesterInstituteofInnovationResearchisa
research centre in the Manchester Business School at the University of Manchester.
Research and lecturing staff in the Institute focus on technology, innovation
management,science,technologyandinnovationpolicy,technologyforesight,andthe
evaluationofresearchandrelatedtopics.
INNOVASpAisaresearch,innovationandtechnologyconsultancywithapresence
in 8 countries, including the United States, that is a European major player in
management & innovation consulting and technology transfer and valorisation, seed
capitalsupportandappliedresearchlabfacilities.
London Economics is a leading UK consultancy, specialising in economics and
policyanalysis,withexpertiseinanalysisofappliedeconomicsinallareaswhereitcan
provideapowerfulsetoftoolsfordecisionmakers.
DIW Berlin (German Institute for Economic Research) is the leading German
think tank for applied economic research and policy advice. Headquartered in Berlin
sinceitsfoundingin1925,DIWBerlincurrentlyemploysabout100scientificstaff.
DIWeconistheeconomicconsultingcompanyofDIWBerlin,withaclearfocuson
the business needs of clients, whose work is based on the combination of sound
economictheorywithadvancedeconomictoolsandrealdata.

ANNUAL REPORT ON EUROPEAN SMES 2013/2014:


A PARTIAL AND FRAGILE RECOVERY

Table of Contents
TABLE OF CONTENTS..................................................................................................................4
EXECUTIVESUMMARY.................................................................................................................6
1

INTRODUCTION.................................................................................................................10
1.1
1.2

SMEPERFORMANCEREVIEW...............................................................................................................................10
SCOPEANDOBJECTIVESOFTHEREPORT...................................................................................................................11

THERECENTPERFORMANCEOFSMESANDTHEOUTLOOKFOR2014AND2015............................13
2.1
RECENTPERFORMANCEOFSMESINTHEEU............................................................................................................14
2.1.1SMEsintheEU28in2013..............................................................................................................................14
2.1.2Performancein2013ofSMEsintheEU28nonfinancialbusinesssector.....................................................16
2.1.3TowhatextenthavetheSMEsrecoveredfromtheeconomiccrisis?............................................................20
2.1.4HowdidtherelativeperformanceofthevariousSMEssegmentscontributetotheoverallperformance
ofSMEsintheEU28from2008to2013?...............................................................................................................24
2.2
THEBUSINESSENVIRONMENTFORSMESINEUROPE..................................................................................................26
2.2.1IssuesfacedbySMEs.....................................................................................................................................26
2.2.2Keyfindingsfromthe2014reviewoftheSBAimplementation....................................................................30
2.3
SMEPERFORMANCEFORECASTFOR2014AND2015...............................................................................................35
2.3.1EU28outlook.................................................................................................................................................35
2.3.2TheoutlookfordifferentSMEsizeclassesattheEU28level.........................................................................37
2.3.3TheoutlookforSMEsindifferentsectorsattheEU28level..........................................................................38
2.3.4TheoutlookforSMEsindifferentMemberStates.........................................................................................40
2.4
COMPARISONOFSMEPERFORMANCEINTHEEU28ANDOTHERSELECTEDCOUNTRIES......................................................42
2.4.1ComparativeanalysisofSMEperformanceintheEU28,USAandJapan......................................................42

DRIVERSOFSMEECONOMICPERFORMANCEINRECENTYEARSANDINTOTHEFUTURE................55
3.1
MACROECONOMICDRIVERSOFDEMANDFORGOODSANDSERVICESPRODUCEDBYSMES.................................................56
3.1.1MainclientsofSMEsinkeyeconomicsectorsintheEU28...........................................................................56
3.1.2ImpactofmacroeconomicperformanceonSMEperformance.....................................................................57
3.2
INTERNATIONALISATIONOFSMES.........................................................................................................................60
3.2.1GeneraldiscussionoftheinternationalisationofSMEs................................................................................60
3.2.2EuropeanSMEsoverallpropensitytoexport................................................................................................63
3.2.3KeyfactsabouttheinvolvementofSMEsinexportorientedindustries.......................................................65
3.2.4ImpactofincreaseinforeigndemandoneconomicsectorsofkeyimportanceforSMEs.............................68
3.2.5ImplicationsofanalysisofinternationalisationofSMEs...............................................................................69
3.3
HIGHTECHMANUFACTURINGANDKNOWLEDGEINTENSIVESERVICESMES:DRIVERSOFINNOVATIONANDGROWTH?................70
3.3.1SMEsinhightechmanufacturingandknowledgeintensiveservicesin2013inEU28..................................70
3.3.2PerformanceofEU28SMEshightechmanufacturingandknowledgeintensiveservicesfrom2009to
2012.......................................................................................................................................................................73
3.3.3Statisticalanalysis.........................................................................................................................................74
3.3.4Implicationsofstatisticalfindings.................................................................................................................76

CONCLUSIONS...................................................................................................................77
4.1
4.2

KEYFINDINGS...................................................................................................................................................77
CONCLUSIONSANDPOLICYRECOMMENDATIONS.......................................................................................................78

ANNEXES................................................................................................................................80
I.

DISTRIBUTION AND IMPORTANCE OF SMES ACROSS EU28 MEMBER STATES AND SECTORS IN 201381

II. DISTRIBUTION AND PERFORMANCE OF SMES BY SIZE CLASS, 2008-2013..................................86

ANNUAL REPORT ON EUROPEAN SMES 2013/2014:


A PARTIAL AND FRAGILE RECOVERY

III. PERFORMANCE OF SMES IN 2012-2013 IN EU28 MEMBER STATES.............................................87


IV. DEGREE OF RECOVERY OF THE SMES IN DIFFERENT MEMBER STATES, 2008-2013 IN EU28 MEMBER
STATES....................................................................................................................................89
V.

CONTRIBUTIONS TO EU28 PERFORMANCE, 2008-2013............................................................91

VI. DISTRIBUTION OF SMES ACROSS SIZE CLASSES IN FIVE KEY SECTORS, 2013 EU28.......................93
VII.GROWTH FORECASTS OF SMES IN EU28 MEMBER STATES.......................................................94
VIII.DEGREE OF RECOVERY OF SMES BY SECTOR IN EU28 MEMBER STATES, 2008-2013..................99
IX. PERFORMANCE OF SMES IN FIVE KEY SECTORS IN EU28 MEMBER STATES................................101
X.

PERFORMANCE BY SIZE CLASS IN FIVE KEY SECTORS IN EU28................................................107

XI. INTERNATIONALISATION OF SMES SECTOR EXPORT INTENSITY LEVELS.................................108


XII.INDEX OF FIGURES..........................................................................................................115
XIII.INDEX OF TABLES...........................................................................................................118
ENDNOTES..............................................................................................................................120

ANNUAL REPORT ON EUROPEAN SMES 2013/2014:


A PARTIAL AND FRAGILE RECOVERY

EXECUTIVE SUMMARY

Background

There can be no doubt that Small and Mediumsized Enterprises (SMEs) have had to
navigate a difficult economic terrain in recent years. This Annual Report on the
economicperformanceofEuropeanSMEs,nowinitsfifthyear,isatestamenttothose
challengesbutalsoawindowtotheprogressachievedbybusinessesacrosstheEU28
inspiteofthesechallengingeconomicconditions.Itisalsoareflectionofthestructural
support channelled to SMEs by the European Commission and National Governments
undertheguiseoftheSmallBusinessAct(SBA).

Adopted in 2008, the SBA reflects the importance and


centralityofSMEstotheEuropeaneconomy.Itcouldhave
notcomeatamorecriticaltime.SMEswereinsomewaysa
bulwark against the devastating effects of the global
financial crisis. They weathered the 2009 economic
downturn more resiliently than their large enterprise
counterparts and mitigated the economywide decline in
employment.

Yet once the darkest days of the economic crisis were overcome, it was the large
businessesthatsince2010toleadtherecovery,fuelledmainlybystronggrowthingross
valueadded.

TherecoveryofSMEswasmuchsloweranditspacehasslowedinthelastthreeyears,
mirroring to a large extent the pace of the recovery of large enterprises during that
period.

Now, after promising signs last year, SMES are at a critical juncture. While there are
some reasons for cautious optimism, the inescapable conclusion is that conditions
remain extremely tough for SMEs and further support is needed to yield sustainable
SMEgrowth.

Acloserlookat2013

AcrosstheEU28lastyear,some21.6millionSMEsinthenon
financial business sector employed 88.8 million people and
generated 3,666 trillion in value added. Expressed another
way, 99 out of every 100 businesses are SMEs, as are 2 in
every3employeesand58centsineveryeuroofvalueadded.
This illustrates how critical SMEs are and reflects the value of
thepresentreport.

The level of value added generated by these SMEs increased


overall by 1.1% in 2013. However this positive trajectory is tempered by two ancillary
points: firstly, a slowdown in this increase from the two previous years, when it was
1.5%(2012)and4.2%(2011);andsecondlyadeclinein2013inboththetotalnumberof
SMEs(0.9%)andthenumberofpeopleemployedbySMEs(0.5%).

ANNUAL REPORT ON EUROPEAN SMES 2013/2014:


A PARTIAL AND FRAGILE RECOVERY

RatioofValueaddedofSMEs2013 to2008

All three performance indicators value added, total number and employment are
inextricablylinkedanddependoneachothertovaryingdegrees.

The slowdown in value added growth by SMEs can be attributed to weak, if positive,
economic growth and falling inflation within the EU economy. Only when the EU
economy,onamacroscale,willemergefromrecessionintorecovery,onecanexpected
thatthefortunesofSMEswillimproveaccordingly.

Since2008,SMEshavefaredverydifferentlyacrosscountries,sizeclassandsectors
andclearfracturelineshaveemerged.

For example, a full value added and employment recovery has only been achieved by
SMEsinonlyeightcountriesincludingEuropeslargesteconomyGermanywhileSME
value added and employment in 15 countries have not yet recovered to their 2008
levels:

SMEdegreeofrecoveryfrom2008to2013,valueaddedandemployment
120

SE
BE

EE

DE
MT

AT

110

LT
FI
NL

DK

100

LV
90

IT

BG
HU
SI

IE

UK

LU

FR

PL
CZ

RO
80

PT

CY

ES
HR

70

EL

60
70

80

90

100

110
120
RatioofEmploymentinSMEs2013 to2008

Note:Duetoabreakinthedataseries,Slovakiaisnotincludedinthefigureabove

AsimilarbreaklineisobservableacrossSMEsectors.

The most important SME sectors are wholesale and retail trade sector, the largest
SME sector in all Member States, manufacturing, construction, professional,
scientific and technical activities, and accommodation and food. Together, these 5
sectorsaccountforalmost4/5ofallSMEsintheEU28.

Thesefivesectorshavefaredverydifferentlysince2008.

Some SME sectors has posted relative strong positive growth from 2008 to 2013 with
businessservices,retailandwholesaletradeandothersectors(whichincludeall
othernonfinancialbusinesssectors)postingpositivevalueaddedgrowth.

In contrast, the construction industry has suffered severely, with an almost 22%
cumulative decline in value added from 2008 to 2013. It has also registered an 18%
decreaseinthelevelofemploymentandthenumberofenterprisesis10%lower.

130

ANNUAL REPORT ON EUROPEAN SMES 2013/2014:


A PARTIAL AND FRAGILE RECOVERY

Others

BusinessS.

Accommodation/food

Trade

Construction

Manufacturing

Others

BusinessS.

Accommodation/food

Trade

Construction

Manufacturing

Others

BusinessS.

Accommodation/food

Trade

Construction

Manufacturing

Themanufacturingsectoralsocontinuedtooperatein2013wellbelow2008levels,with
employmentin2013still10%belowits2008level.

Change(in%)inthreeSMEindicatorsfrom2008to2013intheEU28keySME
sectors

10.4
10.3
10.2

7.0

6.0
5.6
5.4
4.9
3.1

1.2

0.2
1.8
2.9

5.3

9.9
10.1

18.0

21.7

Numberofenterprises
ValueAdded
Employment

The level of recovery is also quite varied SMEs of different size: while there are more
microfirmsthantherewerein2008(+0.3%),smallandmediumfirmsarerespectively
1.6%and2.5%lessnumerousthantheywerebeforethecrisis.

Therecoveryinvalueaddedisforthemostpartdrivenbymediumenterprises(+2.7%)
andmicrofirms(+0.5%), whilesmallfirmsarestilllaggingbehindwithvalue addedin
2013justbelowits2008levels.Intermsofemployment,allgroupsofSMEfirmsarein
2013stillwellbelow2008,withmicrofirmsemploying4.2%fewerpeople.

InternationalisationofSMEs

It is important to note that while the prospects for SME success are tied with macro
economic developments, they by no means identically mirror all of them. As the
majorityofSMEsoperateinsectorsthatservedomesticdemand,forexample,theydid
not share in the benefits of increased foreign demand, which was the key macro
economicdriverofgrowthfrom2008to2013.

Many SMEs are not in exportoriented sectors, particularly the micro and small
enterprises.

Thus, programmes supporting SME exports benefit directly only a subset of SMEs.
However,indirectly,allSMEsbenefittosomeextentfromgrowthinexportsashigher
exports raises a) overall income levels, and hence the demand for goods and services
sold by domestic demand facing SMEs, and b) the demand for goods and services
originatingfromexportingorientedenterprises.

ANNUAL REPORT ON EUROPEAN SMES 2013/2014:


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Yet in an increasingly internationalised world, there are competitive advantages for


those businesses that begin with a global strategy and can move quickly to take
advantageofcrossborderactivities.Providingfurther,tailoredsupportforthisgrowing
assetclasswouldformakeystepinallowingSMEstoleveragethebenefitsofincreased
foreigndemandforgoodsandservices.

Theroadahead

Looking ahead, there is a positive outlook and the promise


of a strengthening of the recovery on the horizon. Total
value added generated by SMEs has already surpassed its
precrisis level and is now expected to rise by 2.8% in 2014
and3.4%in2015.Employmentisalsoexpectedtorise,with
another 740,000 jobs in SMEs, as is the total number of
SMEs(+0.38%),by2015.

Improvements in EU SMEs performance depend critically on the further evolution of


the macroeconomic recovery. However, specific measures for improving the SMEs
businessenvironmentplayanimportantenablingroletoensurethatSMEsareableto
reapthefullbenefitsofareturntosolidandsustainablemacroeconomicgrowth.

At the centre of this is the continued work on the Small Business Acts (SBA) five
foundations: responsive administration, access to finance, access to
markets/internationalisation, entrepreneurship, and skills & innovation. Policy
implicationsherewouldrangefromreducingadministrativecostsandelevatingSMEs
status as a political priority through national SBA strategies, to supporting the
establishmentofanSMEstockmarketexchange,assistingwiththedigitisationofSME
practices such as epayments, and advocating the mandatory inclusion of
entrepreneurshipeducationinnationalschoolcurriculaandpublicuniversities.

ANNUAL REPORT ON EUROPEAN SMES 2013/2014:


A PARTIAL AND FRAGILE RECOVERY

10

1 INTRODUCTION
Small and Mediumsized Enterprises (SMEs) form the backbone of a countrys
economy.AcrosstheEU28,therewere21.2millionSMEsinthenonfinancialbusiness
sector1in2013.SMEsaccountfor99.8%ofallenterprisesinthisparticularsector,66.8%
of total employment and 57.9% of total value added generated by the nonfinancial
businesssector.

SMEsaredefinedasbusinesseswhichemploylessthan250staffand
haveanannualturnoveroflessthan50millionand/ortheirbalance
sheettotalislessthan43million.2Theycomprisethreecategories
micro,smallandmediumwhicharedefinedasfollows.
Table 1: Definition of SMEs

Company
category

Employees

Micro
Small
Medium

<10
<50
<250

Turnover

or

<2million
<10million
<50million

Balancesheettotal
<2million
<10million
<43million

Note:ThesizeclassdefinitionadoptedthroughoutthereportisbasedonthedefinitionsusedintheStructuralBusiness
Statistics(SBS)databasemaintainedbyEurostat.Itrelatestothenumberofpersonsemployed.

ThepresentreportonthestateofEuropeanSMEspublishedbyECDGEnterpriseand
IndustryisanintegralpartoftheannualSMEPerformanceReview.

1.1 SME Performance Review


TheSMEPerformanceReview,conductedonanannualbasis,isoneofthemaintools
the European Commission uses to monitor and assess countries' progress in
implementingtheSmallBusinessAct(SBA).
The SBA strives to foster SME development and remove obstacles to SME growth. It
doesnotconstitutealegalrequirement,butaseriesofguidancemeasuresthatcanbe

11

ANNUAL REPORT ON EUROPEAN SMES 2013/2014:


A PARTIAL AND FRAGILE RECOVERY

idiosyncratically adapted to suit each countrys specific needs while simultaneously


achievingadegreeofharmonisationacrosstheEU.Thetenprinciplesare:

1. Entrepreneurship:Creatinganenvironmentinwhichentrepreneursandfamily
businessescanthriveandentrepreneurshipisrewarded.
2. Second Chance: Ensuring that honest entrepreneurs who have experienced
bankruptcyarepromptlygivenasecondopportunitytosucceed.
3. Think Small First: Designing rules modelled on the Think Small First
principle.3
4. Responsive Administration: Making public administrations responsive to the
needsofSMEs.
5. State Aid and Public Procurement: Adapting public policy tools to suit SME
needs facilitating SMEs participation in public procurement and ensuring
betteraccesstoStateAidforSMEs.
6. AccesstoFinance:FacilitatingSMEsaccesstofinanceanddevelopingalegal
and business environment conducive to the specific requirements of SMEs,
includingtimelypaymentsincommercialtransactions.
7. SingleMarket:HelpingSMEstobenefitmorefromtheopportunitiesofferedby
theSingleMarket.
8. Skills and Innovation: Promoting the enhancement of skills in the SME
workforceandallformsofinnovation.
9. Environment: Enabling SMEs to transform environmental challenges into
economicopportunitieswhileactingsustainably.
10. Internationalisation:EncouragingSMEstobenefitfromthe growthof global
marketsandsupportingtheminthispursuit.

TheSMEPerformanceReviewbringstogethercomprehensiveinformationonthepolicy
activity to implement the SBA and the economic performance of SMEs in EU28
Member States, as well as 9 other partner countries.4 The main outputs of the review
processarethepresentAnnualReportonEuropeanSMEs,theSummaryPaperonthe
SBAimplementation,theSMEpolicydatabaseandtheSBAcountryfactsheets.

1.2 Scope and objectives of the report


The report consists of four chapters that aim to collectively illustrate the SME
landscape, highlight the factors behind SME performance, consider the increasing
globalisation of SMEs, and set out recommendations for further improvements in the
sector.

Chapter 1 begins by introducing the report and contextualising the Performance


Review.

Chapter 2 considers the state of the SME sector in 2013; the performance of SMEs in
2013 and over the period 2008 to 2013; the business environment that SMEs are
currentlyfacingintheEU,andtheoutlookforSMEsin2014and2015.

Chapter 3 analyses a number of factors explaining differences in SME performance


across Member States and economic sectors. The chapter focuses in particular on the
macroeconomic environment, the internationalisation of SMEs and the development
oftheSMEsectorinhightechmanufacturingandknowledgeintensiveservices.

12

ANNUAL REPORT ON EUROPEAN SMES 2013/2014:


A PARTIAL AND FRAGILE RECOVERY

Finally, chapter 4 highlights a few key conclusions and puts forward a list of
recommendations. These are designed to improve structural support for SMEs and
enhancetheirprospectsforsuccess.

13

ANNUAL REPORT ON EUROPEAN SMES 2013/2014:


A PARTIAL AND FRAGILE RECOVERY

2 THE RECENT PERFORMANCE


OF SMEs AND THE OUTLOOK
FOR 2014 AND 2015

Threekeyperformanceindicatorsareusedinthereport:thenumberofSMEs,thevalue
added(incurrentprices5)generatedbySMEsandthenumberofpersonsemployedby
the SMEs. Some of the main factors explaining differences in the performance of the
SMEsectoracrosstheEU28arediscussedinchapter3.

ThefirstsectionpresentsabroadsnapshotofSMEsinthenonfinancial
businesssectorintheEU28in2013,andreviewspost2008trends.

The second section highlights some aspects of the business


environment in which the SMEs operate in the EU28, while the third
sectiondescribestheoutlookforSMEsin2014and2015.

Finally,the fourthsectionreviewsrecentSMEtrendsinthe candidate


countries,theUSA,JapanandtheBRICS.

ANNUAL REPORT ON EUROPEAN SMES 2013/2014:


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14

2.1 Recent performance of SMEs in the EU


KEYFINDINGS
SMEsareintegraltojobgrowth,employing88.8millionpeoplein2013in
theEU28
3,666 trillion in valued added generated by SMEs in 2013 in the EU28
(28%ofEU28GDP)
Nonfinancial business sector dominated by SMEs in terms of number of
enterprises
DifficulteconomicconditionsforSMEsoverall:
o SMEvalueaddedin2013wasjust1%above2008levelsintheEU28
o Employmentin2013still2.6%belowlevelsregisteredin2008inthe
EU28
TheperformanceofSMEsvariesconsiderablyamongsizeclasses,sectors
andMemberStates
o MicroSMEssufferedbiggestdeclineintotalnumberandnumberof
employeesbetween2008and2013intheEU28
o Constructionandmanufacturingvalueaddedin2013stillbelow2008
levels(21.7%,2.9%)intheEU28
o SMEssectorsinonlyalimitednumberofMemberStateshave
exceededin2013their2008precrisisperformance

2.1.1 SMEs in the EU28 in 2013


21.6millionSMEsemployed88.8millionpeople6andgenerated3,666trillioninvalue
added7 in the nonfinancial business sector in 2013 in the EU28. This is equivalent to
28%ofEU28GDP.

Overall, SMEs accounted for 99.8% of all


enterprises active in the EU28 non
financial business sector, 66.8% of total
employment and 58.1% of the value
Number of peopleemployedby added(Table2).

SMEs

Microenterprisesaccountedfor92.4%of
all enterprises in the EU28 nonfinancial
businesssector.

However,thedistributionofemployment
Amount of valueaddedgenerated and value added across the three groups
bySMEs(equivalent to28%of EU of SMEs was more equal, with micro,
smallandmediumenterprisesaccounting
GDP)
for 43%, 31% and 26% of EU28 SME
employment,respectively,and37%,31%and32%ofvalueaddedgeneratedbySMEsin
theEU28nonfinancialbusinesssector.

88.8 million

3,666 trillion

ANNUAL REPORT ON EUROPEAN SMES 2013/2014:


A PARTIAL AND FRAGILE RECOVERY

15

Table 2: SMEs and large enterprises: number of enterprises, value added and employment in the
EU28 in 2013

Micro

Numberofenterprises
Number
19,969,338
%
92.4%
Employment
Number
38,629,012
%
29.1%
Valueaddedatfactorcosts
MillionEuros
1,362,336
%
21.6%

Small

Medium

SMEs

Large

Total

1,378,374
6.4%

223,648
1.0%

21,571,360
99.8%

43,517
0.2%

21,614,908
100%

27,353,660
20.6%

22,860,792
17.2%

88,843,464
66.9%

44,053,576
33.1%

132,897,040
100%

1,147,885
18.2%

1,156,558
18.3%

3,666,779
58.1%

2,643,795
41.9%

6,310,557
100%

Source: Eurostat, National Statistical Offices and DIW Econ

InthenonfinancialbusinesssectorintheEU28,thesixlargestMemberStates(France,
Germany,Italy,Poland,SpainandUnitedKingdom)accountforalmost:

66%ofallSMEs(Figure54, AnnexI);
74%ofvalueaddedgeneratedbySMEs(Figure55, AnnexI);
69%oftotalSMEemployment(Figure56, AnnexI).

TheshareofthemicroSMEsinthetotalnumberofSMEenterprisesrangesfrom82%in
Germany to 96% in the Czech Republic, Greece, and Slovakia (see annex III of the
statisticalbackgrounddocumentfordetailedinformation).
Five key economic sectors account for approximately 78% of all SMEs in the EU28:
manufacturing, construction, professional, scientific and technical activities,
accommodationandfoodandwholesaleandretailtrade,repairofmotorvehiclesand
motorcycles8(Figure1).

The same five sectors also account for roughly


71% of the value added created by SMEs in the
EU28 and for 79% of total EU28 SME employment
(Figure1).

ANNUAL REPORT ON EUROPEAN SMES 2013/2014:


A PARTIAL AND FRAGILE RECOVERY

16

Figure 1: Importance of the five key sectors in the SME sector in Member States 2013
DK

SK

CY

LV

EE

EL

FI

IT

UK

CZ

SE

HR

PT

LT

HU

BG

LU

RO

DE
BE

IE
NL

MT
ES

AT
SI

PL

EU28

FR

Numberofenterprises

Valueadded

Employment
Note:ShareofSMEenterprisesintotalSMEpopulation,shareofvaluedaddedgeneratedbySMEpopulationandshare
oftotalemploymentbySMEpopulation.Fivekeysectorsincludemanufacturing,construction,accommodationand
foodservices,professional,scientificandtechnicalactivities,andwholesaleandretailtrade,repairofmotorvehicles
andmotorcycles.
Source: Eurostat, National Statistical Offices and DIW Econ



Among the five key sectors, the
retail/wholesale sector is the largest in
almost all EU Member States (Figure 58,
AnnexI).

2.1.2 Performance in 2013 of SMEs in the EU28 non-financial


business sector

Broad macroeconomic conditions in 2013


Even though overall economic conditions improved marginally in 2013, the overall
macroeconomicenvironmentcontinuestobeverychallengingforSMEs(Figure2).
Figure 2: Evolution of EU28 GDP and EU28 value added of non-financial business sector (annual
percentage change)
8.0

Annualpercentagechange

6.0
4.0
2.0
0.0
2.0

2009

2010

2011

2012

2013

4.0
6.0
8.0

10.0

GDP,currentprices

GDP,constantprices

Nonfinancialbusinesssectorvalueadded,currentprices

Note:Slovakiaisnotincludedinthevalueaddedaggregateduetoabreakintheseries.
Source: Eurostat, National Statistical Offices, DIW Econ

ANNUAL REPORT ON EUROPEAN SMES 2013/2014:


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17

Of particular importance for SMEs is the fact that economywide growth in 2013 was
verysubdued(Figure3).
Figure 3: Change (in %) in EU28 GDP and EU28 value added of non-financial business sector from
2012 to 2013
0.8%

0.6%

0.1%

GDP,currentprices

GDP,constant prices

Nonfinancialbusinesssectorvalueadded,currentprices

Note:SlovakiaisnotincludedintheEUvalueaddedaggregateduetoabreakintheseries.GDPatconstantpricesisin
chainlinkedvolumes
Source: Eurostat, National Statistical Offices, DIW econ

Performance of the EU28 SME sector in 2013

+ 1.1%
Valueadded

- 0.9%
Number of enterprises

- 0.5%


TherateofexpansionofthevalueaddedgeneratedbySMEsinthe
EU28nonfinancialbusinesssectorslowedagainin2013,fallingto
1.1%in2013from1.5%in2012and4.2%in2011(Figure4and
Table12,AnnexII).

This slowdown in growth reflects a combination of positive but


weak economic growth and falling inflation in the EU economy
moregenerally.

In contrast, both the number of SME enterprises and SME


employmentinthenonfinancialbusinesssectorfellrespectivelyby
0.9% and 0.5% in 2013 after having already recorded a decline in
2012.

Figure 4: Number of SMEs in the non-financial business sector, value added


generated by these SMEs and number of persons employed by these SMEs EU28, 2008 to 2013 (2008=100)

Employment
105
100
95
90
85
2008

2009

2010

Enterprises(2008=100)

2011

2012

2013

GrossValueAddedofSMEs(2008=100)

EmploymentinSMEs(2008=100)

Note:SlovakiaisnotincludedinthisEUaggregateduetoabreakintheseries.
Source: Eurostat, National Statistical Offices, DIW Econ

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Performance of SMEs in 2013 by size class


AttheleveloftheEU28,microSMEspostedanincreaseinvalueadded
thatwasalmosttwiceaslargeassmallandmediumsizedSMEsin2013
(1.5% for micro SMEs versus 0.7% and 0.9% for small and medium
sizedSMEs)(Figure5).

However, micro SMEs fared somewhat less well than small and
mediumsizedSMEsintermsofnumberandjobs:
The number of micro SMEs fell by 0.9% in 2013 while that of
smallandmediumsizedSMEsdeclinedonlyverymarginally(
0.4%and0.4%respectively);
Mirroring the drop in the number of micro SMEs, EU28 employment by micro
SME dropped by 1% while employment at small and mediumsized SMEs
remainedpracticallyunchanged.
Figure 5: Annual growth (in %) in different performance indicators by SME size - EU28
NumberofEnterprises
3%
2%
1%
0%
1%
2%
3%
20082009

20092010

Micro

20102011

Small

20112012

20122013

Medium

ValueAdded
6%
4%
2%
0%
2%
4%
6%
8%
10%
12%
20082009

20092010

Micro

20102011

Small

20112012

20122013

Medium

Employment
1%
1%
0%
1%
1%
2%
2%
3%
20082009

20092010

Micro

20102011

Small

20112012

Medium

Note:SlovakiaisnotincludedinthisEUaggregateduetoabreakintheseries.
Source: National Statistical Offices, Eurostat, DIW econ

20122013

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However,eveniftheperformanceofmicroSMEsandotherSMEsdifferedsomewhatin
2013,thecompositionbyclasssizeoftheSMEintheEU28nonfinancialbusinesssector
hasbarelychangedoverallfrom2008to2013(Table13,AnnexII).

Performance of SMEs in 2013 by Member State

Between 2012 and 2013, only a limited number of Member States registered positive
trendsintwoorthreeperformanceindicators(Table14,AnnexIII):

SMEs in the nonfinancial business sector in Lithuania, Latvia, Malta, and


Romania, posted a positive and strong performance in terms of number of
firms,employmentandvalueadded,withgainshigherthan3%;

SMEs in Germany, Estonia, Denmark, Austria, Luxembourg and Sweden also


sharedthispositivetrendbutwithsmallergrowthrates(between0.5%and3%);

In a group of four other countries (the United Kingdom, Ireland, Hungary and
the Czech Republic), growth of value added generated by SMEs in the non
financial business sector was sluggish (or stable, ranging between 0.05% and
0.05%)andemploymentandnumberofenterprisesgrew;

SMEs in the Netherlands, Finland, Greece, and Cyprus posted a negative


performanceinallthreeindicatorsunderscrutiny,withgrowthratesbetween
0.05% and 3% in the former two countries, and below 3% for the latter.
Croatiaalsofallsinthisgroupintermsofemploymentandvalueaddedgrowth
butnotintermsofnumberofenterprises;

Finally, SMEs in the nonfinancial business sector in Belgium, Italy, Poland,


Slovakia, France, Spain and Slovenia posted moderate growth in value added
(below 3%) and recorded declines in terms of number of SMEs or persons
employedrangingbetween0.05%and3%.

Performance of SMEs in 2013 across sectors

In2013,thenumberofSMEsandemploymentincreasedonlyintwosectors(Business
SectorsandOthers),whilelosseswereobservedintheotherindustries(particularlyin
Construction) (Table 3). The performance in terms of value added was relatively more
positive,withtheexceptionoftheconstructionsector.
Table 3: Performance of SMEs by sector in the EU28 in 2013

Manufacturing
Construction
Trade
Accommodation
/foodS.
BusinessS.
Others

EU28Numberof
SMEs
%change20122013

EU28ValueAddedof
SMEs
%change20122013

EU28SME
Employment
%change20122013

1%
5%
1%

1%
2%
1%

1%
4%
1%

1%
1%
0.4%

1%
2%
2%

1%
1%
1%

Source: Eurostat, National Statistical Offices and DIW Econ

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2.1.3 To what extent have the SMEs recovered from the


economic crisis?

At the EU level, SMEs have recovered to precrisis levels only in terms of value
added,andtoalesserextent,intermsofnumberoffirms.Employmentin2013was
still2.6%belowlevelsregisteredin2008.

Figure 6: Recovery of EU28 SMEs in 2013 relative to 2008 (% change in 2013 levels from 2008
levels)
1.5%
1.0%

1.0%
0.5%

0.1%

0.0%
NumberofSMEs

ValueAddedofSMEs

EmploymentofSMEs

0.5%
1.0%
1.5%
2.0%
2.5%
3.0%

Note:SlovakiaisnotincludedinthisEUaggregateduetoabreakintheseries.
Source: Eurostat, National Statistical Offices and DIW Econ

2.61%

This overall picture hides considerable variations across Member States and industrial
sectors.Thesedifferencesarereviewedingreaterdetailbelow.

Of note is the fact that the relative importance of SMEs and large enterprises in the
nonfinancialbusinesssectorispracticallyunchangedsince2008(Figure57,AnnexI).9

Differences in SME recovery across Member States

Across the EU, SMEs in the large majority of Member States have not yet fully
recoveredfromtherecessionandtheirperformanceintermsofnumberofenterprises,
value added and employment in 2013 was still below 2008 levels (see summary and
moredetailedtablesinAnnexIV).

In fact, on the basis of value added, the following groups of


countriescanbedistinguished:

o The front runner group comprises Austria, Belgium,


Germany, Estonia, Malta, Sweden and Slovakia (although
the latters performance was also affected to a certain
degreebyachangeinthenationalSMEdefinition).Inthis
group, the value added generated in 2013 by SMEs in the
nonfinancialbusinesssectorexceededbymorethan10%
thevalueaddedcreatedin2008.

However, among these strong performers, only German


SMEspostedanemploymentlevelhigherby10%ormorein2013thanin2008.
SMEemploymentintheothercountriesofthisgroupwasbetween2%and10%

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higherwiththeexceptionofEstoniawhereSMEemploymentwas8%lowerin
2013thanin2008;

The solid performer group comprises Finland, France, Lithuania, Luxembourg


andUK.Inthesecountries,thelevelofvalueaddedgeneratedbySMEsinthe
nonfinancialbusiness sectorwasbetween2%and 10% higher in2013thanin
2008.

In contrast to the employment performance of the strong performer group, the


employmentperformanceofthesolidperformergroupismuchmoremixed;
o

In France, SME employment was 16% higher in 2013 than in 2008 reflecting
stronggrowthinsoloentrepreneursoverthisperiod;

In Luxembourg and the United Kingdom, SME employment in 2013 was 4%


higherthanin2008;

InFinland,thelevelofSMEemploymentin2013was3%lowerthanin2008and
inLithuaniaSMEemploymentwasdownby12%in2013relativeto2008.

ThenochangegroupincludesonlytheNetherlands.Itistheonlycountryinwhich
aggregateSMEperformancein 2013 wasvery closetothatof2008.ThelevelofSME
valueaddedin2013was1%lowerthanin2008andemploymentwasdownby2%.

ThegroupofweakperformersincludesBulgaria,Denmark,Italy,LatviaandPoland.
ThelevelofvalueaddedgeneratedbySMEsinthenonfinancialbusinesssectorinthis
groupofcountrieswasbetween2%and10%lowerin2013thanin2008.

SMEemploymentintheweakperformersmirroredthedeclineinvalueadded.SMEs
inBulgariaandPolandpostedemploymentlevelsthatarerespectively8%and5%lower
in2013thanin2008whileinDenmark,ItalyandLatvia2013SMEemploymentlevelsare
downby10%,11%and13%.

o Finally, the group of very weak performers includes 10 countries: Croatia, Cyprus,
CzechRepublic,Hungary,Greece,Ireland,Portugal,Romania,SloveniaandSpain.
o Inthisgroupofcountriesthelevelofvalueaddedgeneratedin2013bySMEsin
the nonfinancial business sector was 10% (or more) lower than in 2008. The
largestdeclinesinSMEvalueareobservedinRomania(17%),Greece(38%)and
Cyprus(22%).
o In all these countries, except the Czech Republic, Romania and Slovenia, SME
employment in 2013 was 10% (or more) lower than in 2008. In Romania and
Slovenia employment was respectively down by 7% and 9% in 2013 relative to
2008whileintheCzechRepublicemploymentwasdownbyonly2%.

Onaveragethereisarelativelystrongrelationshipbetweenchangesinthevalueadded
produced by SMEs and SME employment (Figure 7).The correlation between the
percentage change from 2008 to 2013 in value added (at current prices) and
employmentoverthesameperiodis0.79.

Adjusting value added for inflation has practically no impact on the estimated
correlation,asthevalueofthecorrelationcoefficientis0.74.

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Figure 7: Relationship between changes (in %) from 2008 to 2013 in EU28 SME value added (at
current and constant prices) and EU28 SME employment

ChangeinSMEemployment,
20082013

20%

DE
FR

10%
0%

BE

CZ FI NL
PT

BG
SE

10%

IT

LV

CY

HR

EE

HU
DK

LT

IE

PL

20%

ES

EL

30%
40%
50%

MT
RO AT

LU
SI

40%

30%

20%

10%

0%

10%

20%

30%

ChangeinrealSMEvalueadded,20082013
20%

DE

ChangeinSMEemployment
(20082013)

FR

10%
0%

CZ
PT

10%
CY
PL

HR

20%

40%

SE

HU

IE

LV

BG
IT

DK

LU

AT

MT
BE

RO

EE
LT

ES

EL

30%
40%
50%

SI
NL FI

30%

20%

10%

0%

10%

20%

30%

ChangeinnominalSMEvalueadded,20082013

Source: Eurostat, National Statistical Offices, Eurostat, DIW Econ

Differences in SME recovery across sectors

TheEU28construction SME sector, which accounts for 11% of SME value added and
12%ofSMEjobs,sufferedaseverecumulativedeclinefrom2008to2013withthelevel
of value added in 2013 being 21.7% lower than in 2008, the level of employment 18%
lowerandthenumberofenterprises10.1%lower(Figure8).

The EU28 manufacturing SME sector is also still operating at well below 2008 levels
withvalueaddeddownby2.9%in2013relativeto2008,thelevelofemploymentdown
by9.9%andthenumberofenterprisesdownby5.3%.Today,thissectoremploysmore
than17millionindividualsandgenerates21%ofSMEvalueaddedinEurope.

ThevalueaddedoftheEU28retailandwholesaleSMEsectorincreasedby3.1%while
employmentandthenumberofenterprisesisbroadlyflatoverthe2008to2013period;
thisindustryaloneemploys26%oftheSMElabourforceandaccountsfor22%ofvalue
addedproducedbyEUSMEs.

Incontrast,theEU28SMEbusinessservicessector(andtheotherEU28SMEsector)
expandedsubstantiallybetween2008and2013withthelevelofvalueaddedup7%in
2008 relative to 2013, the level of employment up by 5.4% and the number of
enterprises up by 10.2%. Today, business services produce roughly 13% of SME value
addedandemployabout9Millionpeople(11%),whiletheotherindustriesoffermore
than18millionSMEjobsandaccountfor29%ofSMEvalueadded.

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Finally, the accommodation/food EU28 SME sector shows the strongest growth
(10.4% in value added and 6.0% in employment) among the five specific sectors
highlightedinthepresentanalysis.
Figure 8: The performance of EU28 SMEs in various economic sectors, percentage change from
2008 to 2013

10.4

6.0

5.4

5.6

Others

4.9

BusinessS.

10.3
7.0

Accommodation/food

10.2
3.1

1.2

0.2

1.8

2.9

5.3
9.9

10.1

18.0

Numberofenterprises

ValueAdded

Trade

Construction

Manufacturing

Others

BusinessS.

Accommodation/food

Trade

Construction

Manufacturing

Others

BusinessS.

Accommodation/food

Trade

Construction

Manufacturing

21.7

Employment

Note:SlovakiaisnotincludedinthisEUaggregateduetoabreakintheseries.ThenameBusinessS.isusedas
abbreviationoftheNACEcategoryMProfessional/scientific/technicalactivities,andTradereferstoG
Wholesale/retailtrade/repairofmotorvehicles/motorcycles.CategoriesinOthersrefertosectionsofNACERev.2
classifications:B,D,E,H,J,L,andN.
Source: Eurostat, National Statistical Offices and DIW Econ

IntermsoftheevolutionofEU28SMEvalueaddedandemploymentinthevarioussub
sectors of the nonfinancial business sector, it is interesting to note that the
performance of mediumsized SMEs differs somewhat from that of micro and small
SMEs.

IntheEU28constructionsector,mediumsizedSMEsshowlargerlossesinvalue
addedandemploymentbetween2008and2013thanmicroandsmallSMEs;

In the EU28 manufacturing sector, value added generated by mediumsized


SMEs was unchanged between 2008 and 2013 while it dropped by 5% and 6%
respectivelyinthecaseofmicroandsmallSMEs;

MediumSMEsbenefitedmorethanmicroandsmallSMEsfromtheupswingin
the EU28 in the demand for trade (retail and wholesale) services, business
servicesandgoodsandservicesproducedbytheothersector.

ThiswasmirroredbyasomewhatlargerincreaseinemploymentintheEU28by
mediumsizedSMEsthanbymicroandsmallSMEsovertheperiod2008to2013
thaninthecaseoftrade(retailandwholesale)servicesandbusinessservices.

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2.1.4 How did the relative performance of the various SMEs


segments contribute to the overall performance of SMEs in the
EU28 from 2008 to 2013?

Asaresultoftheperformancetrendsdescribedabove,intheEU28in2013therewere
354,308 more SMEs than there were in 2008, value added posted a small net
increaseof44,313.75 million Euros, and SMEs have lost 1,962,808 jobs. This section
examines in gretare details how SMEs of different sizes, sectors and Member States
contributedtotheoverallperformanceoftheSMEsectorfrom2008to2013.

Analysis by class size

The net increase in the overall number of SMEs in the EU28 from 2008 to 2013 is
explainedbythegrowthinthenumberofmicrofirms(Table16,AnnexV).Microfirms
constitutethelargestshareoftheSMEpopulation,andtheirimportancesince2008is
virtuallyunchanged(Table13,AnnexII). SmallandmediumsizedSMES,ontheother
hand, dragged down the performance of the SME sector in terms of the number of
SMEs.

Incontrast,mediumsizedSMEsaccountforalmost2/3ofthetotalincreasefrom2008
to 2013 in the value added generated by SMEs in the EU28 while small SMEs did not
contributeatalltothegrowthinSMEvalueadded,andmicroSMEsaccountfor1/3of
thegrowthinvaluedadded.

TheoverallSMEemploymentlossesfrom2008to2013intheEU28areaccountedfor
mainlybybymicrofirms(by65%)(where43%ofSMEjobsarelocated)andtoalesser
extentbymediumsizefirms(by27%),whileemploymentlevelsatsmallfirmsfellonly
slightly(Table16, AnnexV).

Analysis by sector

Two sectors (Business services, such as legal, accounting or adversting services, and
Others, including real estate activities and information and communication services)
postedasharpincreaseinthenumberofSMEsintherecentyears(Table17, AnnexV)
andaccountforthebulkoftheoverallincreaseinthenumberofSMEsintheEU28from
2008to2013.

These two industries, together with trade and accomodation/food contributed


significantlytothesmalloverallincreaseinEU28widevalueaddedgeneratedbySMEs
, while manufacturing and, especially, construction pulled down growth in SME value
addedfrom2008to2013.

Asimilarpatternisobservedintermsofemployment.

Ofnoteisthefactthattheconstructionvalueaddedbetween2008and20013declined
by up to 70% across SMEs in the EU28, and grew in only a handful of countries. The
lossesinmanufacturingvalueaddedwererelativelylessstark(Figure9).

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Figure 9: % change in value added of SMEs in the construction and manufacturing sector in the
EU28 2008-2013
30%

Construction

10%

10%

30%

50%

70%

20%

Manufacturing

10%
0%
10%
20%
30%
40%
50%
60%

Source: Eurostat, National Statistical Offices, DIWecon

Analysis by country
In terms of the relative contribution of individual Member States to the EUwide
performance of SMEs, the increase in the EU28 number of SMEs was driven for the
most part by Germany, France, the Netherlands, Slovakia10, and to a lesser extent,
Belgium,CzechRepublic,SwedenandUnitedKingdom(Table18,AnnexV).

The same countries (with the exception of the Czech Republic) also explain the small
positive trend in EU28 SME value added while the depressed level of SME activity in
Spain, Romania, Italy, Greece,Ireland, Croatia, Hungary dragged down growth in EU
wideSMEvalueadded.

The decrease in the overall number of SME jobs in the EU28 is was driven by SME
employmentlossesinSpain,Italy,Portugal,Poland,andRomania.

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2.2 The business environment for SMEs in


Europe

KEYFINDINGS
Markedvariationinperceivedbusinessenvironmentacrosscountries
GainingcustomersbiggestconcernforSMEsincurrentenvironment
MicroSMEsstrugglingmostwithaccessingfinance
Strongcorrelationbetweenperceptionofproblemsandperformance

2.2.1 Issues faced by SMEs


This section focuses on the business environment in which EU SMEs operate. The
discussiondrawsonanumberofsources,amongwhichreportsbytheSurveyonAccess
toFinanceofSMEsintheEuroArea(SAFE)surveydata,andthe2014Innobarometer.

The SAFE survey


KeyissuesandchallengescurrentlyfacedbySMEshavebeenveryinsightfullydetailed
bythe2013surveyofaccesstofinanceofSMEsintheEU(SAFE)11,runjointlyforthe
EuropeanCommissionandtheEuropeanCentralBank.Thesurveyasksparticipantsto
rankandassesstheseriousnessofsixpotentialproblems:

Accesstofinance
Availabilityofskilledstafforexperiencedmanagers
Competition
Costofproduction
Findingcustomers
Regulation

Existing reports12 on the survey focus mainly in the issue of access to finance. In
contrast, the present section considers all the issues identified by SMEs and the link
between these issues and actual SME performance. More detailed countryspecific
informationisprovidedinAnnexIXofthestatisticalbackgrounddocument.

FindingcustomersisthesinglemostpressingproblemfacingSMEsacrosstheEU28
in 2013, as reported by SMEs of all class sizes. This implies that demand is the most
important factor in explaining the performance of SMEs in the past years. As will be
shown in section 3.1, this is particularly true for the construction and manufacturing
sector,asinvestmentincapitalgoodsandconsumerspendingarekeydemandfactors
fortheseindustries.

AllotherissuesrankbroadlythesameforSMEsasawhole.But,
insomecases,cleardifferencesemergeamongSMEsaccording
toclasssizes(Figure10):

Accesstofinanceisarelativelymoreimportant
issueformicroSMEsthanforsmallandmediumsizeSMEs;

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Availabilityofskilledstafforexperiencedmanagersismuchmoreofaconcern
forsmallandmediumsizedSMEsthanformicroSMEs;

Competition, i.e. the pressures that enterprises face on the supply side, is of
particularconcerntomediumsizeSMEs.


Figure 10: Most pressing problems facing SMEs in the EU28 in 2013

22.4%
22.5%
21.4%
23.7%

Findingcustomers

15.4%
17.9%

Accesstofinance

14.9%
11.5%
14.2%
13.8%
13.5%

Regulation

15.7%
14.2%
11.0%

Availabilityofskilledstafforexperiencedmanagers

18.0%
15.9%
13.8%
13.4%

Competition

12.0%
16.4%
12.9%
12.6%

Costsofproductionorlabour

14.3%
12.0%

AllSMEs

Micro

Small

Medium

Source: EC/ECB - SAFE Wave 9

A more detailed review of survey results shows that the problem most frequently
citedbySMEsintheEUaseitherpressingorextremelypressingisdifficultyfinding
customers. Of all survey respondents, 52% rated this issue pressing to extremely
pressing,ofwhich19%judgedthisissuetobeanextremelypressingproblem(Figure
10, AnnexIXofthestatisticalbackgrounddocument).

Though access to finance is the least frequently cited problem overall, for a sizeable
fractionofSMEsthisisextremelypressing.

Moreover, variability across countries is much more pronounced in this than in other
factors13, with SMEs in countries like Slovakia, Greece, Cyprus, Italy and Spain
experiencing significant difficulty in accessing finance, while SMEs in Sweden,
Luxembourg, Czech Republic and Finland identifying this problem relatively
infrequently(AnnexIXofthestatisticalbackgrounddocument).

Figure 11 identifies Member States in which over 50% of interviewed SMEs report a
particularissueasposingaproblemtobusinessintheircountry.Thesizeofthebubble
reflects these countries combined share in total EU28 SMEs, thus capturing the
magnitudeoftheproblemintermsofaffectedSMEs.Theverticallocationofthebubble
reflectstheperceivedimportanceofeachproblem14.

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28

Figure 11: Importance of problems facing SMEs within Member States, weighted by the proportion
of EU SMEs per Member State

50%
45%
40%

AT,CY, FR, DE,


EL,IE, IT, LV,LT,
MT,NL,PL, PT,
SK,ES
AT,BE, FR,
EL,IT, MT,
PL,SK,ES

35%
30%
25%
20%
15%
10%
5%
0%

Findingcustomers
71%
AT,CY, EL,
HU,IE, IT, LV,
LT,MT, PL,
RO,SK,ES

Competition
46%

CY,EL,
IT,SK,
ES

Costsofproductionor
labour
55%

Accesstofinance
32%

FR,IT,
LV,PL,
SK,RO
AT,BE,
DE,MT,
PL,SK,

Regulation
41%

Availabilityofskilled
stafforexperienced
managers
24%

Note: The height of the bubble is constructed as the percentage of SMEs that cite each factor as a
problem across the displayed Member States, weighted by the proportion of EU SMEs per Member State.
This conveys the strength of the preception of a problem across the EU. The size of the bubble is the
overall share of EU SMEs that declare the issue to be a pressing problem
Source: EC/ECB - SAFE Wave 9

Forexample:
Finding customers is cited as a problem by over 50% of SMEs in 15 countries
thataccountfor71%ofallEU28SMEs;
Access to finance, considered a pressing issue by a very large proportion of
SMEs in Slovakia (70%), Greece (61%), Cyprus (62%), Italy (50%), and Spain
(50%),concernsarelativelylowshareofSMEsattheEU28level(32%);
Similarly, availability of skilled workers is a concern for over half of the
respondentsfromsevencountriesthataccountforarelativelylowshareofEU
SMEs(24%).

OncethesizeoftheMemberStateseconomiesistakenintoaccount,therankingofthe
issueschanges,althoughfindingcustomersremainsbyfarthemostimportantissue.
Thisisfollowedbycostsofproductionorlabour,competitionandregulation.

Annex IX of the statistical background document provides the results of a statistical


analysisexaminingtherelationshipbetweenSMEperformanceandtheextenttowhich
SMEs are concerned about structural factors (competition, access to finance, costs of
production,availabilityof skilledworkforce)and regulatorybarriers,orcyclicalfactors
i.e. weak demand (finding customers) and their economic situation in 2013 relative to
2008,beforetherecessionof2009.Keyfindingsaresummarisedbelow.

Formostofthefactorsconsidered,higherSMEconcernisassociatedwithworseSME
performanceintheperiod20082013.

This negative relationship is particularly marked in relation to access to finance and


regulation.

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29

Conversely, SMEs that are more concerned with availability of skilled workers or high
costsofproductionandlabourtendtooperateinMemberStatesinwhichSMEshave
faredrelativelywellsincethecrisis.

Survey undertaken as part of SME 2013/2014 annual report

Complementing and expanding the findings from the SAFE exercise, a survey
conductedfortheSME2013/2014annualreviewfurtherdelvedonissuesencountered
by SMEs. This pan European survey covered the scope of the 10 SBA principles and
gathered114answersfromdifferentkeystakeholdergroups(i.e.22%SMEs,67%SMEs
stakeholders and 11% policy makers). It is obviously not a representative survey, but
duetothehighqualityoftheinterviewees,theresultsformanimportantingredienttoa
comprehensive analysis of the most formidable challenges EU SMEs are facing in the
currentenvironment.
Figure 12 shows the most significant challenges identified during the survey.
Intervieweescouldselectminimum3outofthe9SBAprinciples.Withinthesurvey,the
ThinkSmallFirst(TSF)wasassessedseparatelysinceTSFismorerelatedtogovernance
challenge.Hence,ThinkSmallFirstdoesnotrepresentadirectchallengeforSMEs.

Accesstofinancestandsoutasthemajorissuechosenby66%oftherespondents.Next
in importance are Entrepreneurship (49%), Responsive administration and Skills and
innovation(46%each).

Attheotherendofthespectrum,SingleMarket(12%)andEnvironment(16%)arethe
only two principles below the 30% line, making them the least challenging principles
accordingtosurveyparticipants.

Figure 12: Most challenging SBA principles to SMEs at national level EU28

Entrepreneurship

49%

SecondChance

35%

ResponsiveAdministration

68%
66%

12%

SkillsandInnovation

Internationalisation

54%

32%

AccesstoFinance

Environment

65%

46%

StateAidandPublicProcurement

SingleMarket

51%

34%
88%

46%
16%

54%
84%

42%

58%

%Yessignificantchallenge
%Nosignificantchallenge
Source: SME Performance Review 2013/2014 - Survey

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30

For each chosen principle, the interviewees were also asked to precise the particular
challenges they found most significant, as detailed in Annex IX of the statistical
backgrounddocument.

UnderAccesstofinance,thedifficultyinaccessingtobankcreditsorloansand
theexcessivebureaucraticprocedurestoaccessEUfundswereidentifiedasthe
mainbarriers.
Concerning Entrepreneurship, the lack of financial support measures was the
mainunderlyingbarrierwhichalsocorrelatestotheaccesstofinance.
FortheResponsiveadministration,theadministrativeburdenwaspointedout,
and more specifically the difficulty in managing all of the administrative
requirementsandrequestsfromvariousauthorities.
Finally,issuesrelatedtotheSkillsandinnovationprinciplefocusedonthelack
of strategic support in converting an innovative idea into a commercial
product/process/service.

2014 Innobarometer
AdditionalconclusionswithregardstohowtheseissuesaffectingSMEperformancecan
be drawn from the 2014 Innobarometer survey, which is devoted to the
commercialisationofinnovation.

Inparticular,thesurveyresultsshowthataccesstofundingforR&Dappearstobethe
mainobstacletothecommercialisationofinnovativeproductsorservices.

When asked how important was public financial support in developing innovations,
companieswithturnoverof2millioneuroorless(micro)aremorelikelytosaythatthe
assistancewasimportantcomparedtocompanieswithahigherturnover(51%52%vs.
36%44%).

In contrast with this finding, medium SMEs (50249 employees) are the least likely to
say public financial assistance was important for developing their innovations (39%
vs.46%53%).Retailtradecompaniesarethemostlikelytoreportthattheassistance
was important (55%), followed by those in services (50%), manufacturing (47%) and
industry(36%).

2.2.2 Key findings from the 2014 review of the SBA


implementation
Key findings and conclusions of the results of the SBA policy implementation
assessmentconductedacrosstheEU28MemberStatesforeachSBAprincipleoverthe
referencetermof2013/14incomparisontothelast2referenceperiods(i.e.2011/12and
2012/13)arepresentedbelow.

The assessment is based on the assessment of policy progress judged by national


SMEexperts;andtheperformanceandprogressbasedonSBAindicatorsextracted
from SBA Country Fact Sheets. It is obvious that the simple counting of measures
implemented policy measures is by and in itself not a sufficient indicator of policy
progress. However, combined with the other information it helps to obtain a more
comprehensivepictureofthechangingSMEpolicyenvironmentinagivencountry.

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Main focus of SBA policy measures implemented

Overall, the number of SBA related policy measures adopted/implemented during


2013/2014 in EU28 was slightly higher than the previous reference period (422
measures),yetstilllessthanthe2011/2012referenceperiod,duringwhich735measures
wereadopted/implemented.

AsillustratedinFigure13,AccesstofinanceistheSBAprinciplewhichsawthehighest
policy progress (116) during this reference period followed by Entrepreneurship (83)
and Skills & Innovation (57), while Single market and Second chance were the two
laggingprinciples,withonly8and15measures,respectively.

Whenthetotalnumberofmeasuresadopted/implementedper principlewasadjusted
foreachSBAprinciplebydividingwiththenumberofexistingsubmeasures,theAccess
to finance (13) still remained on the top followed by Internationalisation (10),
Entrepreneurship(8.3),SkillsandInnovation(8),andResponsiveAdministration(6).
Figure 13: Number of policy measures adopted/implemented in EU28 per SBA principle 2013/2014
1.Entrepreneurship
120
10.Internationalisation

100

2.SecondChance

80
60
9.Environment

40

3.ThinkSmallFirst

20
0
8.Skills&innovation

4.Responsiveadmin.

7.Singlemarket

5.Stateaid&Publicproc.
6.Accesstofinance

Source: SME Performance Review 2013/2014 - Policy database

Figure 14 shows the percent distribution of policy measures being


adopted/implementedamongst10SBAprinciplesduringthisreferenceperiod.Access
to finance and Entrepreneurship together amount for nearly half of the measures
implemented (45%), while Single market and Second chance barely reach to 5%
together.

Figure 14: Percent distribution of policy measures per SBA principle in EU28 - 2013/2014

Source: SME Performance Review 2013/2014 - Policy database

32

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Whenthepolicyprogressachievedduringthisreferenceperiodof2013/14iscompared
to the ones in 2011/12 and 2012/13, the following overall conclusions can be drawn
(Figure15):
Ingeneral,thepolicyimplementationrateachievedduring2011/12washigher
thanthesubsequenttworeferenceperiods;
Entrepreneurshiphadthehighestimplementationrateincumulativeterms,but
decreasedsince2011;
Accesstofinancewasgiventhegreatestattentionoverthisreferenceperiodof
2013/14amongtheSBAprinciples;
The number of policy measures under Access to finance, Internationalisation
and State aid &Public procurement over this reference period increased
significantlycomparedtothelastreferenceperiod,whileforotherprinciplesit
decreasedorstayedmoreorlessthesame.

Overall, Access to Finance, Entrepreneurship, Skills & Innovation, Responsive


Administration, and Internationalisation had the highest implementation rate both
during2013/14andduringthe2precedingreferenceperiods,withtheonlyexceptionof
InternationalisationreplacingThinkSmallFirstonthisreferenceperiodof2013/14
Figure 15: Number of policy measures adopted/implemented in EU28 per SBA principle
2011/2014

Source: SME Performance Review 2013/2014 Policy database

The main policy focus during 2013/14 was directed primarily towards improving the
Access to Finance for SMEs, which represents more than a quarter (26%) of the new
policy measures implemented in 2013/2014. This was followed by Entrepreneurship,
Skills & Innovation, Responsive Administration and Internationalisation. At the

33

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same time, these 5 SBA principles were also ranked by the SME stakeholders as the
mostchallengingonesfortheSMEs(Figure12).

Potential impacts of the SBA Implementation on Economic Performance


and Competitiveness

Economic performance and growth (2.1.2) of the EU 28 Member States have been
compared with their SBA implementation status to see whether any potential
relationship exist in between. Estonia, Germany, Lithuania and Sweden support the
assumption that a high economic performance and growth is accompanied by a high
SBAimplementationstatus.

Ingeneral,thosecountrieswithhighSBAimplementationstatusalsodemonstratedstrong
economic performance with moderate to strong growth, with some exceptions such as
Denmark,Netherlands,IrelandandHungary.Thesedifferencesmightbeattributedtothe
varying impact of each of the 5 SBA principles investigated on economic performance
together with whole socioeconomic profile and business ecosystems in those particular
countries.RegardingtheeconomicperformanceandgrowthofthecountrieswithlowSBA
implementation status, such as Bulgaria, Greece, Croatia, Poland, Slovenia, and those
countrieshadmainlyweakeconomicperformancecoupledwithdeclinesinallormostof
theindicatorsmeasured.

Thus,itcanbesuggestedthat,withsomeexceptionsthatneedfurtherinvestigation,the
SBA implementation status at national level may have a potential impact on a countrys
economicperformanceandgrowth.

The potential impact of SBA implementation on the competitiveness status of the


Member States has also been investigated by looking at the Global Competitiveness
Index (GCI)15 and the Europe 2020 Competitiveness Index16 published by the World
EconomicForum.Amongthe8MemberStates(i.e.Denmark,Estonia,Germany,Hungary,
Ireland,Lithuania,theNetherlandsandSweden)identifiedashighperformingcountriesin
termsofSBAimplementation(i.e.highperformingatleastin2outof5keySBAprinciples
explained above), 5 are found to be listed under the stage 3 of development (innovation
driven), whilst Estonia, Hungary and Lithuania fell under the transition from stage 2
(efficiencydriven)tostage3,accordingtotheGCIclassification.

Forstage3countries,innovationandbusinesssophisticationarethekeypillars,whilefor
stage 2 countries: education and training; goods and labour market efficiency; financial
market development; technological readiness; and market size are the key pillars of the
competitiveness.

Someofthemaindriversforahighcompetitivenessscorecanbelinkedtothepresenceof
strong skills and innovation capacity and capability, entrepreneurship and easy access to
finance that are captured in the EU2020 Competitiveness Index under the Smart sub
dimension. Sweden, Netherlands, Denmark, Estonia, Ireland and Germany are all high
scorersintheSmartdimension.

This is strongly reflected in the assessment of the SBA implementation status of those
countries where: DK, DE and NL are all high performers on the Skills & Innovation
principle;DK,DEandSEonAccesstofinance;andEEandIEhighperformersbothinSkills
& Innovation and Entrepreneurship principles, which strengthens their competitiveness
scores.

34

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In general, it should be noted that the role of the SBA in influencing the performance of
SMEsinagivencountryisrather indirect.ImplementationoftheSBAhelps tocreatean
enabling environment in which they may be able to expand their businesses subject to a
otherstimulisuchasrobustmacroeconomicgrowthoftheeconomy.

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35

2.3 SME performance forecast for 2014 and


2015
KEYFINDINGS
EU28 SME value added returned above its precrisis level in 2013, and
expectedtoexpandin2014andin2015
Netincreaseofroughly740,000SMEjobsby2015inEU28
Acrossindustries:
o while in the EU28 SMEs in the service sectors have recovered since
2008andareexpectedtocontinuetogrowto2015,
o EU28 SME employment in construction and manufacturing has
exhibited sustained negative growth, and is forecasted to continue to
shrink
AcrossMemberStates:
o SMEsinmostSouthernandEasternEuropeaneconomieswillstillbefar
fromfullrecoveryin2015
Overall,thebusinessenvironmentforEU28SMEswillremainfraughtwithrisks.These
riskshavethepotentialtonegativelyaffectfuturegrowthprospectsoftheSMEsector.

2.3.1 EU28 outlook

+ 6.3%
Valueadded

+0.8%
Employment

+ 0.1%

TotalvalueaddedgeneratedbySMEsintheEU28hasreturned
above its precrisis level (Table 4,Figure 17) and is expected to
continuetorisebyanothertwopercentagepointsby2015,
expandingby2.8%and3.4%in2015.

Employment in EU28 SMEs is also expected to increase,


growingby0.1%in2014and0.7%in2015.Thisamountsto
anetincreaseofroughly740,000jobsinSMEs.

Moreover,thenumberofSMEsispredictedtoincreaseby
0.38%in2015.

AllthreegroupsofSMEs arepredictedtoexpandin2015,
with micro SMEs expected to grow somewhat less rapidly
thansmallandmediumsizeSMEs(Table4).

Number of SMEs

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Table 4: 2014 and 2015 Forecasts of annual growth in SME performance indicators EU28

Sizeclass
Micro

Small

Medium

Large

SMEs

Total

Indicator

%change
20122013

%change
20132014

%change
20142015

Enterprises
ValueAdded
Employment
Enterprises
ValueAdded
Employment
Enterprises
ValueAdded
Employment
Enterprises
ValueAdded
Employment
Enterprises
ValueAdded
Employment
Enterprises
ValueAdded
Employment

0.93%
1.57%
0.98%
0.42%
0.99%
0.21%
0.50%
0.72%
0.07%
0.40%
0.03%
0.05%
0.90%
1.12%
0.51%
0.90%
0.63%
0.33%

0.28%
2.46%
0.25%
0.33%
2.87%
0.34%
0.45%
3.14%
0.62%
0.49%
2.39%
0.08%
0.23%
2.80%
0.16%
0.23%
2.63%
0.08%

0.33%
2.96%
0.21%
1.00%
3.49%
0.86%
1.27%
3.97%
1.24%
0.25%
2.90%
0.47%
0.38%
3.44%
0.68%
0.38%
3.22%
0.61%

Source: Eurostat, National Statistical Offices and DIW Econ

TheestimateandforecastinthepresentreportofannualgrowthinSMEvalueaddedin
2013 and 2014 are little changed from the forecasts shown in the 2013 report (Figure
16).
However, SME employment is projected to be significantly weaker in both 2013 and
2014.Thisreflectsthefactthatfirms,largeandsmall,focusmuchmorethanpreviously
expectedonimprovingtheirproductivity.
Figure 16: 2013 estimates and 2014 forecasts of performance of SME sector in EU28

3.10%

2.80%
1.80%

1.00% 1.10%
0.30%

0.50%
2013

2014

2013

Valueadded

0.20%
2014

Employment
2013 Report

2014 Report

Source: 2013: Eurostat, National Statistical Offices, London Economics. 2014: Eurostat, National Statistical
Offices, DIW econ

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37

Growthrate(%)

Index:2008=100

Figure 17: Forecast level (left) and growth rate (right) of number of enterprises, value added and
108
employment accounted for 6by SMEs in EU28
106
104
102
100

4
2
0
2

98
96

94

92

90

10

Enterprises

ValueAdded

Employment

Enterprises

ValueAdded

Employment

Source: Eurostat, National Statistical Offices, DIW econ

2.3.2 The outlook for different SME size classes at the EU28
level

In the EU28, relatively faster growth is expected in employment and value added
generationbysmallandmediumfirmsrelativetomicrosizedandlargeenterprisesover
20142015 (Figure 18). However, growth is predicted to pick up in 2015 for all size
classes.

ValueAdded

Growthrate(%)

Growthrate(%)

Figure 18: Forecast growth (in %) in value added and employment by size of company in EU28

0
09
1

1049
50249

12

Source: Eurostat, National Statistical Offices, DIW econ

Employment

+250

Intermsofnumber,SMEswillberecovering2008levelsby2015;largefirmswillstillbe
3%fewer.However,the overallcontributionoflargecompaniestovalueaddedinthe
EUwillhaverisentoagreaterextentandwellaboveprecrisis(Figure19).

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38

Index:2008=100

Figure 19: Forecast enterprise, value added and employment: SMEs and large firms (2008 = 100)
EU28
110
108
106
104
102

2008 =100

100

2014

98

2015

96
94
92
SMEs

Large

Enterprises

SMEs

Large

ValueAdded

SMEs

Large

Employment

Source: Eurostat, National Statistical Offices and DIW Econ

WithinSMEs(Figure20),microcompaniesareanticipatedtogrowthemostinnumbers
by2015,smallcompaniesinemployment(2%),andmediumsizedenterprisesinvalue
creation(10%).

Index:2008=100

Figure 20: Forecast enterprise, value added and employment: micro, small and medium
enterprises (2008 = 100) EU28

115
110
105
2008 =100

100
95
90
85
09

1049 50249
Enterprises

09

1049 50249
ValueAdded

2014

09

1049 50249
Employment

2015

Source: Eurostat, National Statistical Offices and DIW Econ

2.3.3 The outlook for SMEs in different sectors at the EU28


level
TherearesomeimportantdifferencesacrosssectorswithintheEU28.

While SMEs in the service sectors in the EU28 have recovered since the 2008
contraction and are expected to continue to grow to 2015, EU28 SME employment in
construction and manufacturing has exhibited sustained negative growth, and is
forecasted17tocontinuetoshrink.

Valueaddedisexpectedtofollowasimilartrend.

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39

Growthrate(%)

Figure 21: Forecast growth (in %) in value added by sector -EU28


C Manufacturing

10
5

F Construction

0
G Wholesale&retailtrade

5
I Accommodation/food

10

M Professional,scientific&
technicalactivities

15
20

Othersectors

Source: Eurostat, National Statistical Offices, DIW econ

Growthrate(%)

Figure 22: Forecast growth (in %) in employment by sector EU28


6
4

C Manufacturing

F Construction

2
0
2

G Wholesale&retailtrade

I Accommodation/food

4
6

M Professional,scientific&
technicalactivities

Othersectors

Source: Eurostat, National Statistical Offices, DIW econ


In2015,thelevelofemploymentgeneratedbytheconstructionsectorintheEU28will
havedroppedby16%andvalueaddedbyupto25%(Figure23).

Onaslightlysmallerscale,valueaddedfrommanufacturingwillhavecontractedby2%
andemploymentbyupto12%.

Professionalservicesandother(service)sectorswillinsteadhavegrownsinceprecrisis
yearsintheorderof10%.

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40

Index:2008=100

Figure 23: Forecast enterprises, value added and employment by sector (2008 = 100) EU28
120

2008 =100

100
80
60
40

Enterprises

ValueAdded

Othersectors

M Professional,

I Accommodation/food

G Wholesale&retail

F Construction

C Manufacturing

Othersectors

M Professional,

I Accommodation/food

G Wholesale&retail

F Construction

C Manufacturing

Othersectors

M Professional,

I Accommodation/food

F Construction

C Manufacturing

G Wholesale&retail

20

Employment

Source: Eurostat, National Statistical Offices, DIW econ

2.3.4 The outlook for SMEs in different Member States



Achieving a full recovery and resuming on a path of positive growth in jobs and value
addedremainsanongoingchallengeformanyEuropeanSMEs.

In terms of value added creation, three groups of countries can be identified (Figure 62,
AnnexVII):

Those countries where SMEs have achieved a full recovery of precrisis levels by
2013,andareforecasttogrowevenmore(atleastby4%)intheperiod20132015
(toprightquadrant)
ThosecountrieswhereSMEshavenotyetrecovered,butareforecasttoperform
positivelyinthenextyears(topleftquadrant)
Those countries that have not yet recovered and are not expected to improve
performanceinthecomingyears(bottomleftquadrant)

Thereisasmall,positivecorrelation(Rsquaredof0.28)betweenpastandforecastgrowth
rates,implyingthat,onaverage,thecountrieshavingachievedarecoveryarepredictedto
keepongrowing,whilecountrieslaggingbehindarenotexpectedconvergebygrowing
atafasterpace.Thismaypointtoothermacroeconomicorstructuralfactorsasdriversof
(or obstacles to) SME growth, such as a depressed domestic demand, or a decrease in
grossfixedcapitalformation.

Interestingly, in the case of employment the relationship is somewhat less clear, as the
variationbetweencountriesincreases(Figure63,AnnexVII):

For some countries, recovery has been achieved and employment is bound to
increaseevenfurther,albeitmildly(topright)
Forothers,employmentlevelsarestillnotcomparabletoprecrisis,despitegood
prospectsforthecomingyears(topleft)

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41

TherearestillmanycountrieswhereSMEshavenotrecoveredthejobslostduring
the crisis and are not forecast to expand their labour force in the near future
(bottomleftquadrant)

Where will SMEs stand in 2015 relative to 2008?


SignificantdifferencesacrossMemberStatesinSMEperformanceareexpectedtoprevail
in2015relativeto2008.Figure24displaysSMEemploymentandvalueaddedrelativeto
thebaseyear(2008),aswellaseachMemberStatesshareintotalvalueaddedgenerated
bySMEsintheEU.

While SMEs in selected Western European countries18 will have exceeded 2008 levels of
value added and employment by 2015, SMEs in many Southern and Eastern European
countries19willaccordingtotheforecaststillbefarfromfullrecovery.

Inothercountries,suchasDenmark,EstoniaandLithuania,value
addedgeneratedbySMEsisexpectedtobewellaboveprecrisis
years,butemploymentwillremainrelativelylow.

The opposite is true for Romania, where value added generated


by SMEs will still be almost half as high as it was in 2008, while
employmentwillhavejustrecovered.

Countries in which SMEs account for greatest shares in economic activity in the EU
(Germany,France,andUnitedKingdom)areforthemostpartexpectedtohaverecovered
or even grown by 2015. Important exceptions include Spain, Italy, and to a much lesser
degreetheNetherlands.
Figure 24: Forecast value added and employment in 2015, by Member State (2008 = 100)
140

Employmentin2015/Employment2008

130

DE
ShareintotalvalueaddedgeneratedbyEUSMEs(2013)

120

FR

MT

110
LU
NL

100

CZ

90

SI

HR

IE

CY

80

RO

HU

UK

FI
BG

BE

LV

PL

LT
EE

DK

IT

SE

AT

PT
ES

70

EL

60
50

60

70

80

90

100

110

120

130

140

ValueAddedin2015/ValueAddedin2008

Note:ThesizeofbubblesreflectsMemberStatesshareintotalvalueaddedgeneratedbySMEsintheEUin2013.
Slovakiaisomittedbecauseofastructuralbreakinthedata.
Source: Eurostat, National Statistical Offices, DIW econ


AdetailedanalysisofcrosscountryvariationbysectorisdevelopedinAnnexVII.

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42

2.4 Comparison of SME performance in the


EU28 and other selected countries
KEYFINDINGS
The EU28 and Japanese economies are very similar, with
manufacturingaccountingforaquarterofvalueaddedandtradefora
fifth;
In the USA, the other sectors account for almost half of the total
nonfinancial business sector value added, while in the EU28 these
industriesonlyaccountfor33%andinJapan35%.
SMEsmoreimportanttotheEU28andJapaneconomiesthantothe
USeconomy
Overall, SMEs in USA and EU28 performed similarly over the
period20092012
The wholesale/retail trade and the accommodation sectors of the
USA performed better than their European counterparts (+12% vs.
+6%, and +14% vs. +12%); conversely, manufacturing and other
industries experienced relatively more positive developments in the
EU28.

The present section compares the performance of SMEs in the EU28 to that of their
counterpartsinanumberofkeyworldeconomies20,i.e.theUnitedStatesandJapanaswell
asincandidatecountries(Iceland,Macedonia,Serbia,Turkey,Albania21)andLiechtenstein,
Israel,andNorway(Box1)andBrazil,IndiaandRussia(Box2).

2.4.1 Comparative analysis of SME performance in the EU28,


USA and Japan
Currently, there are 21 million SMEs in the nonfinancial business sector EU28 while the
UnitedStates22has18millionSMEsandJapanhas3.9million(Table5).

The levels of value added generated by SMEs are broadly similar in the United States and
EU28,exceeding3trillionEuros.

SMEs of the United States employ 48 million persons, European SMEs 88 millions and
JapaneseSMEs33million.
Table 5: Overview of SMEs in EU28 (2013), USA (2011) and Japan (2012)

EU28
USA
Japan

NumberofSMEs(millions)

EmploymentofSMEs
(millions)

21.6
18.2
3.9

88.8
48.7*
33.5

ValueAdded
(trillionEuros)
3.7
3.3
n.a.

Note:DataforEU28arerelativeto2013,dataforUSAreferto2011,anddataforJapanreferto2012.DataforJapanis
representativeofthenonfinancialbusinesseconomy,butthereisnoseparatesectionforNinJapaneseindustrial
classification.IntheUSAandJapan,mediumfirmscanemployupto299employees,*:dataformicrofirmsis
incrementedbyincludingnonemployerenterprisesfromUSCensusBureau,toaccountforselfemployedindividuals.
Source: Eurostat, National Statistical Offices, DIW econ (EU28), US Census Bureau, Japan National Statistical
Office, DIWEcon

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43

The figures above do not take into account differences in the size of the respective
economies and therefore do not provide a good picture of the relative importance of the
SMEsectorineachofthethreeeconomies.AverydifferentpictureemergesoncetheSME
indicatorsareadjusted(Figure25):

The number of SMEs in the EU28 is very similar to the United States (1.65
and1.63SMEenterprisespermillionofGDP);
InJapan,therearemanyfewerSMEscomparedtothesizeoftheeconomy
(lessthan1enterprisepermillionofGDP);
In contrast, the SMEs of Japan employ relatively more individuals than in
EuropeortheUSA.
Figure 25: Number of enterprises and employment in EU28 (2013), USA (2011) and Japan (2012)as
ratios over GDP
8

7.24
6.80

7
6
5

4.36

4
3
2

1.65

1.63
0.85

1
0
EU28

UnitedStates

Japan

NumberofSMEspermillionGDP

EU28

UnitedStates

Japan

EmploymentinSMEspermillionGDP

Note:DataforEU28arerelativeto2013,dataforUSAreferto2011,anddataforJapanreferto2012.
Source: GDP data: Eurostat. SME data for EU28: Eurostat, National Statistical Offices, DIW Econ; SME data
for USA: US Census Bureau, DIW Econ; SME data for Japan: Japan National Statistical Office, DIW Econ

Overall:
Inallthreeeconomies,SMEsaccountforthevastmajorityofenterprises(over
99%);

EU28 and USA have a similar size class distribution of SMEs, with micro
enterprisesbeingthemostcommon;incontrast,Japantendstohaverelatively
moresmallfirms;

Inallthreeeconomies,SMEsemploymorethanhalfofthepersonsemployedin
the nonfinancial business sector, but there is significant variation: in the USA
theyaccountfor52%oftotalemploymentinthatsector,intheEUfor66%,and
inJapanfor86%;

IntheUSA,largefirmsaccountformorethanhalfofthevalueaddedgenerated
by the nonfinancial business sector whereas in the EU, SMEs account for the
majority(55%).
More detailed data can be found under section XI of the statistical background
document.

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44

WithintheSMEsector:
microfirmsaccountforthevastmajorityofbusinesses
(95% and 92.5% respectively) In the USA and the
EU28,(Figure26);
A markedly different picture is found in Japan, where
79% of SMEs are micro and 18% are small firms. The
medium sized enterprises represent 2.5% of the SME
population.
Figure 26: Enterprise distribution by size class, EU28 (2013), USA (2011) and Japan (2012)

EU28

USA

Japan

92.6%

95.4%

79.2%

Micro

6.4%

1%

3.8%

0.8%

18.3%

Small

2.5%

Medium

Note:DataforEU28arerelativeto2013,dataforUSAreferto2011,anddataforJapanreferto2012.Datafor
Japanisrepresentativeofthenonfinancialbusinesseconomy,butthereisnoseparatesectionforNin
Japaneseindustrialclassification.IntheUSAandJapan,mediumfirmscanemployupto299employees.For
theUSA,microfirmsincludeselfemployed.
Source: Eurostat and National Statistical Offices (EU28), US Census Bureau, Japan National
Statistical Office, DIW Econ

AlthoughthereisnoexactcorrespondencebetweentheEU28,theUSAandJapandue
to differences in size classification, a broad comparison between the employment
distributionsshowsthat(AnnexXIofthestatisticalbackgrounddocument):
IntheUSAfewerpeopleworkinSMEsinthenonfinancialbusinesssectorthan
inEurope(52%asopposedto66%);
In Japan more than 86% of individuals working in the business economy are
employedinanSME.
Amoregranularanalysisofthedatabysizeclassshowsthat(Figure27):
WhileintheEUandtheUSAmicrofirmsaccountforthelargestsharesoftotal
SME employment (with the USA micro firms taking up more than 46% of
personsemployed),inJapanmicrofirmsemployathirdofthepopulation,and
smallfirms,instead,accountformorethan40%.

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Figure 27: Employment distribution by size class, EU28 (2013), USA (2011) and Japan (2012)

EU28

30.8%

43.5%

USA

27.6%

46.1%

Japan

25.7%

26.3%

41.2%

30.7%

Micro

Small

28.1%

Medium

Note:DataforEU28arerelativeto2013,dataforUSAreferto2011,anddataforJapanreferto2012.DataforJapanis
representativeofthenonfinancialbusinesseconomy,butthereisnoseparatesectionforNinJapaneseindustrial
classification.IntheUSAandJapan,mediumfirmscanemployupto299employees,largefirmsarethosewithmore
than300personsemployed.FortheUSA:dataformicrofirmsisincrementedbyincludingnonemployerenterprises
fromUSCensusBureau,toaccountforselfemployedindividuals.
Source: Eurostat and National Statistical Offices (EU28), US Census Bureau, Japan National Statistical Office,
DIWEcon

In terms of value added, the share produced by large companies in the USA (56% of the
total)ishigherthantheonegeneratedbytheirEuropeancounterparts(42%).(AnnexXIof
thestatisticalbackgrounddocument).

In both the EU28 and the USA, SMEs of different sizes contribute almost evenly to the
generationofvalueadded(Figure28).However,theEU28microfirmsaccountfor37.05%of
thetotalSMEgeneratedvalueadded(against33.7%intheUSA),smallenterprisesproduce
30.8%andmediumfirmsaccountfor32%(against35%intheUSA).
Figure 28: Value added distribution by size class, EU28 (2013), USA (2011)

EU28

USA

37.2%

33.7%

31.3%

30.6%

Micro

Small

31.5%

35.6%

Medium

Note:DataforEU28arerelativeto2013,dataforUSAreferto2011.IntheUSA,mediumfirmscanemployupto299
employees,(largefirmsmorethan300).
Source: Eurostat and National Statistical Offices (EU28), US Census Bureau, DIW Econ

Sector-level analysis

Diffrences in the relative importance of SMEs in the three economies may reflect
differentstructuresoftheeconomieswithsomesectorsbeingmoreSMEintensivethan
others.

Therefore,asbackgroundinformation,thepresentsectionprovidesinformationonkey
structural differences between the three economies and an indepth discussion of
sector distribution by size of SMEs can be found in annex XI of the statistical

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background document, together with more information on the distribution of


enterprisesandemployment.

Key facts to note regarding the distribution of value added across sectors (Figure 29)
arethefollowing:

the economies of EU28 and Japan are very similar, with manufacturing
accountingforaquarterofvalueaddedandtradeforafifth;
intheUSA,theothersectorsaccountforalmosthalfofthetotalvalueadded,
while in the EU28 these industries only account for 33% and in Japan 35%. Of
note is the fact that, in the USA, the industries which drive the differences
relativetotheEU28andJapanareRealestate(17.6%)andInformationand
communication(9.1%)23.
Figure 29: Total value added by sector, EU28 (2013), USA (2011) and Japan (2012)

EU28

USA

33.6%

43.8
%

26.1%
3.4%
9.9%
19.2% 7.8%
Manufacturing
Construction
Trade
BusinessS
Accommodation/foodS.
Others

JAPAN

18.5
%

4.0% 17.4
11.1 %
%

5.3%

Manufacturing
Construction
Trade
BusinessS
Accommodation/foodS.
Others

35.1
%

26.1
%

10.0
% 20.7 8.1%
%
Manufacturing
Construction
Trade
BusinessS
Accommodation/foodS.
Others

Note:DataforEU28arerelativeto2013,dataforUSAreferto2011,anddataforJapanreferto2012.Thename
BusinessS.isusedasabbreviationoftheNACEservicecategoryMProfessional/scientific/technicalactivities,and
TradereferstoGWholesale/retailtrade/repairofmotorvehicles/motorcycles.CategoriesinOthersreferto
sectionsofNACERev.2classifications:B,D,E,H,J,L,andN.DataforJapanisproducedusingGDPbysectorforyear
2012,however,nodatawasavailableforAccommodation/foodS..
Source: Eurostat and National Statistical Offices (EU28), US Census Bureau, Japan National Statistical Office,
DIW Econ

Macroeconomic environment

Differences in SME performance among the three economies may also be due to
differencesinmacroeconomicdevelopments.

Inparticular,thepost2008periodischaracterisedbyadecreasefrom2008to2012in
domestic demand in the EU28 (4%) while domestic demand increased, albeit a
subduedrate,intheUSAandJapan.

Investmentsincapitalgoodsdroppedinallthreeeconomies,althoughintheUSAand
Japanthereweresignsofaninversioninthistrendin2013.

TheEU28andtheUSAexperiencedanincreaseinexportsfrom2008to2013,whilein
Japansuchanincreaseoccurredonlyrecentlyin2013.

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Figure 30 : Developments (jn %) in key macroeconomic factors at constant prices, 2008-2013


15%
10%
5%
0%
5%
10%
15%

EU28

USA

Japan

EU28

Domesticdemand

USA

Japan

EU28

Exports
%change20082012

USA

Japan

Grossfixedcapitalformation

%change20122013

Note:nodatafor2013wasavailableforUSAandJapandomesticdemandatthetimeofdrafting
Source: Eurostat National Accounts (base year 2005, chain-linked series)

Recent performance trends


Thedifferencesinthesectoralmakeupofthethreeeconomiesandinmacroeconomic
developments noted above explain to some extent the different trends24 in SME
performancedescribedbelow.

Intermsofnumberoffirms(Figure31),theEU28andtheUSAfollowedapathofmild
increasebetween2010and2011;thelatestEUdatashowhoweveraninversioninthis
trend to levels barely above precrisis. Japan followed a different trajectory, with a
steadydecreaseinthenumberofSMEs.
Figure 31: Number of SMEs in EU28, USA and Japan, 2009=100
110

105
EU28
100

USA
Japan

95

90
2008

2009

2010

2011

2012

2013

Note:*DataforEU28excludeSlovakiaduetoabreakinseries;DataforJapanisrepresentativeofthenonfinancial
businesseconomy,butthereisnoseparatesectionforNinJapaneseindustrialclassification.IntheUSAandJapan,
mediumfirmscanemployupto299employees.Dataindexedto2009duetoastructuralbreakindataforJapan
registeredin2008.
Source: Eurostat and National Statistical Offices (EU28), US Census Bureau, DIWEcon

Acloserlookatthesedynamicsonasectorallevelfrom2009to2012,revealsthatwhile
for the EU28 and the USA some sectors (such as services) showed signs of positive
growth,inJapantherewasawidespreadreductionintheSMEpopulation.

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Figure 32: % change in number of SMEs by sector in EU28, USA and Japan, 2009 - 2012
10%
8%
6%
4%
2%
0%
C:Manufacturing

F:Construction

2%

G:Wholesaleandretail I:Accommodation/food M:Professional,scientific


trade
services
andtechnicalactivities

Others

4%
6%
8%
10%
EU28

USA

Japan

Note:*DataforEU28excludeSlovakiaduetoabreakinseries;dataforJapanisrepresentativeofthenonfinancial
businesseconomy,butthereisnoseparatesectionforNinJapaneseindustrialclassification.IntheUSAandJapan,
mediumfirmscanemployupto299employees.Datashownstartingin2009duetoastructuralbreakindataforJapan
registeredin2008.ThepercentagechangefortheUSAiscalculatedfor20092011,duetolackofdatafor2012.

AllthreegeographiesshowSMEemploymentlosses.However,theyaremuchmoreseverein
intheUSAandJapan(Figure33).
Figure 33: Employment in SMEs in EU28, USA and Japan, 2009=100
110

105

EU28
100

USA
Japan

95

90
2008

2009

2010

2011

2012

2013

Note:*DataforEU28excludeSlovakiaduetoabreakinseries;DataforJapanisrepresentativeofthenonfinancial
businesseconomy,butthereisnoseparatesectionforNinJapaneseindustrialclassification.IntheUSAandJapan,
mediumfirmscanemployupto299employees.Dataindexedto2009duetoastructuralbreakindataforJapan
registeredin2008.
Source: Eurostat and National Statistical Offices (EU28), US Census Bureau, DIWEcon

Similarly to the evolution of enterprises, in the case of employment the services sectors
were those where (mild) growth occurred after 2009 in both the EU28 and the USA. In
Japan,ontheotherhand,SMEemploymentdecreasedinallsectorsoftheeconomy.

The sharp declines in SME construction employment are very similar in all three
economies.

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Figure 34: % change in emplyment of SMEs by sector in EU28, USA and Japan, 2009 - 2012

4%
2%
0%
C:Manufacturing

F:Construction

2%

G:Wholesaleandretail I:Accommodation/foodM:Professional,scientific
trade
services
andtechnicalactivities

Others

4%
6%
8%
10%
EU28

USA

Japan

Note:*DataforEU28excludeSlovakiaduetoabreakinseries;dataforJapanisrepresentativeofthenonfinancial
businesseconomy,butthereisnoseparatesectionforNinJapaneseindustrialclassification.IntheUSAandJapan,
mediumfirmscanemployupto299employees.Datashownstartingin2009duetoastructuralbreakindataforJapan
registeredin2008.ThepercentagechangefortheUSAiscalculatedfor20092011,duetolackofdatafor2012.
Source: Eurostat and National Statistical Offices (EU28), US Census Bureau, DIWEcon

DuetothelackofdataforJapan,theevolutionofvalueaddedcanbeassessedonlyfor
the EU28 and the USA (Figure 35). Following the 2008 crisis, SMEs of both regions
experiencedlargelossesintermsofvalueadded.

SMEvalueaddeddeclinedmuchmoresharplyin2009intheEU28thanintheUSA.In
theUSA,atemporaryrecoveryfollowedimmediatelyinyear2010,andfollowedbya
dip in 2011; in the EU28, instead, the losses in value added were up to 10%, and the
recoverytookplaceataslowerpace.ArecoverytoprecrisislevelsintheEUwasonly
experiencedin2013.
Figure 35: Value Added of SMEs in EU28 and USA, 2008-2013 -2009=100
115

110

EU28

105

USA
100

95
2008

2009

2010

2011

2012

2013

Note:*DataforEU28excludeSlovakiaduetoabreakinseries;DataforJapanisrepresentativeofthenonfinancial
businesseconomy,butthereisnoseparatesectionforNinJapaneseindustrialclassification.IntheUSAandJapan,
mediumfirmscanemployupto299employees.Dataindexedto2009forcomparabilitywithpreviouscharts.Datafor
USAfor2012and2013arenotyetavailiable
Source: Eurostat and National Statistical Offices (EU28), US Census Bureau, DIW Econ

Ananalysisoftheperformanceofthedifferentsectorsintermsofvalueaddedforthe
period20092012showsthatthewholesale/retailtradeandtheaccommodationsectors
oftheUSAperformedmorepositively thanintheEU.Conversely,manufacturingand
otherindustriesexperiencedrelativelymorepositivedevelopmentsintheEU28.

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Figure 36: % change in value added of SMEs by sector in EU28 and USA - 2009-2012
20%

15%

10%

5%

0%
C:Manufacturing
5%

F:Construction

G:Wholesaleandretail I:Accommodation/food
M:Professional,
trade
services
scientificandtechnical
activities
EU28

Others

USA

Note:*DataforEU28excludeSlovakiaduetoabreakinseries;dataforJapanisrepresentativeofthenonfinancial
businesseconomy,butthereisnoseparatesectionforNinJapaneseindustrialclassification.IntheUSAandJapan,
mediumfirmscanemployupto299employees.Datashownstartingin2009duetoastructuralbreakindataforJapan
registeredin2008.ThepercentagechangefortheUSAiscalculatedfor20092011,duetolackofdatafor2012.
Source: Eurostat and National Statistical Offices (EU28), US Census Bureau, DIWEcon

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Box 1: SMEs in EU28, candidate countries and Isreal, Liechtenstein and


Norway
Table6providesanoverviewofSMEsinthesecountries,accordingtothelatestavailabledata.
Table 6: Overview of SMEs in EU28 and partner countries, 2013 or latest available data

21,571

EmploymentofSMEs
(1000)
88,844

GrossValueAddedof
SMEs(MillionEuros)
3,667

ALBANIA
ICELAND
MACEDONIA

77
26
53

234
72
255

1.9
3.9
2.1

SERBIA
TURKEY

283
2,387

997
8,177

7.9
78

ISRAEL
LIECHTENSTEIN

370
3

1,207
18

45
1.6

NORWAY

282

1,037

156.2

Country

NumberofSMEs(1000)

EU28

Note:intheIsraelSMEclassification,microfirmsemploy09persons,smallfirmsemploy1049,andmediumemploy50
to200.InthecaseofTurkey,microfirmsemploy1to19persons,smallfirmsemploy20to49,andmediumfirmsemploy
50to249persons.DataforEU28are2013values,forAlbaniaandMacedonia,2012,forSerbiaandTurkey,2011,forIsrael,
2011(enterprises)2010(valueadded)and2012(employment),forLiechtenstein2012(enterprisesandemployment),2011(value
added),forIceland2012(enterprises)2011(employmentandvalueadded),forNorway2013
Source: Eurostat and National Statistical Offices (EU28), DIWEcon

Latest SME snapshot


Across all economies, SMEs account for more than 99% of firms in the nonfinancial business
sector(annexXIIIofthestatisticalbackgrounddocument).

Intermsofvalueadded(annexXIIIofthestatisticalbackgrounddocument)Israel,Norwayand
LiechtensteinpresentasimilardistributiontotheEU28,withSMEsaccountingfor65%,67%
and 69%. SMEs in Iceland and Serbia account for a slightly larger share (72% and 71%
respectively). In Macedonia, Albania, and Turkey, SMEs produce more than 75% of the value
added. In the EU28, SMEs employ just less than 60% of the labour force, and a similar
distribution is found in Serbia, Turkey, Israel and Liechtenstein (annex XIII of the statistical
background document). SMEs offer relatively more jobs in Albania (70%), Iceland (70%) and
Macedonia(66%).

AscanbeseeninannexXIIIofthestatisticalbackgrounddocument,inallcountries,microfirms
accountforatleast80%oftheSMEpopulation,andmediumfirmsonlyforamaximumof
2%. In Turkey, the share of micro enterprises reaches 97%, while the lowest share is found in
Liechtenstein (86%). In the case of value added (annex XIII of the statistical background
document), the allocation across size classes is broadly similar in all the economies under
analysis,withtheexceptionofNorway,wheremicroSMEsaccountformorethan55%ofSME
valueadded.

Intermsofemployment,withtheexceptionofIcelandandNorway,inalltheeconomiesatleast
40% of the persons employed are working in micro firms. The share of employment in small
firmsisquitediverseacrosscountries,rangingfromaminimumof18%(Turkey)toamaximum
of37%(Liechtenstein)(annexXIIIofthestatisticalackgrounddocument).Mediumfirmsaccount
for20to28%ofjobsinalltheseeconomies.

Recent performance trends

ThedevelopmentsinthenumberofSMEsprovedveryvolatileinallcountries,whilsttheEU28
registered a more stable path during the years of the crisis (Figure 37). Albania, Israel and

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Liechtensteinexperiencedyearsofsustainedgrowth;inMacedoniaandTurkey,SMEgrowth
hadatleastonenegativeperiod(2011and2010respectively).Icelandregisteredanegativetrend
from2008to2011,butisnowsetonapositivetrajectory.InallcountriesbutIceland,thereare
currentlymoreSMEsthantherewerein2008.
Figure 37: Number of SMEs, EU28 and partner countries, 2009=100
108
106
104
102
100
98
96
94
92
90
88
86

2008

2009

2010

EU28
FYRMacedonia
Israel

2011

2012

Albania
Serbia
Liechtenstein

2013
Iceland
Turkey
Norway

Note:intheIsraelSMEclassification,microfirmsemploy09persons,smallfirmsemploy1049,andmedium
employ50to200.InthecaseofTurkey,microfirmsemploy1to19persons,smallfirmsemploy20to49,and
mediumfirmsemploy50to249persons.DatafortheEU28excludeSlovakiaduetoabreakintheseries.
Source: Eurostat and National Statistical Offices (EU28), DIW Econ

TheperformanceofSMEsintermsofvalueaddedisalsoquitedifferentbetweentheEU28and
thecandidatecountries,asshowninFigure38.TheEUsufferedanimmediatesetbackin2009,
withalossofalmost10%,andIceland,Norway,IsraelandSerbiaperformedsimilarly.Inthe
followingyears,theseeconomiespostedsubstantiallydifferenttrends.WhiletheEUresumeda
mildrecovery,SerbiaexperiencedasecondyearofnegativegrowthandIsraelexhibiteda
strikingly positive performance. Albania and Macedonia only registered negative rates
starting 2011 (1.4% and 6.2%), and while Albania recovered swiftly, Macedonia lost an
additional 6.8% of value added in 2012. Turkey and Liechtenstein, in contrast, did not
experiencelossesduringthecrisis.

Figure 38: Value added of SMEs, EU28 and partner countries 2009=100

140
130
120
110
100
90

2008

2009

2010

2011

2012

2013

EU28

Albania

Iceland

FYRMacedonia

Serbia

Turkey

Israel

Liechtenstein

Norway

Note:intheIsraelSMEclassification,microfirmsemploy09persons,smallfirmsemploy1049,andmedium
employ50to200.InthecaseofTurkey,microfirmsemploy1to19persons,smallfirmsemploy20to49,and
mediumfirmsemploy50to249persons.DatafortheEU28excludeSlovakiaduetoabreakintheseries.
Source: Eurostat and National Statistical Offices (EU28), DIW Econ

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WhiletheEUhasseenitsemploymentlevelsdropthreetimessinceonsetofthecrisis,theSMEs
in the other countries performed quite differently, and in some cases, have markedly
expanded their labour force (Figure 39). SMEs in Albania, Macedonia, Turkey, and
Liechtenstein generated more and more jobs in 20082012. In contrast, SME employment
declinedforthreeconsecutiveyearsinIcelandandSerbia.
Figure 39: Employment in SMEs, EU28 and partner countries, 2009=100
120
115
110
105
100
95
90

2008

EU28

2009

2010

Albania

2011

2012

Iceland

FYRMacedonia

Serbia

Turkey

Israel

Liechtenstein

Norway

2013

Note:intheIsraelSMEclassification,microfirmsemploy09persons,smallfirmsemploy1049,andmediumemploy50
to200.InthecaseofTurkey,microfirmsemploy1to19persons,smallfirmsemploy20to49,andmediumfirmsemploy
50to249persons.DatafortheEU28excludeSlovakiaduetoabreakintheseries.
Source: Eurostat and National Statistical Offices (EU28), DIW Econ

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Box 2: SMEs in EU28, Brazil, India and Russia


Brazilian SMEs number 4.2 millions and employ to 23 million individuals; their Indian
counterpartsnumber24.5millionandemploymentreaches73millions.25 Lastly,inRussiathere
are1.7millionSMEs,generating11.4millionjobs(Table7).Moreinformationonthedistribution
and role of SMEs in these countries is available in annex XII of the statistical background
document.
Table 7: Overview of SMEs in EU28 (2013), Brazil, India and Russia (2011)

NumberofSMEs(millions)

EmploymentofSMEs
(millions)

ValueAdded
(trillionEuros)

EU28
Brazil

21.6
4.2

88.8
23.3

3.7
0.6

India

24.5

73.0

n.a.

Russia

1.7

11.4

0.7*

Note:DataforEU28arerelativeto2013,whileforBrazil,IndiaandRussiaarerelativeto2011;*turnoverdata;SMEsize
classdefinitionsforRussia:Micro(015),Small(16100),Medium(101250).
Source: Eurostat and National Statistical Offices (EU28), DIWEcon

Recent performance trends

IncontrastwiththeEUtrends,inBrazil,IndiaandRussiaSMEsgrewinnumberby
respectively 10%, 6% and 35% from 2008 to 2011. (annex XII of the statistical
backgrounddocument).
Similarly,employmentinbothBrazilandIndiaexperiencedhighgrowthratesinthe
period20082011:Brazilgained4millionSMEemployees(+18%)andIndiaalmost6
million(+9%)inthese4years.InRussia,conversely,employmentfollowedatrendof
gradualdecrease,withnegativegrowthratesintheperiod20082011(annexXIIofthe
statisticalbackgrounddocument).
Intermsofvalueadded,BrazilianSMEsexperiencedasluggishgrowthintheperiod
20082009, but soon recouped with two consecutive years of high growth, with a
cumulativegrowthof56%from2008to2011.InRussia,similarlytoEU28,therewere
large losses in value added from year 2008 to 2009, but strong growth rates
characterisedthesubsequentyears(annexXIIofthestatisticalbackgrounddocument).

55

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3 DRIVERS OF SME ECONOMIC


PERFORMANCE IN RECENT
YEARS AND INTO THE FUTURE

Whilethepreviouschapterpresentedanumberofkeyfactsontherecentperformanceof
SMEsintheEU28andaselectionofothercountries,thepresentchapterfocusesona
numberoffactorswhichcanexplaintheobserveddifferencesinSMEperformanceinthe
EU28.

Thechapterfirstfocusesonmacroeconomicdevelopmentsasdriversofthedemandfor
goodsandservicesproducedbyEU28SMEs(section3.1).

Next,inlightoftheimportanceofexportsofgoodsandservicesandinnovationtothe
economicrecoveryinEurope,thechapterdiscussestheissueoftheinternationalisationof
SMEs(section3.2).

Finally,thechpaterexaminestheperformanceofSMEsinhightechmanufacturingand
knowledgeintenseserviceSMEs,twoeconomicsegmentswhichareexpectedtobekey
growthenginesinthefuture(section3.3)..

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3.1 Macro-economic drivers of demand for


goods and services produced by SMEs
KEYFINDINGS
Macroeconomictrends
Sharpdeclineingrosscapitalformation(housing,structures,
plantandequipment)inalargenumberofMemberStates;
Verylimitedincreaseordeclinesinconsumerspendingand
governmentspendinginmanyMemberStates;
Muchstrongergrowthinexportsofgoodsandservicesthanin
finaldomesticdemandinmostMemberStates.
ImpactofmacroeconomictrendsonSMEperformance:
Householddemandhasasignificantimpactontheperformance
ofSMEsintheaccommodationandothersectors;
Ontheotherhand,constructionvalueaddedismainlyaffected
bygrossfixedcapitalformation;
Inallsectors,intermediatedemandispositivelyaffectingSME
growthofvalueadded;
Foraccommodationandtradefirms,thefactorsthataffect
employmentgrowtharehouseholdexpenditureandintermediate
demandbyothersectors;
Grossfixedcapitalformationsignificantlyaffectsemploymentin
bothconstructionandbusinessservices

3.1.1 Main clients of SMEs in key economic sectors in the EU28

Section2.2.1highlightedthatforthevastmajorityofSMEs,findingcustomerswasthe
mostpressingproblemexperiencedintherecentyears.Thepresentsectionshedslight
ontheimportanceofmacroeconomicfactors,andinparticulardemand,inexplaining
thelargedifferencesidentifiedinSMEperformanceacrosscountries,sizeclasses,and
sectors.

Unfortunately,informationonthevarioustypesofclientsservedbySMEsdoesnot
existattheEU28widelevel.

However,theinputoutputtablesproducedbyEurostat,whichshowthedistributionof
salestootherindustriesandenduserssuchasconsumers,governmentandforeign
buyersforalargerangeofindustries,andprovideusefulinsightsonthelikely
customersofSMEs.

Forexample,thesummaryinputoutputtablebelow(Table8)showsthat,intheEU27:

Householdsbuy46%ofoutputgeneratedbytheretailandwholesalesector;
Thespendingoncapitalgoods(includinghousing)byhouseholdsandgovernment
accountsfor60%ofthesalesoftheconstructionsector;

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Incontrast,thevariousindustriesaretogetherthelargestcustomerofthe
manufacturingsector,accountingfor54%ofallsales;
Publicadministrationsandthebusinesssectorareotherimportantclientsofthe
retailandwholesalesector;
Salesofthe"othersectorarebroadlydistributedacrossthegroupofthegroupof
otherindustries,householdsandgovernment.

Table 8: Key demand drivers of sectors of key importance to SMEs - EU27, 2009

Trade

Businessservices

Accommodation/food
services

Others

Finalconsumption
expenditureby
households

Finalconsumption
expenditureby
government

Grossfixedcapital
formation

Exports

Finaldemand

Construction

Intermediatedemand(industries)

Manufacturing

Manufacturing
Construction
Trade
BusinessS.
Accommodation/foodS.
Others

31%
2%
17%
20%
2%
9%

6%
19%
4%
4%
1%
2%

3%
1%
5%
10%
2%
5%

1%
1%
1%
16%
1%
3%

2%
0.4%
2%
1%
1%
1%

11%
13%
11%
30%
9%
24%

22%
3%
46%
2%
82%
27%

1%
0.2%
2%
3%
0.4%
23%

9%
60%
5%
7%
0%
2%

16%
0.3%
7%
7%
2%
3%

Note:ThenameBusinessS.isusedasabbreviationoftheNACEcategoryMProfessional/scientific/technicalactivities,and
TradereferstoGWholesale/retailtrade/repairofmotorvehicles/motorcycles.CategoriesinOthersrefertosectionsof
NACERev.2classifications:B,D,E,H,J,L,andN.Thepercentagesshowhoweachindustryintherowsallocatesoutputacross
theusersinthecolumns,whichareintermediateusers(i.e.otherfirms)andfinaldemand(i.e.households,governments,etc).
2009isthelastyearforwhichdataarecurrentlyavailable
Source: Eurostat Input Output tables (Domestic use, EU27)

3.1.2 Impact of macroeconomic performance on SME


performance
ThebriefoverviewofthemainfeaturesoftheEU27inputoutputtablehighlightedthefact
thatthekeymacroeconomicdriversofdemandforSMEgoodsandserviceswillbe
differentfordifferentindustries.Thisisparticularlyimportantinunderstandingwhycertain
sectorshavesufferedserioussetbackssince2008(suchasconstruction)andwhatchannels
couldbestimulatedinordertoimprovetheeconomicperformanceofSMEs,thushelping
themreachfullrecovery.

Thekeynoteworthymacroeconomicdevelopmentssince2008are:
asharpdeclineingrosscapitalformation(housing,structures,plantandequipment)
inalargenumberofMemberStates;
averysmallincreaseordeclinesinconsumerspendingandgovernmentspendingin
manyMemberStates;
amuchstrongergrowthinexportsofgoodsandservicesthaninfinaldomestic
demandinmostMemberStates.

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Domestic and foreign demand developments contrast sharply in many EU Member


States.Domesticdemand(adjustedforinflation)ishigherin2013thanin2008inonlya
handful of countries (Germany, Luxembourg, Sweden, Poland, and to a lesser extent,
France, Belgium and Austria) (Figure 40). In contrast, exports of goods and services
(adjustedforinflation)arehigherin2013thanin2008inallbut6MemberStates.
Figure 40: Domestic demand and exports by Member State, % change 2008-2013 (constant prices)
10%

Domesticdemand atconstantprices

5%

PL

SE

LU

DE

AT

FR

BE

UK

MT

FI

EE

EU28

DK

CZ

NL

SK

RO

IT

BG

HU

PT

LT

ES

LV

SI

IE

HR

5%

CY

EL

0%

10%
15%
20%
25%
30%
35%

Exportsatconstantprices

40%
30%
20%
10%

20%
Source: Eurostat national accounts data

Theimportanceofdevelopmentsinvariouscomponentsoftotalaggregatedemandfor
SMEsisassessedstatisticallyusingannualdatafrom2009to2012.26Thekeyfindingsof
suchstatisticalanalysisareprovidedbelow.27

Key macroeconomic determinants of growth of SME value added:

HouseholddemandhasasignificantimpactontheperformanceofSMEsinthe
accommodationandothersectors;
Ontheotherhand,constructionismainlyaffectedbygrossfixedcapitalformation;
Inallsectors,intermediatedemandispositivelyaffectingSMEgrowthofvalue
added;
Governmentspendinghasasignificant(positive)impactonperformanceof
accommodationandbusinessservices.

LT

RO

EE

SK

BG

PL

LV

CZ

HU

ES

PT

MT

DE

IE

NL

BE

UK

FR

AT

SI

EU28

10%

SE

DK

IT

LU

CY

FI

HR

EL

0%

59

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Key macroeconomic determinants of growth of SME employment:


Foraccommodationandtradefirms,thefactorsthataffectemploymentgrowth
arehouseholdexpenditureandintermediatedemandbyothersectors;
Grossfixedcapitalformationbyhouseholdsandgovernmentssignificantlyaffects
bothconstructionandbusinessservices;
Thegrowthofvalueaddedinthetotaleconomy(theproxyforintermediatedemand)
hasasignificanteffectontheemploymentgrowthofallsectors.

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3.2 Internationalisation of SMEs


KEYFINDINGS
After2008,exportswerethekeygrowthdriverinmanyEUMember
States
InvolvementofSMEsinexportactivitiesstilllimitedinEU28:
o ShareofexportingSMEsbelow30%(fortradeingoods)
o Propensitytoexportgrowswithsizeofthefirm
o SMEs (particularly micro) are mostly located in sectors with
lowexportintensity
Butexportshavearippleeffectonthewholevaluechain:
o Forexample,anincreaseof10%inEUexportsincreasesvalue
added of the manufacturing sector by 2.7% and of the
constructionsectorby0.2%.

The previous section highlighted the fact that the impact of developments in the
variousaggregatedemandcomponentsvariesmarkedlyacrosstheeconomicsectorsin
which SMEs are particularly active and the first section of this chapter has brought to
the fore the importance of the growth in exports of goods and services to the overall
economicrecoveryandthe.

Therefore,thepresentsectionlooksattheimpactofforeigndemandfromadifferent
anglebyfocusingontheexportperformanceofSMEsandassessingtheinvolvementof
SMEs in exportoriented industries. The analysis below focuses on the following
questions:

WhatistherelevanceofinternationalisationforSMEs?
TowhatextentdoEuropeanSMEsexport?
AreEuropeanSMEslocatedinexportinclinedindustries?
Whataretheindirectbenefitsofexportsforthe(domestic)valuechain?

3.2.1 General discussion of the internationalisation of SMEs

Internationalisation has become increasingly important to the competitiveness of


enterprises of all sizes. In todays environment, SMEs that startwith a global strategy
can move quickly to take advantage of crossborder activities, which provide
opportunitiesnotonlyforrevenuegrowthbutalsofortheexchangeofknowledgeand
theenhancementofcapabilities,therebystrengtheningthelongtermcompetitiveness
of the firm. Despite the common understanding of the importance of
internationalisation,therearestillmanyinternalandexternalbarriersthatimpedethe
internationalisation of SMEs. Moreover there is a lack of data on the actual export
performanceofSMEsandthechallengesandissuestheyface.

A few key facts on the internalisation of the EU-28 SMEs

A2009studybytheCommissionanalysedallactivitiesthatputSMEsintoameaningful
businessrelationshipwithaforeignpartner:exports,imports,foreigndirectinvestment,
internationalsubcontractingandinternationaltechnicalcooperation.28

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Themostrelevantfindingwasthat25%ofEU27SMEsexportorhaveexportedatsome
point during the last 3 years. However, international activities are mostly geared
towardsothercountriesinsidetheinternalmarketandonlyabout13%ofEUSMEsare
activeinmarketsoutsidetheEU.TheresultsshowedthatexportorientedSMEsshow
higher growth of turnover and employment than SMEs catering for the domestic
market. In addition, export oriented SMEs are also more innovative. Hence, the study
concludedthatitisinthepublicinteresttosupportSMEstointernationalise.

Thestudyalsopresentedevidenceoftheneedtosupportgreaterinternationalisation:

International SMEs create more jobs: internationally active SMEs report an


employmentgrowthof7%versusonly1%forSMEswithoutanyinternationalactivities;

International SMEs are more innovative: 26% of internationally active SMEs


introducedproductsorservicesthatwerenewfortheirsectorintheircountry;forother
SMEsthisisonly8%;

Public support goes largely unnoticed: only 16% of SMEs are aware of public
support programmes for internationalisation and only a small number of SMEs use
publicsupport;

EuropeanSMEsaremoreinternationallyactivethanUSandJapaneseSMEs.Overall,
EuropeanfirmsaremoreactivethantheircounterpartsinJapanortheUS.Evenifonly
extraEUexportsareconsideredtheystillperformbetter;

MostoftenSMEsstartinternationalactivitiesbyimporting.SMEsthatbothimport
andexportstartedwithimporttwiceasoften(39%)thanwithexports(18%).

Asubsequentstudy,whichwasfocusedonopportunitiesfortheinternationalisationof
SMEs in 12 external markets, reviewed ways of better connecting European SMEs to
internationalmarkets,andspecificmeasurestofacilitatetheaccessofEuropeanSMEs
tothesemarkets.

According to the studys results, internationalised European SMEs derive only a small
shareoftheirturnoverfrombusinessactivitiesfromthirdmarkets(asshowninFigure
41).

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Figure 41: Distribution of total turnover among three market areas, average percentage turnover
of internationalised SMEs

Otherkeyfindingsincludethefollowing:

42%ofEUSMEsareengagedinsomeformofinternationalisation;

25%ofEUSMEsareexporting;

13%ofEUSMEsareexportingtothirdcountries;

ImportingisoftenthefirststageintheinternationalisationprocessforSMEs;

Only10%oftheturnoverofthe(42%)internationalisedSMEsisfromclientsinthird
countries.

Figure 42: For various modes of internationalisation, the percentage of SMEs in EU27 involved in
international business activities, having concrete plans to start or none at all

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Despite all the existing support mechanisms in place


bothatnationalandEUlevelsaimingtohelpSMEsin
their internationalisation, many barriers still exist
bothinternaltothefirmandexternal.Externalfactors
impeding the internationalisation of SMEs include
nationalandinternationaladministrativerulesaswell
asformalandinformaltradebarriers.Internalbarriers
forSMEstryingtointernationalisecanincludecultural
differences, lack of information or skills, insufficient
networks, language barriers and lack of access to
necessaryfinance.

The
Commission
study
on
internationalisationopportunitiesfor
SMEs in 2011 also found that SMEs face particular obstacles to
tapping the global market, not least when it comes to access to
market information, locating possible customers and finding the right partners, even
though international markets offer substantial opportunities for European companies.
They face more complex issues such as compliance with foreign laws, for example
mandatory rules of contract law, customs rules, technical regulations and standards,
managingtechnologytransferandprotectingintellectualorindustrialpropertyrights.In
dealingwithsuchchallengesSMEsareusuallylesswellequippedthanlargerenterprises
withinhouseexpertiseandfinancialorhumanresources.

Considering firms of all sizes, the metaanalysis of the academic literature shows a
generallypositiverelationshipbetweeninternationalisationandperformance.However,
forsmallscalecompanies,investigationofimpactofinternationalisationonperformance
delivers more ambiguous results. When considering firms of all sizes, size of the firm is
expected to be inversely related to the degree of internationalisation: to simplify, the
largerthefirmthehigheritsinvolvementininternationalactivities(trade,investment).

However,academicliteratureshowsanabsenceofcorrelationforSMEsbetweensizeof
thefirmsandexportintensityasmeasuredbytheratioofexportstosales.Thismeans
that the smallest firms are not necessarily those exporting the least, among the SMEs.
This is likely to be due to the existence of a niche strategy for some small and micro
enterprisesthatsubsequentlyexhibitveryhighexportlevels.

Moreover, recent studies29 have shown that internationalising sales improves survival
probabilitiesandiscorrelatedwithinnovationlevels.
IntermsofSMEexportorientation:

A2012DepartmentforBusiness,InnovationandSkillsSmallBusinessSurveynoted
thenumberofUKSMEswhoseexportisfalling,with19%ofsmallbusinesses
categorisedasexporters,downfrom24%beforethefinancialcrisis.Thisisbelowthe
EUaverageof25%.30

3.2.2 European SMEs overall propensity to export

While internationalisation can take many forms (exports, imports, foreign direct
investment, international subcontracting), export and import activities are the most
commonamongEUSMEs,andexportswillbethemainfocusofthissection.

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Export performance of goods-producing SMEs


In 2011, in the majority of the EU27, the share of SMEs exporting goods in the total
numberofSMEsinthegoods=producingindustrysectorwaswellbelow30%.

It is worth noting that the size of the country may explain to some extent higher
tendencyofSMEstoengageininternationalexportsofgoodsasthecountrieswiththe
highest shares of such SMEs are Luxembourg, Estonia, Ireland (for extraEU flows),
Denmark,Austria,andBelgium(Figure43).31
Figure 43: Share of exporting SMEs in the EU27, industry sectors

50%
40%
30%
20%
10%
0%
FR

CY

MT

SK

CZ

EL

IE

PL

FI

ES EU27 RO

BG

IntraEU27exports

SE

PT

IT

HU

DE

LT

UK

SI

DK

AT

LV

BE

ExtraEU27exports

Additional evidence on exporting SMEs


Inasetof5countries,whichtogetheraccountforalmost60%ofEUSMEs,thenumber
of exporting SME firms in recent years32 does not reach 12% (Table 9). The overall
percentages are very low and range from a low of 4% in Italy and Spain to 11% in
GermanyandtheUnitedKingdom.

Aswillbeseeninthenextsection,thislowexportpropensityismainlyduetothefact
that in all EU economies, micro firms account for the majority of enterprises and
generallyshowaverylowpropensitytoexport.

The tendency to export grows progressively with size, and large enterprises are those
showingthehighestexportpropensityinallfivecountries.

Table 9: Exporting SMEs in 5 largest EU28 countries by number of SMEs (absolute levels and in 5 of
total)

Italy
(2011)

09
1049

France
(2013)

Spain
(2010)

Germany
(2010)

Numberofexportingfirmsbysizeclass
122,851
26,519
255,500
90,811
55,118

(020p)

64,239

66,200

United
Kingdom
(2011)
153,300
34,400

25,421
14,267
23,500
10,600
(20to250p)
Large
1,936
3,403
2,702
8,400
2,900
Total
190,851
119,635
107,728
353,600
201,200
Percentageofexportingfirmsovertotalnumberoffirmsbysizeclass

50249

10,739

LU

Note:industryreferstoNACEsectionsB,C,D,E.
Source: Eurostat- COMEXT statistics on international trade in goods

EE

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65

09
1049
50249
Large
Total

3%
29%
49%
54%
4%

4%
(0to250p)
70%
5%

1%
48%
85%
93%
4%

9%
47%
68%
80%
11%

9%
20%
34%
41%
11%

Source: Italy: elaboration of SME database and Commercio Estero e attivita internazionali delle
imprese 2013; France: elaboration of SME database and Le chiffre du commerce exterieur- a2012;
Spain:elaboration of SME database and Informe Sobre la Pyme 2012, Direccin General de Industria y de
la Pequea y Mediana Empresa; Germany: elaboration of SME database and
Auenwirtschaftsaktivitten von kleinen und mittleren Unternehmen im Lichte der amtlichen
Statistik; United Kingdom: Annual Business Survey

3.2.3 Key facts about the involvement of SMEs in exportoriented industries

InordertogainadeeperunderstandingoftheinvolvementofSMEsinexportsofgoods
and services and overcome the problem of a lack of comprehensive data on export
participationbySMEs,theanalysisbelowfocusesontheexportintensityofthevarious
economicsectorsinwhichSMEsareactive.

To that end, the SME data assembled for the purpose of the 2014 SME Review 33 is
combined with information from Eurostats Input Output tables.34 The latter provide
detailedinformationonasectorsexportsales.35.

ThepresentanalysisfocusesontheEU27astheinputoutputdatafromEurostatdonot
yetcoverCroatia.

Theexportintensityindicatorofaparticularindustryisdefinedastheratioofexports
overtotalsalesforeachindustry.Exportintensityisdefinedasrangingfromverylow
(theshareofexportsovertotalsalesofanindustryislessthan5%)tolow(5%toless
than10%),medium(10%tolessthan20%),high(20%tolessthan40%)andvery
high(morethan40%).

Each industryisthenallocatedtooneoftheseexportclassesand,for each enterprise


class (micro, small, medium, large), the share of a particular export class in the total
valueaddedandemploymentoftheenterpriseclassiscomputed.

The figure below clearly shows that exportparticipation (in terms of number of
enterprises)inexportorientedindustriesincreaseswiththeenterprisesize.

The vertical axis on the figure below (Figure 44) measures export intensity while the
horizontal axis measures the share of each enterprise size class in the total enterprise
population.36

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66

Overall, 70% of micro SMEs and 60% of small SMEs are active in
industries with very low or low export intensity and only 15% of
micro SMEs and 24% of small SMEs are active in industries
characterisedbyhighorveryhighexportintensity.

Incontrast,35%ofmediumSMEsand39%oflargeenterprisesare
activeinindustrieswithhighorveryhighexportintensityandonly
47% of medium SMEs and 43.5% of large enterprises are active in
industrieswithveryloworlowexportintensity.

Sharesofenterprisesbysectorexportintesity

Figure 44: Distribution of the population of SMEs and large enterprises


across different export-intensity classes EU27, 2009

100%

mediumenterprises

60%
40%
20%

microenterprises

smallenterprises

largeenterprises

80%

0%
0%

10%

20%

30%

verylowexportintensity

40%
50%
60%
Shareovertotalnumberofenterprisesbysize

low

medium

70%

80%

high

90%

veryhighexportintensity

Source: Elaboration of SME database and Eurostat Input Output tables EU27

Asimilarpictureemergesfromananalysisofthedistributionbyvalueaddedandexport
intensitysizeclass.

ThevalueaddedgeneratedbymicroandsmallSMEsisconcentratedinindustrieswitha
very low export focus. Their share in very low and low exportoriented industries
accountsfor70%and55%oftheirrespectivetotalvalueadded.

In contrast, 40% and 41% respectively of the total value added of medium and large
firmsisgeneratedinhighandveryhighexportintensivesectors.

Sharesofvalueaddedbyexport
intesity

Figure 45: Distribution of the value added generated by SMEs and large enterprises across
different export-intensity classes EU27, 2009

100%
80%
60%
40%
20%

smallenterprises

microenterprises

mediumenterprises

largeenterprises

0%
0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Shareovertotaleconomyvalueaddedbysize

verylowexportintensity

low

medium

high

veryhighexportintensity

Source: Elaboration of SME database and Eurostat Input Output tables EU27

The analysis clearly shows that, while exports are important for a group of SMEs, the
vastmajorityofSMEs,especiallymicroandsmallSMEs,operateinindustrieswithvery

100%

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67

limited export focus. This is true in the majority of Member States SMEs typically
operate in industries that are characterised by a very low or low tendency to export
(Figure46).AmoredetailedanalysiscanbefoundinAnnexXI.

Countries where more than 60% of SMEs are primarily domesticdemand facing are:
Greece,Italy,France,Cyprus,andFinland.

AttheotherendofthespectrumaretradeorientedcountriessuchasEstonia,Austria,
Hungary,andLuxembourg,wheretheshareofSMEenterprisesinsectorsoflowexport
intensityisrelativelylow.

Figure 46: Shares of the number of SMEs in low export intensity sectors in EU27 Member
States ,2009

90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
EE

AT

HU

LU

SI

BG

RO

NL

BE

DE

SE

LV

UK

PL

verylowexportintensity

ES

SK

IE

LT

CZ

DK

PT

MT

CY

FI

IT

lowexpintensity

Source: Elaboration of SME database and Eurostat Input Output tables EU27

In terms of value added, in most of the Member States, SMEs produce between 25%
and45%oftheirvalueaddedinsectorsthatarenotexportintensive(Figure47).

Conversely,inthecaseofafewcountries,suchasEstonia,Hungary,Luxembourg,value
added creation is densely concentrated in sectors that have high or very high export
intensity,whereaslowexportintensityindustriesonlyaccountforupto30%ofSMEs.
AmoredetailedanalysiscanbefoundinAnnexXI.

FR

EL

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Figure 47: Shares of the value added generated by SMEs in low export intensity sectors in EU27
Member States, 2009
80%
70%
60%
50%
40%
30%
20%
10%
0%
EE

HU

LU

BE

SI

AT

NL

IE

BG

DE

LT

LV

DK

PT

verylowexportintensity

CZ

MT

ES

UK

PL

SK

RO

SE

IT

FI

CY

lowexpintensity

Source: Elaboration of SME database and Eurostat Input Output tables EU27

3.2.4 Impact of increase in foreign demand on economic


sectors of key importance for SMEs

The analysis above shows that the vast majority of SMEs are not operating in
industrieswithastrongexportfocus.

However, this does not mean that such SMEs would not benefit from a boost in
exports, as any increase in foreign demand will create a ripple effect in the domestic
economy.

This ripple effect arises when industries benefiting from an increase in foreign
demand increase their employment and purchases of goods and services from
suppliers to meet the additional foreign demand, and in turn this increase in
employment and production at suppliers will further boost employment and
productioninotherindustries.

Themultiplier37measurestheoverallimpactonallindustriesofanincreaseindemand
which in the first instance is directed towards a particular industry. The table below
shows the impact on the key SME sectors of an increase of 10% in exports of all
industriesintheeconomy.

The first column in the Table 10 shows the share of exports in a particular economic
sector.Forexample,manufacturingexports16.4%ofitsvalueaddedwhileconstruction
exportsonly0.3%ofitsvalueadded.

Thesecondcolumninthetableshows,foreacheconomicsector,theincreaseinvalue
added(inpercentageterms)thatresultsdirectlyandindirectlyfromanincreaseof10%
inalltheexportsoftheEUeconomy,andthethirdandfourthcolumnsshowthedirect
andindirecteffectseparately..

For example, an increase of 10% in EU exports directly increases value added of the
manufacturingsectorby1.6%andindirectlyby1.1%.

FR

EL

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69

The indirect effect of increased exports benefits not only exportoriented firms in
manufacturingbutalsofirmswhich,whilenotexportingthemselves,supplyfirmswhich
do export or sell to users who benefit from the increase in aggregate income arising
from higher exports. In other words, export stimulation benefits not only export
orientedfirmsbutalsoindirectlymoredomesticdemandfacingfirms.

Whileanincreaseinexportshasnodirectimpactontheconstructionsectorasthelatter
is almost entirely domestic demand facing, the indirect effect of higher exports
increasesslightlytheconstructionsectorsvalueadded(by0.2%).

Overall,thesizeoftheEUeconomy,measuredbyvalueadded,increasesby1.4%when
totalEUexportsincreaseby10%.

Finally,thefifthcolumnshowsthedistributionacrosssectorsoftheEUwideincreasein
value added. For example, manufacturing accounts for 46% of the total increase in
valueaddedwhileconstructionaccountsfor1.3%ofthetotalincrease.

Table 10: Direct and indirect impact in key SME sectors of an increase in foreign demand, EU27,
2009

16.4%
0.3%

Increaseinoutput
ofsectorasa%of
sector's
production
(directand
indirect)
2.7%
0.2%

6.9%
6.8%

1.4%
2.1%

0.7%
0.7%

0.7%
1.4%

9.6%
8.7%

1.5%
3.5%
6.8%

0.4%
0.9%
1.4%

0.2%
0.3%
0.7%

0.2%
0.6%
0.7%

0.7%
34.5%
100%

Shareof
exportsin
sector's
total
output
Manufacturing
Construction
Retailandwholesale
trade
BusinessServices
Accommodation/food
Services
Othersectors
Total

Direct
effect

Indirect
effect

Increasein
outputofsector
asa%oftotal
increasein
output

1.6%
0.0%

1.1%
0.2%

46.0%
1.3%

Source: Elaboration on Eurostat Input Output tables, EU27

3.2.5 Implications of analysis of internationalisation of SMEs


The clear policy implication of the analysis is that, while any measures to stimulate
exports by SMEs may benefit only a limited number of SMEs, their increase in export
activitywilleventuallybenefitallSMEs,includingthoseactiveinveryloworlowexport
intensityindustries.

However,theoverallgainsaremorelimitedfortheSMEsactiveinlowexportindustries
thanfortheSMEsactiveinindustrieswithahigherpropensitytoexport.

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3.3 High tech manufacturing and


knowledge intensive service SMEs:
drivers of innovation and growth?

KEYFINDINGS

HightechandknowledgeintensiveSMEsareimportantcontributorstoa

countrysinnovationcapabilitiesanditsfuturegrowthpotential
IntheEU,only2%ofmanufacturingSMEsareinvolvedinhightech

About30%ofSMEsintheservicesindustryareoperatinginknowledge

intensiveactivities,andtheygeneratemorethanaoftotalvalueadded

producedbySMEsinservicessectors

KeyfactorsforthedevelopmentofHighTechmanufacturingand
KnowledgeIntensiveservices:
o investmentintherenewalofoperatingcapital,inparticular:gross
fixedcapitalformationandinvestmentintechnologyintensivecapital
(informationandcommunicationtechnologies),
o appropriatelabourmarketpolicies
o publicinvestmentsineducationandtraining

3.3.1 S
MEs in high tech manufacturing and knowledge intensive
services in 2013 in EU28

High tech and knowledge intensive SMEs are important contributors to a countrys
innovationcapabilitiesanditsfuturegrowthpotential.

Overall,thehightechintensityoftheEU28manufacturingindustryisrelativelylow,and
thisistrueforbothSMEsandlargefirms:

IntheEU28,in2013,only2%ofmanufacturingSMEswereinvolvedinhightech
industries,and,inthecase,oflargefirmstheequivalentfigureis7%;
However,thecontributionofhightechenterprisestovalueaddedgenerationis
about twice as important. High tech SMEs generate roughly 6% of
manufacturing value added while large high tech firms account for 13% of
manufacturingvalueadded;
SMEsinhightechmanufacturingsectorsaccountfor4%ofSMEmanufacturing
employment.

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Figure 48: Share (%) of high-tech on total manufacturing, SMEs and large enterprises, EU28, 2013
100%
80%
60%
40%
20%
0%

Enterprises ValueAddedEmployment Enterprises ValueAddedEmployment


SMEs

Large

HighTech

MediumandLowTech

Source : Eurostat, National Statistical Offices and DIW Econ

InmostEU28MemberStates,hightechmanufacturingSMEsaccountforbetweenless
than1%and10%ofmanufacturingvalueadded(annexXVIofthestatisticalbackground
document).
However,incountrieslikeIrelandandMalta,hightechSMEsplayaparticularly
importantrole:
inIrelandmorethan30%ofmanufacturingvalueaddedisgeneratedbyhightech
manufacturingSMEs;and,
inMaltathecomparablefigureis18%.
Figure 49: Share (%) of high tech manufacturing over total manufacturing, EU 28 SMEs, 2013

IE

MT

CY

LU

10%

SK
PT

UK

PL

FI
5%

SI

DE

EE

DK
0%

HU

ES
HR

NL
CZ

LV
RO

SE
LT

FR
IT
Enterprises

BG

AT

ValueAdded

Source : Eurostat, National Statistical Offices and DIW Econ

BE
Employment

About30%ofSMEsintheservicesindustryareoperatinginknowledgeintensiveactivities,
andtheygeneratemorethanaoftotalvalueaddedproducedbySMEsinservices
sectors.

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Figure 50: Share (%) of knowledge intensive services on total services, SMEs and large enterprises,
EU28, 2013
100%
80%
60%
40%
20%
0%
Enterprises ValueAddedEmployment Enterprises ValueAddedEmployment
SMEs

Large

KnowledgeIntensiveServices

LessKnowledgeIntensiveServices

Source : Eurostat, National Statistical Offices and DIW Econ

SMEsinknowledgeintensiveservicessectorsareparticularlyprevalentintheUnited
KingdomandtheNetherlands:
atleast40%ofservicesSMEsareactiveinknowledgeintensiveservicessectors
intheUnitedKingdomandtheNetherlands;and,
in the United Kingdom, knowledge intensive services SMEs generate almost
halfofthevalueaddedgeneratedintheservicesindustry.

Figure 51: Share (%) of knowledge intensive services over total services, EU 28 SMEs, 2013

UK

SI
LU

LT
50%

LV

ES
EE

40%

FR

PT

30%

IE

SK

20%
10%

NL

IT

0%

HU

PL

SE

CY
BG

DE
FI

AT
MT

DK
HR

Enterprises

CZ

BE
ValueAdded

Source : Eurostat, National Statistical Offices and DIW Econ

RO
Employment

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3.3.2 Performance of EU28 SMEs high tech manufacturing and


knowledge intensive services from 2009 to 2012
Overall,overtheperiod2009201238,theknowledgeintensiveSMEsarenotperforming
anybetterthanthenonknowledgeintensiveSMEsinthenonfinancialbusinesssector
in terms of real value added growth even if the degree of variation (indicated by the
standard deviation statistics) is particularly higher in the case of knowledge intensive
servicesSMEs.

On the other hand, high tech manufacturing SMEs have recorded an increase in real
valueaddedof12%between2009and2012whichcontrastswith7.8%increaseinvalue
addedbytheprivate,nonfinancial,businesssectorsandthe2%increaseinrealvalue
addedoftheknowledgeintensiveserviceSMEs.

Intermsofemployment,thehightechmanufacturingSMEsperformedratherpoorly,
withanoveralldeclineof6%whilstemploymentintheprivate,nonfinancialbusiness
sectors decline only by less than 1%. Noteworthy is the trend of employment in the
knowledgeintensiveserviceSMEs,which,between2009and2012grewbyover7%.
Table 11: Descriptive statistics on EU28 high tech and knowledge intensive industries

Mean
cumulative
EU28
growth rate
cumulative
of
EU28
growthrate
Member
(20092012)
States
(20092012)

SMEsinnon
financialbusiness
sector
Valueadded(*)

Employment(*)

Highteach
manufacturing
SMEs
ValueAdded(*)

Employment(*)

Knowledge
intensiveservices
SMEs
ValueAdded(*;**)

Employment(*)

Standard
deviation of
cumulative
growth rate
across
EU28
Member
States

Minimum
cumulative
growthrate
shown
by
Member
States

Maximum
cumulative
growth rate
shown
by
Member
States

7.78%

0.75%

5.13%

1.46%

0.0265

0.0129

33.23%

17.60%
(Greece)

31.70%

9.05%
(Germany)

12.04%

6.04%

5.25%

3.07%

0.1984

0.1363

37.97%
(Croatia)
22.49%
(Greece)

42.10%
(Latvia)
26.95%
(Denmark)

2.03%

7.17%

0.80%

5.24%

0.1814

0.1815

45.07%
(Luxembourg)
27.30%
(Greece)

42.90%
(UK)
67.70%
(Estonia)

Note:ValueaddedisadjustedforinflationbydeflatingbytheGDPdeflator(baseyear2009)*ValuesforSlovakiain2009
arenotincluded**Cyprusnotincludedintheanalysis
Source : elaboration on Eurostat, National Statistical Offices and DIW Econ

In 2009 and 2010, in terms of value added (at constant prices), the hightech sector
outperformed the private, nonfinancial business sectors until 2011, and larger

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companies operating in the hightech manufacturing sector have performed relatively


betterthantheSMEsinthesamesector.

Figure 52: HighTechmanufacturing Annual growth rate (in %) in value added in EU28 (2012-2008)

Note:TotalBN=thenonfinancialbusinesssector.
Source : Eurostat, National Statistical Offices and DIW Econ

Knowledgeintensive services SMEs and larger firms experienced a much sharper


decline in 2009 in value added (at constant prices) than nonknowledge services
businesses.

However, subsequently, the knowledgeintensive firms (small and large) rebounded


muchmoresharplyin2010andtoalesserextentin2010thanthenonfinancialbusiness
sectorasawhole,andin2012,thegrowthperformancewasbroadlythesame.
Figure 53: Knowledge Intensive Services Annual growth rate (in %) in value added in EU28 (20122008)

Note:TotalBN=thenonfinancialbusinesssector.
Source : Eurostat, National Statistical Offices and DIW Econ

3.3.3 Statistical analysis

A simple econometric model was developed to identify the main drivers of growth in
value added and employment of EU28 SMEs in the hightech manufacturing and
knowledgeintensiveservicessectors.

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The variables to be explained by the econometric analysis are the cumulative growth
from 2009 to 2011 in EU28 SME value added and employment in the in thehightech
manufacturingandknowledgeintensiveservicessectors.Keyfindingsofthestatistical
analysis are reported below and the detailed empirical results are presented in the
standalone working paper High tech manufacturing and knowledge intensive service
SMEs in Europe: Drivers of innovation and growth? Working paper for the Annual
ReportofEuropeanSMEs2013/2014.

High tech manufacturing

The main factors which are found to explain the cross country variation in the
cumulativegrowthinvalueaddedgeneratedovertheperiod20092012bySMEsinthe
hightechmanufacturingsectorintheEU28are:
thecostofcontinualvocationaltrainingcoursesasapercentageoftotallabour
costin2010;
the share of high tech manufacturing SME value added over total
manufacturingvalueadded;
businessexpendituresinR&Dacrossallsectorsoftheeconomy;
the share of research and development personnel in the business sector as a
percentageofthelabourforce.39

Overtheperiodofinterest,growthinEU28hightechmanufacturingSMEvalueadded
islinkedtoeconomiesofscaleinthehightechmanufacturingsector.

The growth of the relative weight of EU28 high tech manufacturing SME value added
over the total manufacturing is positively associated with the growth of High Tech
manufacturing SMEs value added and statistically significant. This indicates that the
sectorissubjecttoeconomiesofagglomeration.

Further evidence is provided by a review of the evolution of the number of hightech


manufacturing in relation to the number of other manufacturing enterprises in the
economy. These data show that numbers of high tech manufacturing firms tended to
grow even though the number of other manufacturing firms is decreasing in those
countries where the ratio high tech manufacturing/total manufacturing is relatively
higher.

Science and Technology factors such as increase in investments in business R&D and
R&Dpersonnelarealsopositivelylinkedtoincreaseinvalueaddedgeneratedbyhigh
techmanufacturingSMEs.Bothvariablesarestatisticallysignificant.

Knowledge-intensive services

Overtheperiod20092011,thestatisticalanalysisreportedintheWorkingPapershows
thatthedriversofthegrowthinthevalueaddedoftheknowledgeintensiveindustries
intheEU28are
thegrowthofgrossfixedcapitalformation;
the value added of mediumhigh tech firms as a share of total manufacturing
valueadded;
labourmarketpoliciesasrepresentedbyanoverallindex;
totalannualexpenditureonpublicandprivateeducationalinstitutionsperpupil
inprimary,secondaryandtertiaryeducation;and

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76

shareofhumanresourcesinScience&Technologyaspercentageoftheactive
population.

Investments in human resources and physical investments stimulate value added


performance of SMEs in knowledgeintensive services. Both variables are statistically
significant.

Labourmarketpolicies(includingpublicexpenditureonlabourpoliciessuchastraining,
labour market services and subsidies) have also a beneficial effect on value added
generatedbySMEsinknowledgeintensiveservices.

Moreover,publicexpenditureoneducationisalsopositivelyassociatedwithgrowthof
valueaddedbySMEsinknowledgeintensiveservices.

3.3.4 Implications of statistical findings

The performance of SMEs in EU28 hightech manufacturing SMEs depends on a


multiplicity of factors, all substantially related to the economys effort in Science,
TechnologyandInnovation.

In particular, real value added growth by SMEs in EU28 high tech manufacturing is
linkedtogrowthinR&Dinvestments,bothnationwideadsectorspecific,thegrowing
availabilityofR&Dpersonnelandtheincreaseoftechnologicalinvestmentsespeciallyin
informationandcommunicationtechnologies.

Moreover, the increased attractiveness of the sector to young and skilled workers is a
furtherelementofsuperiorperformance.

The key conclusions emerging from the study of EU28 knowledge intensive services
SMEsdiffersfromthatofthehightechmanufacturingSMEsinmanyaspects.Factors
suchashigheducationalattainmentsbytheworkforceareessentialforathrivingSME
sectorintheknowledgeintensiveservices.

Overall, the policy implications which emerge from the literature review and the
statisticalanalysispointingtowardsthreemain(complementary)directions:

Investmentintherenewalofoperatingcapital,inparticular:grossfixedcapital
formationandinvestmentintechnologyintensivecapital(informationand
communicationtechnologies).
Labourmarketpolicies
Publicinvestmentsineducationandtraining

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4 CONCLUSIONS

4.1 Key Findings


Afterpromisingsignslastyear,therearesomereasonsforcautiousoptimismbutthe
inescapableconclusionisthatconditionsremainextremelytoughforSMEsandfurther
support is needed to yield sustainable SME growth. While exports provide a much
needed stimulus to many EU economies, most SMEs do not benefit in anymajor way
directlyfromthegrowthinforeigndemandforgoodsandservicesastheyareactivein
industrieswhicharemainlycateringtotheneedsofdomesticdemand.

AcrosstheEU28lastyear,some21.6millionSMEsinthenonfinancialbusinesssector
employed 88.8 million people and generated 3,666 trillion in value added. Expressed
anotherway,99outofevery100businessesinthissectorareSMEs,asare2inevery3
employeesand58centsineveryeuroofvalueadded.ThisillustrateshowcriticalSMEs
are.

ThefinancialcrisisandtheeconomicrecessionhavehitSMEshardintheEU28andthe
economic conditions remain difficult. Overall, in the EU28 in 2013 the value added
generated by SMEs was just 1% above 2008 levels and employment was still 2.6%
below levels registered in 2008. This overall situation masks a great deal of
heterogeneity as the performance of SMEs varies considerably among size classes,
sectorsandMemberStates:

MicroSMEssufferedthebiggestdeclineintotalnumberandnumberof
employeesbetween2008and2013intheEU28
Intheconstructionandmanufacturingsectorsvalueaddedin2013isstillbelow
2008levels,whileintheotherkeySMEsectors(i.e.professional,scientificand
technicalactivities","accommodationandfood"and"wholesaleandretail
trade,repairofmotorvehiclesandmotorcycles")EU28valueaddedisnow
aboveits2008level
In2013,theSMEshaveexceededtheir2008(precrisis)performanceonlyina
limitednumberofMemberStates.

ThetripledivideoftheSMEperformanceamongSMEsizeclass,sectorsofactivityand
Member States suggests that a multipronged policy approach is required to support
SMEsthroughoutEuropeandsupportasustainablerecoveryof theSMEsectorinthe
yearahead.

DepresseddemandforthegoodsandservicesSMEproduceisthekeyfactorexplaining
why SME performance has not yet recovered to prerecession levels in a number of
Member States. SMEs depend critically on improvements in overall macroeconomic
conditions in these countries. Other key challenges influencing the performance of
SMEsarefoundtobethedifficultiesinaccessingtofinance,findingcustomers,doing
business,highcostsofproductionandlabouraswellasthelackofskilledstaff.

Looking ahead, the outlook is moderately positive with the promise of some
strengtheningoftherecoveryonthehorizon.Totalvalueaddedisexpectedtoriseby
2.8%in2014and3.4%in2015.Thiswouldgalvaniseavirtuouscycle,withemployment
levelsandthenumberofSMEsalsoreturningtopositivegrowth.

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4.2 Conclusions and Policy recommendations



Theresultsofthisreport clearly highlighttheneedforSMEsizeclassesandsectoral
differentiationinthedesignandimplementationofnewpoliciesandregulations.Also,
microSMEsandsoloentrepreneursshouldbetreateddifferently.IntheMemberStates
where the SME sector has already surpassed its prerecession levels, additional micro
SMEtargetedpolicies(e.g.fiscalexemptions,lessregulatoryrequirements,etc.)could
potentiallycontributesignificantlytoensuringthesustainabilityofthesectorspartial,
yetfragilerecovery.

Inaddition,itisimportanttotakeintoaccountwhendevelopingSMEpoliciesthatthe
majority of SMEs operate in sectors characterised by low export intensity and only a
relativelysmallproportionofSMEsoperateinhightechmanufacturingorknowledge
intensiveservices.

In order to ensure sustainable SME growth and


performance, the main challenges facing SMEs should
be addressed effectively through the development and
implementationofnewandinnovativepolicysolutions.
For instance, even though a great deal of policy focus
has been dedicated to improving access to finance for
SMEs over the last couple of years, the SBA
implementation assessment has shown that it is still a
main barrier for SMEs. Thus, it is necessary to launch new solutions, such as the
implementationofa"SecondaryStockExchangeMarketfortheSMEs",inadditionto
improving the efficiency of the existing financing schemes. This includes efforts to
increase the market uptake of EUbased funding schemes via the EIB Group at the
national level. This could be achieved through the increase in the number of financial
intermediariesatthenationallevel,thereductionoftheadministrativeburdenandthe
increase in the awareness of all existing support schemes among SMEs and financial
intermediaries. In addition, SMEs should be guided and supported through the entire
processofaccessingfinanceviadedicatedonestopshopswhereappropriatesolutions
according to their size, sector and purpose (e.g. for R&D, innovation, expansion,
modernisation of manufacturing, implementation of energy efficiency solutions,
internationalisation,digitisation,etc)arereadilyavailableandprovided.

WithregardstotheothermainchallengesfacingSMEs,suchasthedifficultyinfinding
customers, doing business, and the high costs of production and labour, this can not
onlybesolvedwithSBApolicies,butthroughthecombinationofhorizontalandvertical
policy formulations. For instance, the impact of technological advancements (e.g. ICT
tools, digitalisation, cloud computing, smart software, Key Enabling Technologies
nanotechnology, micro and nanoelectronics, biotechnology, photonics, advanced
materials and manufacturing technologies) on the innovativeness, productivity, and
profitabilityofSMEscannotbeneglectedwhendesigningnewpoliciesesepciallyata
time when we are going through a "Third Industrial Revolution" at a global scale.
Particularly, ICT and digitalisation have a catalytic impact on the productivity and
innovationofSMEsandoffermanyadvantagestoSMEs,aswellastopublicauthorities
forincreasingthequalityoftheservicesthattheyoffertobusinessesandcitizens.The
main application areas for governments include eGovernment, eprocurement, e
payments, esignatures, ecommerce, eInfrastructure for RD&I collaboration and
learning,andebusinesssupportservices,whichcorrespondsresepectivelytotheSBA

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principles of Responsive administration, Public Procurement, Entrepreneurship, Skills


andInnovation,Internationalisation,andSingleMarket.WithregardstoeGovernment,
asindicatedbytheSBAimplementationassessment,thereisaneedforincreasingthe
interactionandsharingbetweendifferentministriesandpublicauthorities,inorderto
increase the efficiency of eservices provided and to further reduce administrative
burden,particularlythroughthestrictimplementationofthesubmitonceprinciple.

In order to further boost the innovation capacity and capability of SMEs, which
influencestheirexportpotentialandcompetitiveness,usercentricopeninnovationas
well service innovation in combination with technological innovation concepts should
be supported by an appropriate policy and regulatory framework. This includes the
consideration of the major role played by clusters, living labs, design centres and
innovationclinics.

As additional support to innovation, Innovative Public Procurement solutions should


also be supported and implemented at all levels. This requires the training of public
procurersonthenewprocurementtoolsforeffectiveimplementation.Bythisway,the
involvement of SMEs in public procurement can also be increased, while innovation,
including ecoinnovation, can be further supported, and market absorption of newly
innovated goods and services can be accelerated via precommercial public
procurement.

ForcombatingtheskillsgapwithinSMEs,provisionmechanismsshouldbeputinplace
by national governments, where labour market needs should constantly be assessed
andthenreflectedintheeducationandtrainingsystems.Inaddition,raisingawareness
amongresearchersonexploitingtheirRD&Iresultsshouldbeapriorityfromtheonset
oftheRTDproject.DuringtheR&DandInnovationstages,strategicsupportshouldbe
provided for project risk analysis, exploitation strategy seminars, IP support, business
plandevelopmentsupportandtheorganisationofbrokerageeventsforSMEstomeet
withinvestorsandotherpotentialcollaboratorsforfundraisingandcommercialisation
ofRD&Ioutput.

While policies to support the internationalisation of SMEs and their growth in high
tech manufacturing or knowledgeintensive services are essential for the future
economicwellbeingofEurope,themanySMEsoperatingoutsidethesesectorsshould
not be forgotten. There is a need for the establishment of a dedicated umbrella
organisation to support SMEs on all aspects (e.g. financial and strategic support) of
internationalisation, in order to increase efficiency by preventing the current overlaps
andconfusionsbetweendifferentorganisationsofferingsupport.

Finally, the voice of SMEs should be taken into greater consideration through regular
andeffectiveconsultationswithSMEsandSMErepresentatives.Moreover,SMEtests
and regulatory impact assessments should also be applied not on ad hoc basis but
rathersystematicallyasanintegralpartofpolicymaking,whichiscurrentlystillnotthe
caseinmostofMemberStates.

80

ANNEXES

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81

I.

DISTRIBUTION AND IMPORTANCE


OF SMEs ACROSS EU28 MEMBER
STATES AND SECTORS IN 2013
Figure 54: SME enterprises 2013 (% of EU28 total)

LU
MT
CY
EE
LV
SI
LT
IE
HR
DK
FI
BG
AT
SK
RO
BE
HU
EL
SE
PT
NL
CZ
PL
UK
DE
ES
FR
IT

0.1%
0.1%
0.2%
0.3%
0.4%
0.5%
0.6%
0.7%
0.7%
1.0%
1.0%
1.4%
1.4%
1.8%
2.0%
2.4%
2.4%
3.0%
3.1%
3.6%
3.7%
4.7%
6.8%
8.0%
10.2%
10.4%
12.0%
17.2%
0%

Figure 55: SME value added


2013 (% of EU28 total)

5%
Micro

10%
Small

15%
Medium

MT
CY
LV
EE
LT
HR
SI
BG
LU
SK
HU
RO
EL
IE
PT
CZ
FI
DK
PL
AT
BE
SE
NL
ES
IT
UK
FR
DE

MT
LU
CY
EE
SI
LV
LT
HR
IE
FI
SK
DK
BG
HU
EL
BE
AT
SE
PT
CZ
RO
NL
PL
ES
FR
UK
IT
DE

0.1%
0.2%
0.2%
0.2%
0.2%
0.3%
0.3%
0.3%
0.4%
0.6%
0.7%
0.7%
0.9%
1.2%
1.2%
1.2%
1.4%
2.2%
2.6%
2.8%
3.1%
3.3%
5.2%
7.7%
12.5%
14.5%
14.6%
21.6%
0%

20%

Figure 56: SME employment


2013 (% of EU28 total)

5%
10%
15%
20%
Micro
Small
Medium

Source: Eurostat, National Statistical Offices and DIW Econ

25%

0.1%
0.2%
0.2%
0.4%
0.5%
0.5%
0.7%
0.8%
0.9%
1.0%
1.2%
1.2%
1.6%
1.9%
2.0%
2.0%
2.0%
2.3%
2.5%
2.7%
3.0%
4.0%
6.4%
8.6%
10.8%
10.8%
13.0%
18.8%
0%

5%
Micro

10%
Small

15%
Medium

Importance of SMEs to the economies of EU28 Member States



Within the EU, the bulk of SMEs and SME activity is concentrated in the largest Member
States, as shown in the figures above. However, those figures alone are not an adequate
measureofSMEsimportancetoaparticularMemberStateseconomy,astheydonottake
intoaccountthedifferingsizesofthevariouseconomies.

TheperspectiveontherelativeimportanceoftheSMEsectoraltersradicallyoncesuchan
adjustmentforthesizeofeachMemberStateeconomyismade.

IntermsofthenumberofSMEs:

o TogetherwithGreece,CentralEuropeancountriessuchasBulgaria,theCzech
Republic, Slovakia, and Hungary have the highest density of SMEs, with 10

20%

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82

SMEs or more per million of value added generated in the nonfinancial


businesssector(refertosectionIVofthestatisticalbackgrounddocument).

Conversely,Germany,Luxembourg,IrelandandtheUnitedKingdomhaveless
than 5 SMEs per Million of Value Added produced in their respective business
economies

IntermsofthevaluegeneratedbySMEs:

IncountriessuchasIreland,Romania,andPoland,SMEsgeneratelessthan50%
of total value added of the nonfinancial business sector (refer to statistical
backgrounddocument).

o Bycontrast,inCyprus,EstoniaandMalta,theSMEsgeneratemorethan70%of
thetotalvalueaddedofthenonfinancialbusinesssector.

IntermsofemploymentbySMEs:
o

Bulgaria, Romania, Lithuania and Latvia have the highest number of persons
employed by SMEs per million of value added generated in the nonfinancial
businesssector(refertostatisticalbackgrounddocument)

SMEs and large enterprises in the EU28 non-financial business sector


At the EU level, the relative importance of SMEs and large enterprises in the non
financialbusinesssectorispracticallyunchangedsince2008(Figure57).40

Overtheperiod20082013:
TheshareofthenumberofSMEsinthetotalnumberofenterprisesinthenonfinancial
businesssectorhasfluctuatedbetween99.79%and99.8%;
The share of value added in the nonfinancial business sector generated by SMEs has
fluctuatedbetween58.4%and58.1%;
The SME employment share in total employment in the nonfinancial business sector
rangedfrom66.9%to66.7%.
Figure 57: Number of enterprises, value added and employment in non-financial business sector
share of SMEs from 2008 to 2013 in EU28
2008
100%
90%

2013

80%

2009

70%
60%
50%

2012

2010

2011
Numberofenterprises

Valueadded

Employment

Note:SlovakiaisnotincludedinthisEUaggregateduetoabreakintheseries.

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83

Source: Eurostat, National Statistical Offices, DIW Econ

IncontrastwiththepictureobservedattheEU28level,ananalysisoftheevolutionof
the shares in total SME value added, employment and number of enterprises of the
different SME size classes shows much less stability (Annex II of the statistical
backgrounddocument).

Inparticular,microSMEsinBelgium,Bulgaria,CzechRepublic,Estonia,Spain,
Ireland, Lithuania, and Latvia, gained larger shares of the number of
enterprises,valueaddedproducedandtotalemploymentofSMEs.

In the case of Belgium, Estonia, Lithuania and Latvia, the increase in the
shareofmicroSMEswasmirroredbyadecreaseintheshareofbothsmall
andmediumfirms.

In the case of Bulgaria, the increase in share of micro SMEs was


accompaniedbyadecreaseintheshareofthenumberofsmallSMEsanda
decrease in the value added and employment shares of the mediumsized
SMEs.

In the Czech Republic, Ireland and Spain, the share gains of micro SMEs
were accompanied by a fall in the share in the number, value added and
employment of small SMEs and the employment share of mediumsized
SMEs.

Conversely,inGermany,Greece,PolandandRomania,thesharesofsmallSMEs
in total SME value added, employment and number of enterprises increased
whilegenerallytheshareofmicroSMEsfell;

Onlyinalimitednumberofcases(Austria,Croatia,Italy,forvalueadded,and
Cyprus, and the United Kingdom, for value added and employment) did the
mediumsizedSMEsincreasetheirshare;

In all other countries, the shares of the different SME size classes remained
broadlystable.

Additional information on the distribution of SMEs across sectors



InonlytwoMemberStates(UnitedKingdomandDenmark)dotheSMEsinthefivekey
sectorsaccountforthelessthan75% butmorethan60%oftheSMEpopulation,value
added and employment (Figure 1). In these countries, the administrative and support
activities, real estate (specifically for Denmark), and information and communication
services(particularlyfortheUnitedKingdom)accountforthemajorityoftheremaining
shares.

AcrossMemberStates,thefivekeysectorsaboveaccountformorethan65%ofallSME
enterprises, value added generated and SME employment in all Member States.41
Moreover, in six Member States Italy, Czech Republic, Poland, Slovakia, Slovenia and
Romania that figure increases to 70% (Figure 1). However, in sharp contrast to the
distribution of the number of SMEs across the three SME class sizes, the relative
contribution of each size class to the generation of value added in the five economic

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84

sectors is broadly identical across the three size classes (Figure 60, Annex V). But, the
distributionofemploymentacrossthethreeSMEsizeclassesdiffersmarkedlyfromthat
ofvalueadded.TheshareofmicroSMEemploymentisabout7percentagepointshigher
than the share of micro SME value added while the opposite holds for mediumsized
SMEs(Figure61,AnnexV).
Thevastmajorityoffirms(92.4%)ineachofthesefiveeconomicsectorsaremicroSMEs
(Figure59,AnnexV).
Theonlyexceptionsare:

ShareofSMEenterprisetheNetherlands,wherebusinessserviceshaveaslightly
highershare;

Share of SME value added the Czech Republic, Italy and Slovenia, where the
manufacturing SMEs produce a somewhat higher share of value added generated
bySMEsinthenonfinancialbusinesssector;

ShareofSMEemploymenttheCzechRepublic,EstoniaandSlovenia,wherethe
manufacturing SMEs employment share of total SME employment is slightly
higher.
Figure 58: Share of SME enterprises, value added and employment in non-financial business sector
in Member States in EU28 Member States in 2013
Number of SME enterprises
100%
9%

90%
80%

11%
18%

10%

7%

10% 14%

7%

7%
8% 19%

9%

28%

20%

13%

5%
14%

10%

8%
13%

5%
14% 14% 14%
4%

23% 24%

3%
12%

17%

20% 10%
21%

19%

10% 11% 12%


15%
11%

21%

19%

70%
60%

6%

20% 15% 24%

10%

12%

30%

9%

15%

16%

25%

9%
11%

17% 14% 16%

11%

4%

4%
14%
15%

12%
13%

15%

24%

14%
14%

19% 13%

7% 10%

13%
15%

12%

13%
17%

16% 19%

13%

8%

15%
16%
16% 16%

50%
40%

5%
14% 15%

18% 26% 30% 24% 33% 24% 16%


26% 24% 24% 20%
30% 22% 21% 34%
27% 36%

23%

19% 19% 27%

19% 20% 18% 14%

20%
10%
0%

27% 27% 29% 29% 30% 31% 32% 32% 33% 33% 34% 34% 34% 35% 35% 35% 35% 37% 41% 41% 41% 43% 44% 44% 44% 49% 50% 54%

SI SE UK FI CZ NL AT DK BE FR HR EE HU IE LU DE SK IT PT ES LV EL MT PL CY LT RO BG
Wholesale/retailtrade

BusinessS.

Construction

Value added

Manufacturing

Accommodation/FoodS.

ANNUAL REPORT ON EUROPEAN SMES 2013/2014:


A PARTIAL AND FRAGILE RECOVERY

85

100%

5%

6%

6%

5%

4%

5%

9%

5%

5%

8%

9%

4%

4%

8%

90%

5%

3%

6%

8% 10%

2%

3%
11% 12%

24% 23%

24%

30%
39%

38%

28%

24%

24%

28%

70%
13%

18% 19%

60%

15%
21%
13%

14%

20%

28%

15%

16% 15%

12%

13%
17%
16% 18%

16%

28%
38% 33% 27%

10%
18%

17%

20%

40%

17%

28%
34%
32%
29% 36%
32% 21%

10% 21%

17% 15%

20% 16%

17%

13%
13%

26%

11% 15%
14%

18%

11%

19%

30%

33%

13%

5%

33% 32%

11% 12%
15%

17% 12%
11%

20%

13% 15%

11%

3%

17%

9%
11%

3%
17%

9%

80%

50%

6%

13%

18%
13%

12%

13%

30%
20%
10%
28% 32% 24% 29% 29% 39% 30% 36% 37% 30% 33% 31% 33% 34% 43% 33% 45% 28% 35% 33% 40% 43% 36% 36% 36% 44% 34% 38%

0%
SI SE UK FI CZ NL AT DK BE FR HR EE HU IE LU DE SK IT PT ES LV EL MT PL CY LT RO BG
Wholesale/retailtrade

BusinessS.

Construction

Manufacturing

Accommodation/FoodS.

Employment
100%
90%

8% 10%

80%
70%

22%
34%

28%
21%

19%

15%

17%

40%
30%

8%

12%

18%

7% 10%
11% 14% 8%

12% 14%

35%

11%
23%

34%

18% 19%
17% 19%

16% 20%
15%

14% 12%

15% 17%
13% 15%

14%

15% 17%
28%

31% 27% 20%

13% 17%
14%

16%

6%

31%

16%
20%

6%

11%

20%
28%

35%

16%

31%

9%

9%

17% 13% 11%

11% 12%

4%

7%

28%
14%

20%

16%

14%

26%

15%

12% 13%
17%

31%

28%

29%

22%

22%

6%

22%
25% 21%

18%

9%

14%

60%
50%

8%
16%

15%

12%

15%
11%

14% 18%

13% 11%

12%

11% 16% 14% 17%


15%
13% 10%
13% 10%

11%
8%

8%

20%
10%
0%

25% 32% 29% 28% 28% 38% 29% 37% 34% 32% 30% 29% 33% 40% 31% 34% 35% 31% 34% 37% 36% 47% 39% 38% 36% 39% 35% 39%

SI SE UK FI CZ NL AT DK BE FR HR EE HU IE LU DE SK IT PT ES LV EL MT PL CY LT RO BG
Wholesale/retailtrade

BusinessS.

Construction

Manufacturing

Accommodation/FoodS.

Note:Fivekeysectorsincludemanufacturing,construction,accommodationandfoodservices,professional,scientific
andtechnicalactivities,andwholesaleandretailtrade,repairofmotorvehiclesandmotorcycles.Dataareorderedby
therelativesharesofnumberofenterprisesinthewholesaleandretailtradeindustry.
Source: Eurostat, National Statistical Offices and DIW Econ

ANNUAL REPORT ON EUROPEAN SMES 2013/2014:


A PARTIAL AND FRAGILE RECOVERY

86

II.

DISTRIBUTION AND PERFORMANCE


OF SMEs BY SIZE CLASS, 2008-2013

Thetablebelowpresentsthedetailedannualgrowthratepatternofthefollowingthreeperformanceindicators
(numberofenterprises,valueaddedandemployment)forSMEsandlargeenterprisesintheEU28nonfinancial
businesssector.

Thedataclearlyshowthat,whilethepatternsofgrowthofSMEsandlargeenterprisesmaydivergeslightlyat
times,theevolutionssince2008ofthetwogroupsofenterprisesshownosystematicdifferences.
Table 12: Annual growth rate (in %) of number of enterprises, value added and employment by
SMEs and large enterprises in the EU28 non-financial business sector 2009 to 2013

Numberofenterprises

SMEs

Large

Total
Valueadded

SMEs

Large

Total
Employment

SMEs

Large

Total

2009

2010

2011

2012

2013

1.35%
3.46%
1.36%

2.11%
1.00%
2.11%

0.64%
2.38%
0.64%

0.35%
0.17%
0.35%

0.89%
0.34%
0.89%

9.62%
10.12%
9.83%

4.44%
9.32%
6.46%

4.20%
2.89%
3.64%

1.52%
1.62%
1.56%

1.11%
0.03%
0.63%

0.46%
3.57%
1.49%

0.96%
0.51%
0.48%

0.16%
1.45%
0.58%

0.85%
0.08%
0.60%

0.51%
0.08%
0.32%

Note:EUaggregateexcludesSlovakiabecauseofbreakindataseries
Source: Eurostat, national statistical office and DIW Econ


Table 13: Distribution of SMEs by size class in the EU28 non-financial business sector 2008 and
2013

Indicator

Enterprises

ValueAdded

Employment

Shareofeach
SMEclassin
SMEtotal
%Micro
%Small
%Medium
%Micro
%Small
%Medium
%Micro
%Small
%Medium

2008

2013

Change(2013
2008)

92.37%
6.56%
1.07%
37.28%
31.66%
31.06%
44.08%
30.25%
25.67%

92.51%
6.44%
1.05%
37.10%
31.32%
31.59%
43.38%
30.85%
25.77%

0.14%
0.11%
0.03%
0.18%
0.34%
0.53%
0.71%
0.60%
0.10%

Note:SlovakiaisnotincludedinthisEUaggregateduetoabreakintheseries.Figuresmaynotaddupduetorounding.
Source: National Statistical Offices, Eurostat, DIW econ

ANNUAL REPORT ON EUROPEAN SMES 2013/2014:


A PARTIAL AND FRAGILE RECOVERY

87

III.

PERFORMANCE OF SMEs IN 20122013 IN EU28 MEMBER STATES

Table14:Changes(inpercentage)inthenumberofSMEenterprises,thevalueaddedgeneratedbySMEs
andSMEemploymentinthenonfinancialbusinesssectorofEUMemberStates2013

Country

Enterprises(SMEs),
%change20122013

ValueAddedof
SMEs,%change
20122013

Employmentin
SMEs,%change
20122013

AT

BE

BG

CY

CZ

DE

DK

EE

EL

ES

FI

FR

HR

HU

IE

IT

LT

LU

LV

MT

NL

PL

PT

ANNUAL REPORT ON EUROPEAN SMES 2013/2014:


A PARTIAL AND FRAGILE RECOVERY

88

RO

SE

SI

SK

UK

Notes:

Growthratehigherthan0.05%andbelow3%

Growthrateabove3%

Growthratelower

than0.05%andabove3%
Growthbelow3%
Growthratebetween0.05%and0.05%
Source: Eurostat, National Statistical Offices, Eurostat, DIW econ

ANNUAL REPORT ON EUROPEAN SMES 2013/2014:


A PARTIAL AND FRAGILE RECOVERY

89

IV.

DEGREE OF RECOVERY OF THE


SMEs IN DIFFERENT MEMBER
STATES, 2008-2013 IN EU28
MEMBER STATES
Table 15: State of the recovery of the SME sector in different Member States

Country

Enterprises
(SMEs),ratio
2013/2008

AT

ValueAddedof
SMEs,ratio
2013/2008

Employmentin
SMEs,ratio
2013/2008

BE

BG

CY

CZ

DE

DK

EE

EL

ES

FI

FR

HR

HU

IE

IT

LT

LU

LV

MT

NL

PL

ANNUAL REPORT ON EUROPEAN SMES 2013/2014:


A PARTIAL AND FRAGILE RECOVERY

90

PT

RO

SE

SI

SK

UK

Notes:
Solidperformer(between2%andlessthan10%higherin2013thanin2008)
Strongperformer
(10%ormorehigherin2013thanin2008)
Weakperformer(between2%andlessthan10%lowerin2013thanin
2008)
Veryweakperformer(10%ormorelowerin2013thanin2008)
Unchanged(levelin2013
between98%and102%of2008level).InthecaseofSlovakia,theratiosarecalculatedusinglevelin2010overlevelin
2013.
Source: Eurostat, National Statistical Offices, Eurostat, DIW econ

ANNUAL REPORT ON EUROPEAN SMES 2013/2014:


A PARTIAL AND FRAGILE RECOVERY

91

V.

CONTRIBUTIONS TO EU28
PERFORMANCE, 2008-2013
Table 16: Size class contributions to EU28 SME performance (change 2008 to 2013)

NumberofSMEs,
Millions

Size
Micro

2008
19.59

Small
Medium
AllSMEs

2013
19.97

ValueaddedofSMEs,
TrillionEuros

EmploymentofSMEs,
Millions

contribution
108%

2008
1.35

2013
1.36

contribution
32%

2008
39.90

2013
38.63

contribution
65%

7%
2%
100%

1.15
1.13
3.62

1.15
1.16
3.67

0%
68%
100%

27.52
23.38
90.81

27.35
22.86
88.84

9%
27%
100%

1.40
1.38
0.23
0.22
21.22 21.57

Note:whentheoverallchangeinavariableisnegative,contributionpercentagesshouldbeconsideredwithanopposite
sign.
Source: Eurostat, National Statistical Offices, DIW Econ

Table 17: Sector contributions to EU28 SME performance (change 2008 to 2013)

NumberofSMEs,
Millions

ValueaddedofSMEs,
TrillionEuros

EmploymentofSMEs,
Millions

Sector
Manufacturing

2008
2.14

2013
2.08

contribution
15%

2008
0.78

2013
0.75

contribution
47%

2008
19.75

2013
17.87

contribution
96%

Construction
Trade
Accommodation
/foodS.

3.34
6.17

3.08
6.15

73%
4%

0.51
0.79

0.40
0.82

248%
63%

12.90
23.30

10.66
23.38

114%
4%

1.75

1.79

BusinessS.
Others
Total

3.45
3.84
4.37
4.62
21.22 21.57

10%

0.15

0.17

36%

7.99

8.49

26%

111%
71%
100%

0.45
0.95
3.62

0.48
1.05
3.67

73%
224%
100%

8.92
17.95
90.81

9.45
18.99
88.84

27%
53%
100%

Note:whentheoverallchangeinavariableisnegative,contributionpercentagesshouldbeconsideredwithanopposite
sign.
Source: Eurostat, National Statistical Offices, DIWecon

Table 18: Country contributions to EU28 SME performance (change 2008 to 2013)

NumberofSMEs,
Millions

ValueaddedofSMEs,
TrillionEuros

EmploymentofSMEs,
Millions

Country
AT

2008
0.29

2013
0.31

contribution
5%

2008
0.09

2013
0.10

contribution
23%

2008
1.73

2013
1.81

contribution
4%

BE
BG
CY
CZ
DE
DK
EE
EL
ES
FI
FR

0.45
0.27
0.05
0.90
1.87
0.21
0.05
0.86
2.63
0.22
2.33

0.52
0.30
0.04
1.01
2.20
0.21
0.06
0.65
2.25
0.22
2.60

21%
8%
2%
31%
94%
0%
3%
58%
106%
0%
76%

0.10
0.01
0.01
0.05
0.67
0.08
0.01
0.05
0.37
0.05
0.52

0.11
0.01
0.01
0.04
0.79
0.08
0.01
0.03
0.28
0.05
0.53

35%
1%
4%
12%
286%
3%
2%
47%
210%
3%
42%

1.71
1.53
0.20
2.47
14.01
1.16
0.34
2.40
10.28
0.91
8.29

1.77
1.41
0.17
2.42
16.72
1.05
0.32
1.76
7.63
0.89
9.59

3%
6%
2%
3%
138%
6%
1%
33%
135%
1%
66%

ANNUAL REPORT ON EUROPEAN SMES 2013/2014:


A PARTIAL AND FRAGILE RECOVERY

92

HR
HU
IE
IT
LT
LU
LV
MT
NL
PL
PT
RO
SE
SI
SK
UK
EU28

0.16
0.57
0.17
3.91
0.14
0.03
0.08
0.03
0.58
1.53
0.94
0.50
0.58
0.11
0.06
1.72
21.22

0.15
0.53
0.14
3.72
0.13
0.03
0.09
0.03
0.80
1.47
0.77
0.43
0.67
0.12
0.39
1.72
21.57

5%
11%
6%
55%
1%
1%
3%
1%
64%
16%
46%
22%
24%
2%
93%
2%
100%

0.01
0.03
0.05
0.48
0.01
0.01
0.01
0.00
0.19
0.10
0.06
0.03
0.10
0.01
0.01
0.52
3.62

0.01
0.02
0.04
0.46
0.01
0.01
0.01
0.00
0.19
0.09
0.04
0.03
0.12
0.01
0.02
0.53
3.67

9%
6%
13%
36%
1%
1%
1%
1%
1%
7%
27%
12%
43%
4%
21%
28%
100%

0.79
1.88
0.90
12.88
0.74
0.16
0.53
0.09
3.65
5.97
2.79
2.90
1.92
0.45
0.64
9.46
90.81

0.68
1.72
0.76
11.52
0.65
0.16
0.46
0.10
3.56
5.68
2.26
2.71
2.02
0.41
1.03
9.60
88.84

6%
8%
7%
70%
5%
0%
4%
0%
4%
15%
27%
10%
5%
2%
20%
7%
100%

Note:whentheoverallchangeinavariableisnegative,contributionpercentagesshouldbeinterpretedwithanopposite
sign.
Source: Eurostat, National Statistical Offices, DIW econ

ANNUAL REPORT ON EUROPEAN SMES 2013/2014:


A PARTIAL AND FRAGILE RECOVERY

93

VI.

DISTRIBUTION OF SMEs ACROSS


SIZE CLASSES IN FIVE KEY
SECTORS, 2013 EU28
Figure 59: Shares of micro, small and medium-size SMEs in five key sectors in EU28- 2013
6.6%

1.0%

Micro
Small
Medium

92.4%

Figure 60: Shares of value added generated by micro, small and medium-size SMEs in EU28 in five
key sectors

31.1%
35.9%

Micro
Small
Medium

33.0%

Figure 61: Shares of employment by micro, small and medium-size SMEs in EU28 in five key
sectors

23.8%
44.9%

Micro
Small
Medium

31.3%

Note:Fivekeysectorsincludemanufacturing,construction,professional,scientificandtechnicalactivities,
Accommodationandfoodservicesandwholesaleandretailtrade,repairofmotorvehiclesandmotorcycles.
Source: Eurostat, National Statistical Offices and DIW Econ

ANNUAL REPORT ON EUROPEAN SMES 2013/2014:


A PARTIAL AND FRAGILE RECOVERY

94

VII.

GROWTH FORECASTS OF SMEs IN


EU28 MEMBER STATES

Figure 62: Value added recovery and growth forecast (in %), EU28 SMEs, 2008-2015
20%

Cumulativegrowthrate20132015

15%

SK

LT

LV
RO
UK

R=0.2839

DE
EE SE

LU

10%
PL
BG
NL DK

5%

IE

HR
ES

PT

SI

0%

AT
MT
BE

FIFR
CZ
HU
IT

CY
5%

EL

10%
40%

30%

20%

10%

0%

10%

20%

30%

Recoverylevel(%2013levelabove/below2008)
Source: Eurostat, National Statistical Offices, DIW econ

Figure 63: Employment recovery and forecast growth (in %), EU28 SMEs, 2008-2015

Cumulativegrowthrate20132015

15%
SK
10%
LV LT
RO

5%

0%

IE

HR

DK BG

ES
PT

5%

10%
30%

CY
EL

20%

IT

HUEE
SI

10%

Source: Eurostat, National Statistical Offices, DIW econ

SE
UK

NLCZ
PL
FI

MT

DE

LU
AT
FR

BE

0%

R=0.133

10%

20%

Recoverylevel(%2013levelabove/below2008)

ANNUAL REPORT ON EUROPEAN SMES 2013/2014:


A PARTIAL AND FRAGILE RECOVERY

95

Sector level analysis


Inmanufacturingandconstruction(Figure64,Figure65)foronlyahandfulofcountriestherewasgrowthin
bothemploymentandvalueaddedrelativeto2008.However,FranceandtheUKarenolongeramongstthese
countries:SMEmanufacturingactivityinFranceisexpectedtoshrinkbyalmost15%whileconstructioninthe
UKisanticipatedtoexperienceasimilardeclineamongintermsofemployment.
AstrikinglylargedeclineinactivityofSMEsisexpectedintheconstructionsectorinGreece(approximately
85%bothforemploymentandvalueadded).However,SMEsinconstructioninmanylargereconomiesarealso
expectedtosuffer(e.g.Spain,Portugal,Ireland,andItaly).
SMEsinwholesaleandretailtrade(Figure66)areexpectedtogrowsignificantlymoreinmostcountries,at
leastintermsofvalueadded.Fortheotherservicesectorsthepictureisevenmorepositive,acrosstheboard:
valueaddedgeneratedbySMEsinprofessional,scientificandtechnicalactivityisexpectedtobehigherthan
2008levelsinallcountriesexceptPortugal,ItalyandCroatia.Forotherservices,employmentwillhave
recoveredinallbutfourcountries(Romania,Croatia, IrelandandHungary).
Figure 64: Forecast SME value added and employment by Member State in 2015 (2008 = 100):
Manufacturing

Employmentin2015/Employment2008

120

C Manufacturing
MT

110

RO

ShareintotalvalueaddedgeneratedbyEUSMEs(2013)
DE

100

UK
DK
NL
PL

FR

CZ
90
FI
LU

80

HR

HU
IT

BE

IE

SE

LV
AT

LT
EE

SI
BG

CY

PT

70
ES

EL

60
30

40

50

60

70

80

90

100

110

120

130

140

ValueAddedin2015/ValueAddedin2008

Note:ThesizeofbubblesreflectsMemberStatesshareintotalvalueaddedgeneratedbySMEsintheEUin2013.
Slovakiaisomittedbecauseofastructuralbreakinthedata.Thelocationofthelabelisnotrelatedtothepositionofthe
countryinthechart,whichisrepresentedbythecenterofthebubble.
Source: Eurostat, DIW Econ

150

ANNUAL REPORT ON EUROPEAN SMES 2013/2014:


A PARTIAL AND FRAGILE RECOVERY

96

Figure 65: Forecast SME value added and employment by Member State in 2015 (2008 = 100):
Construction

Employmentin2015/Employmentin
2008

F Construction
160
140

ShareintotalvalueaddedgeneratedbyEUSMEs(2013)

120
CZ

100
80

HR

LT

CY

60

IE

PT

40

BG

RO

IT

SI

MT

PL

HU

NL
DK LV

SE DE

AT

FR
FI

UK

LU

BE
EE

ES
EL

20
0
10

20

30

40

50

60

70

80

90

100

110

120

130

140

150

ValueAddedin2015/ValueAddedin2008
Note:ThesizeofbubblesreflectsMemberStatesshareintotalvalueaddedgeneratedbySMEsintheEUin2013.
Slovakiaisomittedbecauseofastructuralbreakinthedata.Thelocationofthelabelisnotrelatedtothepositionofthe
countryinthechart,whichisrepresentedbythecenterofthebubble.
Source: Eurostat, DIW Econ

Figure 66: Forecast SME value added and employment by Member State in 2015 (2008 = 100):
Wholesale and retail trade

Employmentin2015/Employmentin2008

G Wholesale&retailtrade
160
DE
140

120

FR

100

HU

CZ

SI

UK
BG

ES

FI DK

PT CY IE PL

80

EL

RO

HR

MT
IT

LU
SE
NL AT
BE

LT

EE
LV

ShareintotalvalueaddedgeneratedbyEUSMEs(2013)

60
50

60

70

80

90

100

110

120

130

140

150

160

170

180

ValueAddedin2015/ValueAddedin2008

Note:ThesizeofbubblesreflectsMemberStatesshareintotalvalueaddedgeneratedbySMEsintheEUin2013.
Slovakiaisomittedbecauseofastructuralbreakinthedata.Thelocationofthelabelisnotrelatedtothepositionofthe
countryinthechart,whichisrepresentedbythecenterofthebubble.
Source: Eurostat, DIW Econ

190

ANNUAL REPORT ON EUROPEAN SMES 2013/2014:


A PARTIAL AND FRAGILE RECOVERY

97

Figure 67: Forecast SME value added and employment by Member State in 2015 (2008 = 100):
Accommodation and food services

Employmentin2015/Employmentin2008

I Accomodation/foodS.
180
ShareintotalvalueaddedgeneratedbyEUSMEs(2013)

160

DE
140
RO
120

FR

100

HR IT
LV

PT
IE

80

SI

FI

ES
UK

BE

CY

MT

BG
AT
NL

CZ
HU

SE
LU

LT
EE

PL

EL
60

DK

40
70

80

90

100

110

120

130

140

150

160

ValueAddedin2015/ValueAddedin2008

Note:ThesizeofbubblesreflectsMemberStatesshareintotalvalueaddedgeneratedbySMEsintheEUin2013.
Slovakiaisomittedbecauseofastructuralbreakinthedata.Thelocationofthelabelisnotrelatedtothepositionofthe
countryinthechart,whichisrepresentedbythecenterofthebubble.
Source: Eurostat, DIW Econ

Figure 68: Forecast SME value added and employment by Member State in 2015 (2008 = 100):
Professional, scientific and technical activities

Employmentin2015/Employmentin2008

160

M Professional,scientific&technicalactivities

150

BE

FR

140
130

MT

RO
DE

120
NL

110

CZ

HR

LU
DK

SI

HU

100

PT

CY

90

UK
LV

AT
FI

BG
SE

LT

PL

EE

IE
IT
ES

ShareintotalvalueaddedgeneratedbyEUSMEs
(2013)

80
70
60
90

100

110

120

130

140
150
160
ValueAddedin2015/ValueAddedin2008

Note:ThesizeofbubblesreflectsMemberStatesshareintotalvalueaddedgeneratedbySMEsintheEUin2013.
Slovakiaisomittedbecauseofastructuralbreakinthedata.Thelocationofthelabelisnotrelatedtothepositionofthe
countryinthechart,whichisrepresentedbythecenterofthebubble.
Source: Eurostat, DIW Econ

ANNUAL REPORT ON EUROPEAN SMES 2013/2014:


A PARTIAL AND FRAGILE RECOVERY

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Figure 69: Forecast SME value added and employment by Member State in 2015 (2008 = 100):
Other sectors
140

Employmentin2015/Employmentin
2008

Othersectors
BG

130

LT

ShareintotalvalueaddedgeneratedbyEUSMEs

120

LV

FR

HU

CZ

SE

PL DE

SI

110

BE

CY

AT

LU

EE
UK

RO

FI
DK

100

IT

HR

NL

PT

90

IE

ES

80
70

80

90

100

110

120

130

140

150

ValueAddedin2015/ValueAddedin2008

Note:ThesizeofbubblesreflectsMemberStatesshareintotalvalueaddedgeneratedbySMEsintheEUin2013.
Slovakiaisomittedbecauseofastructuralbreakinthedata.Thelocationofthelabelisnotrelatedtothepositionofthe
countryinthechart,whichisrepresentedbythecenterofthebubble.
Source: Eurostat, DIW Econ

ANNUAL REPORT ON EUROPEAN SMES 2013/2014:


A PARTIAL AND FRAGILE RECOVERY

99

VIII. DEGREE OF RECOVERY OF SMEs BY


SECTOR IN EU28 MEMBER STATES,
2008-2013
Table19:ValueaddedandemploymentperformanceofSMEsfrom2008to2013inkeyeconomicsectorsin
EU28MemberStates
Employmentoutcomes(ratiosof2013to2008)

Manufacturing

Value added
outcomes
(ratiosof2013
to2008)

DE

RO

AT
NL
DK,FR

MT

BE,PL,UK
CZ,SK

EE,LT
LV
BG,SE,IE
HU,IT,SI
CY,EL,ES,
FI,HR,LU,PT

Employmentoutcomes(ratiosof2013to2008)

Trade

Value added
outcomes
(ratiosof2013
to2008)

DE

AT

BE

LT

FR

SE,
LU
MT

NL

IT

EE

CZ,UK

DK,FI

CY,PL

SK

BG

SI

EL,ES,HR,
HU,IE,LV,PT,R
O

Employmentoutcomes(ratiosof2013to2008)

BusinessServices

Value added
outcomes
(ratiosof2013
to2008)

Construction

DK

HU

NL
HR,PT

EL,ES,IE

DE,SE,

SK

MT,BE

AT

FI,LU

FR

EE

CZ,PL,UK

BG,CY,DK,EL,
ES,HR,HU,IE,I
T,LT,LV,NL,PT
,RO,SI

FI,MT,UK

AT,BE,CY,
DE,FR,PL,SE
EE
BG,LU

LT
IT
SI
CZ,LV
RO,SK
Employmentoutcomes(ratiosof2013to2008)

Employmentoutcomes(ratiosof2013to2008)

Accommodation/foodS.

Value added
outcomes
(ratios
of
2013to2008)

Value added
outcomes
(ratios
of
2013to2008)

DE,FR,LU,SE,
BG

MT,FI
AT

NL
IT
HR

EE
BE,UK
CY

LT,PL,DK

RO

CZ
SK

ES
HU,PT,SI

EL,IE,LV

ANNUAL REPORT ON EUROPEAN SMES 2013/2014:


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100

Employmentoutcomes(ratiosof2013to2008)

Others

Value added
outcomes
(ratiosof2013
to2008)

FR,PT

AT,BG,
EE,FI,PL,
SE
SI,LU,NL

LV,DK
CZ

CY
HU

RO
SK

HR

BE,DE,MT,UK

Notes:

IT,LT

ES,IE
DK

Solidperformer(between2%andlessthan10%higherin2013thanin2008)

Strongperformer

(10%ormorehigherin2013thanin2008)

Weakperformer(between2%andlessthan10%lowerin2013thanin

2008)
Veryweakperformer(10%ormorelowerin2013thanin2008)
Unchanged(levelin2013
between98%and102%of2008level).InthecaseofSlovakia,theratiosarecalculatedusinglevelin2010overlevelin
2013.
Source: Eurostat, National Statistical Offices, Eurostat, DIW Econ

Figure70:TheperformanceofEU28SMEsinvariouseconomicsectors,percentagechangefrom2008to
2012and2012to2013
8%

7%

6.64%

5%

4%

3%
1%
0% 1%

1%
4%

3%

1%

0%

1%

1%

2%
0%

1%
1%

1%

2%

1%
1%

1%

1%

4%

4%

5% 5%

5%

3%

2%

8%

%change20082012

%change20122013

Source: Eurostat, National Statistical Offices, Eurostat, DIW Econ

Others

BusinessS.

Accommodation/food

Trade

Construction

Manufacturing

Others

BusinessS.

Accommodation/food

Trade

20%

Construction

Manufacturing

Others

BusinessS.

Accommodation/food

Trade

Construction

Manufacturing

11%

ANNUAL REPORT ON EUROPEAN SMES 2013/2014:


A PARTIAL AND FRAGILE RECOVERY

101

IX.

PERFORMANCE OF SMEs IN FIVE


KEY SECTORS IN EU28 MEMBER
STATES
Table 20: Performance of SMEs in manufacturing in Member States from 2008 to 2013

Country

MANUFACTURING
ValueAddedof
Enterprises(SMEs),
SMEs,ratio
ratio2013/2008
2013/2008

AT

BE

EmploymentinSMEs,
ratio2013/2008

BG

CY

CZ

DE

DK

EE

EL
ES

FI
FR

HR
HU
IE

IT

LT

LU
LV
MT

NL

PL

PT

RO

SE

SI

SK

Solidperformer(between2%andlessthan10%higherin2013thanin2008)

UK

Notes:

Strongperformer

(10%ormorehigherin2013thanin2008)

Weakperformer(between2%andlessthan10%lowerin2013thanin

2008)
Veryweakperformer(10%ormorelowerin2013thanin2008)
Unchanged(levelin2013
between98%and102%of2008level).ForSlovakia,ratiosarecomputedfrom2010over2013
Source: Eurostat, National Statistical Offices, Eurostat, DIW Econ

ANNUAL REPORT ON EUROPEAN SMES 2013/2014:


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Table 21: Performance of SMEs in retail and wholesale trade in Member States from 2008 to 2013

Country

TRADE
ValueAddedof
Enterprises(SMEs),
SMEs,ratio
ratio2013/2008
2013/2008

AT
BE

BG

Employmentin
SMEs,ratio
2013/2008

CY
CZ
DE

EE

DK

EL
ES

FI

FR

IE

IT

LU
LV
MT
NL

LT

PL
PT

RO

SE

SI

SK

UK

Notes:

HR
HU

Solidperformer(between2%andlessthan10%higherin2013thanin2008)

Strongperformer

(10%ormorehigherin2013thanin2008)

Weakperformer(between2%andlessthan10%lowerin2013thanin

2008)
Veryweakperformer(10%ormorelowerin2013thanin2008)
Unchanged(levelin2013
between98%and102%of2008level).ForSlovakia,ratiosarecomputedfrom2010over2013
Source: Eurostat, National Statistical Offices, Eurostat, DIW Econ

ANNUAL REPORT ON EUROPEAN SMES 2013/2014:


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Table 22: Performance of SMEs in business services in Member States from 2008 to 2013

BUSINESSSERVICES
ValueAddedof
SMEs,ratio
Enterprises(SMEs),
2013/2008
ratio2013/2008

Country
AT
BE
BG
CY

CZ
DE
DK
EE

Employmentin
SMEs,ratio
2013/2008

ES

FR

HU

IE

IT
LT
LU
LV
MT
NL
PL

RO

SE
SI
SK
UK

Notes:

PT

HR

EL
FI

Solidperformer(between2%andlessthan10%higherin2013thanin2008)

Strong

performer(10%ormorehigherin2013thanin2008)

Weakperformer(between2%andlessthan10%lowerin

2013thanin2008)
Veryweakperformer(10%ormorelowerin2013thanin2008)
(levelin2013between98%and102%of2008level).
Source: Eurostat, National Statistical Offices, Eurostat, DIW Econ

Unchanged

ANNUAL REPORT ON EUROPEAN SMES 2013/2014:


A PARTIAL AND FRAGILE RECOVERY

104

Table 23: Performance of SMEs in construction in Member States from 2008 to 2013

CONSTRUCTION
ValueAddedof
SMEs,ratio
Enterprises(SMEs),
2013/2008
ratio2013/2008

Country
AT
BE

Employmentin
SMEs,ratio
2013/2008

BG
CY

CZ

DE

DK

EE

EL
ES

FI

FR

HR
IE
IT
LT

LU
LV
MT
NL

PL
PT
RO

SE

SK

SI

Notes:

HU

UK

Solidperformer(between2%andlessthan10%higherin2013thanin2008)

Strong

performer(10%ormorehigherin2013thanin2008)

Weakperformer(between2%andlessthan10%lowerin

2013thanin2008)
Veryweakperformer(10%ormorelowerin2013thanin2008)
Unchanged
(levelin2013between98%and102%of2008level).ForSlovakia,ratiosarecomputedfrom2010over2013
Source: Eurostat, National Statistical Offices, Eurostat, DIW Econ

ANNUAL REPORT ON EUROPEAN SMES 2013/2014:


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Table 24: Performance of SMEs in accommodation/food services in Member States from 2008 to
2013

ACCOMMODATION
ValueAddedof
Enterprises(SMEs),
SMEs,ratio
ratio2013/2008
2013/2008

Country

Employmentin
SMEs,ratio
2013/2008

AT

BE

BG

DE

DK

EE

ES
FI
FR

HU

IT
LT
LU
MT
NL

SE

SI

SK

UK
Notes:

Solidperformer(between2%andlessthan10%higherin2013thanin2008)

RO

PT

PL

LV

HR
IE

EL

CY
CZ

Strong

performer(10%ormorehigherin2013thanin2008)

Weakperformer(between2%andlessthan10%lowerin

2013thanin2008)
Veryweakperformer(10%ormorelowerin2013thanin2008)
Unchanged
(levelin2013between98%and102%of2008level);ForSlovakia,ratiosarecomputedfrom2010over2013
Source: Eurostat, National Statistical Offices, Eurostat, DIW Econ

ANNUAL REPORT ON EUROPEAN SMES 2013/2014:


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106

Table 25: Performance of SMEs in other industries in Member States from 2008 to 2013

OTHERINDUSTRIES
ValueAddedof
SMEs,ratio
Enterprises(SMEs),
2013/2008
ratio2013/2008

Country
AT
BE
BG

DE
DK
EE

FI
FR

HU
IT

LV
MT
NL
PL

RO
SE
SI
SK
UK

Notes:

Solidperformer(between2%andlessthan10%higherin2013thanin2008)

PT

LT
LU

IE

HR

EL
ES

CY
CZ

Employmentin
SMEs,ratio
2013/2008

Strong

performer(10%ormorehigherin2013thanin2008)

Weakperformer(between2%andlessthan10%lowerin

2013thanin2008)
Veryweakperformer(10%ormorelowerin2013thanin2008)
Unchanged
(levelin2013between98%and102%of2008level);ForSlovakia,ratiosarecomputedfrom2010over2013
Source: Eurostat, National Statistical Offices, Eurostat, DIW Econ

ANNUAL REPORT ON EUROPEAN SMES 2013/2014:


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107

X.

PERFORMANCE BY SIZE CLASS IN


FIVE KEY SECTORS IN EU28
Table 26: Growth rates of Enterprises, Value Added and Employment by sector and size, 2008 to
2012 and 2012 to 2013 - EU28

Sector

Manufacturing

Construction

Trade

Accommodation
/foodS.

BusinessS.

Others

Sizeclass
Micro
Small
Medium
SMEs
Large
Total
Micro
Small
Medium
SMEs
Large
Total
Micro
Small
Medium
SMEs
Large
Total
Micro
Small
Medium
SMEs
Large
Total
Micro
Small
Medium
SMEs
Large
Total
Micro
Small
Medium
SMEs
Large
Total

Numberofenterprises
%
%2012 2013/20
2008
2013
08
2012
1%
1%
100%
10%
2%
89%
10%
2%
88%
1%
1%
97%
10%
1%
89%
1%
1%
97%
3%
5%
93%
11%
2%
87%
22%
4%
75%
3%
5%
92%
16%
4%
81%
3%
5%
92%
0%
1%
100%
2%
0%
102%
9%
0%
109%
1%
1%
100%
2%
0%
102%
1%
1%
100%
2%
1%
101%
16%
0%
116%
14%
0%
114%
3%
1%
102%
16%
0%
116%
3%
1%
102%
11%
1%
112%
2%
1%
104%
5%
2%
107%
11%
1%
111%
10%
1%
111%
11%
1%
111%
6%
0%
106%
2%
1%
103%
5%
1%
106%
5%
0%
106%
4%
1%
104%
5%
0%
106%

GrossValueAdded
%
%2008
2013/2
2012
2012
008
2013
7%
3%
95%
8%
2%
94%
0%
1%
100%
4%
1%
97%
0%
0%
99%
2%
0%
98%
18%
3%
80%
19%
1%
81%
25%
3%
72%
20%
2%
78%
7%
2%
91%
18%
2%
80%
1%
2%
103%
3%
1%
104%
3%
1%
105%
2%
1%
103%
7%
1%
108%
4%
1%
105%
4%
1%
106%
15%
1%
116%
12%
1%
113%
9%
1%
110%
12%
1%
113%
10%
1%
111%
4%
2%
107%
5%
2%
108%
6%
3%
108%
5%
2%
107%
9%
3%
112%
6%
2%
108%
7%
3%
111%
7%
1%
108%
11%
1%
112%
8%
2%
110%
4%
0%
104%
6%
1%
107%

Employment
%
2008
2012
6%
10%
10%
9%
10%
9%
12%
13%
24%
14%
16%
14%
3%
5%
7%
1%
2%
1%
1%
14%
11%
7%
4%
6%
6%
4%
5%
5%
5%
5%
3%
6%
7%
5%
2%
4%

%2012
2013

2013/2
008

0%
1%
1%
0%
0%
0%
5%
2%
4%
4%
3%
4%
1%
0%
0%
1%
0%
0%
1%
0%
0%
1%
0%
0%
1%
1%
2%
1%
1%
1%
0%
1%
1%
1%
1%
1%

94%
89%
90%
90%
90%
90%
84%
86%
73%
83%
82%
83%
96%
104%
107%
100%
102%
101%
100%
114%
111%
106%
104%
106%
106%
105%
107%
106%
106%
106%
103%
107%
108%
106%
103%
104%

Note:ThenameBusinessS.isusedasabbreviationoftheNACEcategoryMProfessional/scientific/technicalactivities,and
TradereferstoGWholesale/retailtrade/repairofmotorvehicles/motorcycles.CategoriesinOthersrefertosectionsof
NACERev.2classifications:B,D,E,H,J,L,andN.
Source: National Statistical Offices, Eurostat, DIW Econ

ANNUAL REPORT ON EUROPEAN SMES 2013/2014:


A PARTIAL AND FRAGILE RECOVERY

108

XI.

INTERNATIONALISATION OF SMEs
SECTOR EXPORT INTENSITY LEVELS
Table 27: Classification of levels of export intensity EU27

Exportintensity
1
2
3
4
5

Classification
Verylow(exportsovertotalsalesbetween0and5%)
Low(exportsovertotalsalesbetween5and10%)
Medium(exportsovertotalsalesbetween10and20%)
High(exportsovertotalsalesbetween20and40%)
Veryhigh(exportsovertotalsalesabove40%)
Exportnotapplicable/nodataavailable

Source: London Economics analysis of Eurostat EU27 input-output table


Table 28: Sector labels

NACE
sector
abbreviation
B
Miningandquarrying

NACE
abbreviation
G45

C10_C12

G46

C13_C15
C16

C17
C18
C19
C20
C21

C22
C23

C24
C25

C26
C27

Foodproducts,beverages
andtobaccoproducts
Textiles,wearingappareland
leatherproducts
Woodandofproductsof
woodandcork,except
furniture;articlesofstraw
andplaitingmaterials
Paperandpaperproducts
Printingandrecording
services
Cokeandrefinedpetroleum
products
Chemicalsandchemical
products
Basicpharmaceutical
productsandpharmaceutical
preparations
Rubberandplasticsproducts
Othernonmetallicmineral
products

Basicmetals
Fabricatedmetalproducts,
exceptmachineryand
equipment
Computer,electronicand
opticalproducts
Electricalequipment

G47
H49

sector
Wholesaleandretailtradeandrepairservicesof
motorvehiclesandmotorcycles
Wholesaletradeservices,exceptofmotor
vehiclesandmotorcycles
Retailtradeservices,exceptofmotorvehiclesand
motorcycles
Landtransportservicesandtransportservicesvia
pipelines

H50
H51

Watertransportservices
Airtransportservices

H52
H53

Warehousingandsupportservicesfor
transportation
Postalandcourierservices

Accommodationandfoodservices

J58
J59_J60

Publishingservices
Motionpicture,videoandtelevisionprogramme
productionservices,soundrecordingandmusic
publishing;programmingandbroadcasting
services
Telecommunicationsservices
Computerprogramming,consultancyandrelated
services;informationservices

J61
J62_J63

L68

Realestateservices(exludingimputedrent)

M69_M70

Legalandaccountingservices;servicesofhead
offices;managementconsultingservices

ANNUAL REPORT ON EUROPEAN SMES 2013/2014:


A PARTIAL AND FRAGILE RECOVERY

109

C28
C29
C30
C31_C32
C33

D35
E36

E37_E39

Machineryandequipment
n.e.c.
Motorvehicles,trailersand
semitrailers
Othertransportequipment
Furniture;other
manufacturedgoods
Repairandinstallation
servicesofmachineryand
equipment
Electricity,gas,steamand
airconditioning
Naturalwater;water
treatmentandsupply
services
Sewerage;wastecollection,
treatmentanddisposal
activities;materialsrecovery;
remediationactivitiesand
otherwastemanagement
services
Constructionsand
constructionworks

M71
M72
M73
M74_M75

Architecturalandengineeringservices;technical
testingandanalysisservices
Scientificresearchanddevelopmentservices

N77

Advertisingandmarketresearchservices
Otherprofessional,scientificandtechnical
services;veterinaryservices
Rentalandleasingservices

N78

Employmentservices

N79

Travelagency,touroperatorandother
reservationservicesandrelatedservices

N80_N82

Securityandinvestigationservices;servicesto
buildingsandlandscape;officeadministrative,
officesupportandotherbusinesssupportservices

ANNUAL REPORT ON EUROPEAN SMES 2013/2014:


A PARTIAL AND FRAGILE RECOVERY

110

Figure 71: SMEs by level of export intensity EU27 Member States, 2009

NumberofSMEsbylevelsofexportintensity
0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

EL
IT
BG
FR
ES
MT
PL
UK
DE
LV
BE
SK
IE
PT
CY
CZ
FI
AT
DK
RO
SE
HU
SI
LT
EE
NL
LU
v.lowexportintensity

low

medium

high

Source: elaboration of SME database and Eurostat Input Output tables

v.highexportintensity

ANNUAL REPORT ON EUROPEAN SMES 2013/2014:


A PARTIAL AND FRAGILE RECOVERY

111

Figure 72: SME value added by export intensity, 2009

SMEvalueaddedbylevelsofexportintensity
0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

EL
BG
IT
UK
FR

v.low
export
intensity

ES
SK
PL

low

MT
RO
LV
CY
CZ

medium

FI
PT
SE
DE
AT

high

DK
BE
IE
SI
HU
LT

v.high
export
intensity

NL
EE
LU


Source: elaboration of SME database and Eurostat Input Output tables

112

ANNUAL REPORT ON EUROPEAN SMES 2013/2014:


A PARTIAL AND FRAGILE RECOVERY

Table 29: Country-level classification of sectors by level of export intensity sectors B to F, 2009
country B
C10_C12 C13_C15 C16 C17 C18 C19
AT
3
3
4
4
5
4
3
BE
4
4
4
4
4
3
4
BG
1
3
4
4
3
1
4
CY
2
2
1
1
1
1
3
CZ
2
3
4
4
4
1
2
DE
1
3
4
3
4
2
3
DK
4
4
4
3
4
1
3
EE
3
3
4
5
5
4
3
EL
1
2
3
1
2
1
3
ES
1
3
3
2
3
1
3
FI
1
2
2
4
5
3
4
FR
1
3
4
3
3
1
3
HU
1
3
4
4
4
1
3
IE
1
5
2
4
3
4
4
IT
1
2
4
2
3
1
3
LT
1
4
4
5
4
1 n.a.
LU
1
3
4
5
5
3
4
LV
3 n.a.
n.a.
5
3
1 n.a.
MT
4
2
4
1
1
5
4
NL
4
4
4
3
4
1
5
PL
1
3
4
4
4
1
2
PT
2
3
4
4
4
1
3
RO
1
1
5
4
2
1
3
SE
3
3
3
4
5
1
4
SI
1
3
4
5
5
1
3
SK
1
3
4
4
5
1
4
UK
4
2
3
1
2
1
4
Source: elaboration of Eurostat Input Output tables

C20
4
5
4
2
4
5
4
4
3
4
4
4
4
5
4
5
4
n.a.
3
5
4
3
4
5
4
4
4

C21
5
5
4
5
4
5
5
3
3
4
4
4
5
5
4
4
3
n.a.
5
5
3
2
2
n.a.
5
3
5

C22
4
5
3
1
4
4
4
4
3
4
4
4
4
4
4
4
5
4
4
5
4
4
4
4
4
4
3

C23
4
4
3
1
4
4
4
4
2
3
3
3
4
2
3
3
4
3
1
3
3
4
1
3
4
4
3

C24
5
5
5
2
4
4
4
4
4
4
5
4
4
4
4
4
5
5
1
5
4
4
4
5
4
5
4

C25
4
4
3
1
4
4
4
4
1
3
3
3
4
3
3
4
4
4
3
4
4
4
3
4
4
4
3

C26
4
4
4
3
4
5
4
5
1
3
5
4
5
5
3
4
4
4
5
5
4
4
4
5
4
5
4

C27
5
4
4
1
5
5
4
5
4
4
5
4
5
4
4
5
4
4
5
5
4
4
5
5
5
5
4

C28
5
5
3
2
5
5
5
5
3
4
5
4
4
4
5
5
5
4
4
5
4
4
4
5
5
5
5

C29
5
5
3
1
5
5
3
5
1
4
4
4
5
2
4
5
4
5
3
4
5
4
4
5
5
5
4

C30
5
5
4
4
5
5
4
5
3
4
5
5
5
2
4
5
4
4
4
5
5
3
5
4
5
5
5

C31_C32
4
5
4
3
5
4
4
5
1
2
3
3
4
n.a.
4
5
3
n.a.
4
4
5
3
4
4
5
4
3

C33
3
2
2
1
1
2
1
4
1
1
1
1
3
1
1
1
n.a.
n.a.
4
3
2
3
1
1
2
1
1

D35
2
4
3
1
2
4
2
3
1
1
1
1
2
1
1
1
2
1
1
1
1
1
1
1
3
1
1

E36
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1

E37_E39
3
2
5
4
4
3
3
5
2
1
2
3
3
1
2
5
5
4
3
4
3
3
1
3
4
4
3

F
1
1
1
1
1
1
1
2
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1

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Table 30: Country-level classification of sectors by level of export intensity sectors G to N, 2009
country

G45

G46

G47

H49

H50

H51

H52

H53

J58

J59_J60

J61

J62_J63

L68

M69_M70

M71

M72

M73

M74_M75

N77

N78

N79

N80_N82

AT

n.a.

BE

n.a.

BG

n.a.

n.a.

CY

n.a.

n.a.

CZ

n.a.

DE

n.a.

DK

EE

n.a.

EL

ES

n.a.

FI

n.a.

FR

n.a.

HU

n.a.

IE

n.a.

IT

n.a.

LT

n.a.

LU

n.a.

LV

n.a.

n.a.

n.a.

n.a.

MT

n.a.

NL

n.a.

PL

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

PT

n.a.

RO

n.a.

n.a.

SE

n.a.

n.a.

n.a.

n.a.

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SI

n.a.

SK

UK

1 n.a.
1
1
5
3
2
Source: elaboration of Eurostat Input Output tables

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INDEX OF FIGURES

Figure1:ImportanceofthefivekeysectorsintheSMEsectorinMemberStates2013...........16
Figure2:EvolutionofEU28GDPandEU28valueaddedofnonfinancialbusinesssector
(annualpercentagechange).....................................................................................................16
Figure3:Change(in%)inEU28GDPandEU28valueaddedofnonfinancialbusinesssector
from2012to2013......................................................................................................................17
Figure4:NumberofSMEsinthenonfinancialbusinesssector,valueaddedgeneratedby
theseSMEsandnumberofpersonsemployedbytheseSMEsEU28,2008to2013
(2008=100).................................................................................................................................17
Figure5:Annualgrowth(in%)indifferentperformanceindicatorsbySMEsizeEU28...........18
Figure6:RecoveryofEU28SMEsin2013relativeto2008(%changein2013levelsfrom2008
levels).......................................................................................................................................20
Figure7:Relationshipbetweenchanges(in%)from2008to2013inEU28SMEvalueadded
(atcurrentandconstantprices)andEU28SMEemployment...................................................22
Figure8:TheperformanceofEU28SMEsinvariouseconomicsectors,percentagechange
from2008to2013.....................................................................................................................23
Figure9:%changeinvalueaddedofSMEsintheconstructionandmanufacturingsectorin
theEU2820082013.................................................................................................................25
Figure11:MostpressingproblemsfacingSMEsintheEU28in2013.........................................27
Figure12:ImportanceofproblemsfacingSMEswithinMemberStates,weightedbythe
proportionofEUSMEsperMemberState................................................................................28
Figure13:MostchallengingSBAprinciplestoSMEsatnationallevelEU28...........................29
Figure14:Numberofpolicymeasuresadopted/implementedinEU28perSBAprinciple
2013/2014..................................................................................................................................31
Figure15:PercentdistributionofpolicymeasuresperSBAprincipleinEU282013/2014.........31
Figure16:Numberofpolicymeasuresadopted/implementedinEU28perSBAprinciple
2011/2014.................................................................................................................................32
Figure17:2013estimatesand2014forecastsofperformanceofSMEsectorinEU28...............36
Figure18:Forecastlevel(left)andgrowthrate(right)ofnumberofenterprises,valueadded
andemploymentaccountedforbySMEsinEU28.....................................................................37
Figure19:Forecastgrowth(in%)invalueaddedandemploymentbysizeofcompanyin
EU28..........................................................................................................................................37
Figure20:Forecastenterprise,valueaddedandemployment:SMEsandlargefirms(2008=
100)EU28...............................................................................................................................38
Figure21:Forecastenterprise,valueaddedandemployment:micro,smallandmedium
enterprises(2008=100)EU28................................................................................................38
Figure22:Forecastgrowth(in%)invalueaddedbysectorEU28............................................39
Figure23:Forecastgrowth(in%)inemploymentbysectorEU28..........................................39
Figure24:Forecastenterprises,valueaddedandemploymentbysector(2008=100)EU28.40
Figure25:Forecastvalueaddedandemploymentin2015,byMemberState(2008=100).......41
Figure26:NumberofenterprisesandemploymentinEU28(2013),USA(2011)andJapan
(2012)asratiosoverGDP..........................................................................................................43
Figure27:Enterprisedistributionbysizeclass,EU28(2013),USA(2011)andJapan(2012).......44

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Figure28:Employmentdistributionbysizeclass,EU28(2013),USA(2011)andJapan(2012)..45
Figure29:Valueaddeddistributionbysizeclass,EU28(2013),USA(2011)...............................45
Figure30:Totalvalueaddedbysector,EU28(2013),USA(2011)andJapan(2012)...................46
Figure31:Developments(jn%)inkeymacroeconomicfactorsatconstantprices,20082013.47
Figure32:NumberofSMEsinEU28,USAandJapan,2009=100...............................................47
Figure33:%changeinnumberofSMEsbysectorinEU28,USAandJapan,20092012..........48
Figure34:EmploymentinSMEsinEU28,USAandJapan,2009=100........................................48
Figure35:%changeinemplymentofSMEsbysectorinEU28,USAandJapan,20092012....49
Figure36:ValueAddedofSMEsinEU28andUSA,200820132009=100................................49
Figure37:%changeinvalueaddedofSMEsbysectorinEU28andUSA20092012...............50
Figure38:NumberofSMEs,EU28andpartnercountries,2009=100........................................52
Figure39:ValueaddedofSMEs,EU28andpartnercountries2009=100...................................52
Figure40:EmploymentinSMEs,EU28andpartnercountries,2009=100.................................53
Figure41:DomesticdemandandexportsbyMemberState,%change20082013(constant
prices).......................................................................................................................................58
Figure42:Distributionoftotalturnoveramongthreemarketareas,averagepercentage
turnoverofinternationalisedSMEs...........................................................................................62
Figure43:Forvariousmodesofinternationalisation,thepercentageofSMEsinEU27
involvedininternationalbusinessactivities,havingconcreteplanstostartornoneatall.........62
Figure44:ShareofexportingSMEsintheEU27,industrysectors.............................................64
Figure45:DistributionofthepopulationofSMEsandlargeenterprisesacrossdifferent
exportintensityclassesEU27,2009.......................................................................................66
Figure46:DistributionofthevalueaddedgeneratedbySMEsandlargeenterprisesacross
differentexportintensityclassesEU27,2009.........................................................................66
Figure47:SharesofthenumberofSMEsinlowexportintensitysectorsinEU27Member
States,2009.............................................................................................................................67
Figure48:SharesofthevalueaddedgeneratedbySMEsinlowexportintensitysectorsin
EU27MemberStates,2009.......................................................................................................68
Figure49:Share(%)ofhightechontotalmanufacturing,SMEsandlargeenterprises,EU28,
2013..........................................................................................................................................71
Figure50:Share(%)ofhightechmanufacturingovertotalmanufacturing,EU28SMEs,2013 71
Figure51:Share(%)ofknowledgeintensiveservicesontotalservices,SMEsandlarge
enterprises,EU28,2013............................................................................................................72
Figure52:Share(%)ofknowledgeintensiveservicesovertotalservices,EU28SMEs,2013....72
Figure53:HighTechmanufacturingAnnualgrowthrate(in%)invalueaddedinEU28
(20122008)...............................................................................................................................74
Figure54:KnowledgeIntensiveServicesAnnualgrowthrate(in%)invalueaddedinEU28
(20122008)...............................................................................................................................74
Figure55:SMEenterprises2013(%ofEU28total)..................................................................81
Figure56:SMEvalueadded2013(%ofEU28total)..................................................................81
Figure57:SMEemployment2013(%ofEU28total).................................................................81
Figure58:Numberofenterprises,valueaddedandemploymentinnonfinancialbusiness
sectorshareofSMEsfrom2008to2013inEU28....................................................................82
Figure59:ShareofSMEenterprises,valueaddedandemploymentinnonfinancialbusiness
sectorinMemberStatesinEU28MemberStatesin2013.........................................................84

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Figure60:Sharesofmicro,smallandmediumsizeSMEsinfivekeysectorsinEU282013.....93
Figure61:Sharesofvalueaddedgeneratedbymicro,smallandmediumsizeSMEsinEU28
infivekeysectors.....................................................................................................................93
Figure62:Sharesofemploymentbymicro,smallandmediumsizeSMEsinEU28infivekey
sectors......................................................................................................................................93
Figure63:Valueaddedrecoveryandgrowthforecast(in%),EU28SMEs,20082015..............94
Figure64:Employmentrecoveryandforecastgrowth(in%),EU28SMEs,20082015.............94
Figure65:ForecastSMEvalueaddedandemploymentbyMemberStatein2015(2008=
100):Manufacturing.................................................................................................................95
Figure66:ForecastSMEvalueaddedandemploymentbyMemberStatein2015(2008=
100):Construction....................................................................................................................96
Figure67:ForecastSMEvalueaddedandemploymentbyMemberStatein2015(2008=
100):Wholesaleandretailtrade................................................................................................96
Figure68:ForecastSMEvalueaddedandemploymentbyMemberStatein2015(2008=
100):Accommodationandfoodservices..................................................................................97
Figure69:ForecastSMEvalueaddedandemploymentbyMemberStatein2015(2008=
100):Professional,scientificandtechnicalactivities.................................................................97
Figure70:ForecastSMEvalueaddedandemploymentbyMemberStatein2015(2008=
100):Othersectors...................................................................................................................98
Figure71:TheperformanceofEU28SMEsinvariouseconomicsectors,percentagechange
from2008to2012and2012to2013.......................................................................................100
Figure72:SMEsbylevelofexportintensityEU27MemberStates,2009...............................110
Figure73:SMEvalueaddedbyexportintensity,2009.............................................................111

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XIII. INDEX OF TABLES


Table1:DefinitionofSMEs.......................................................................................................10
Table2:SMEsandlargeenterprises:numberofenterprises,valueaddedandemploymentin
theEU28in2013.......................................................................................................................15
Table3:PerformanceofSMEsbysectorintheEU28in2013....................................................19
Table4:2014and2015ForecastsofannualgrowthinSMEperformanceindicatorsEU28.....36
Table5:OverviewofSMEsinEU28(2013),USA(2011)andJapan(2012)..................................42
Table6:OverviewofSMEsinEU28andpartnercountries,2013orlatestavailabledata..........51
Table7:OverviewofSMEsinEU28(2013),Brazil,IndiaandRussia(2011)................................54
Table8:KeydemanddriversofsectorsofkeyimportancetoSMEsEU27,2009.....................57
Table9:ExportingSMEsin5largestEU28countriesbynumberofSMEs(absolutelevelsand
in5oftotal)...............................................................................................................................64
Table10:DirectandindirectimpactinkeySMEsectorsofanincreaseinforeigndemand,
EU27,2009................................................................................................................................69
Table11:DescriptivestatisticsonEU28hightechandknowledgeintensiveindustries.............73
Table12:Annualgrowthrate(in%)ofnumberofenterprises,valueaddedandemployment
bySMEsandlargeenterprisesintheEU28nonfinancialbusinesssector2009to2013.........86
Table13:DistributionofSMEsbysizeclassintheEU28nonfinancialbusinesssector2008
and2013...................................................................................................................................86
Table14:Changes(inpercentage)inthenumberofSMEenterprises,thevalueadded
generatedbySMEsandSMEemploymentinthenonfinancialbusinesssectorofEU
MemberStates2013...............................................................................................................87
Table15:StateoftherecoveryoftheSMEsectorindifferentMemberStates..........................89
Table16:SizeclasscontributionstoEU28SMEperformance(change2008to2013)................91
Table17:SectorcontributionstoEU28SMEperformance(change2008to2013).....................91
Table18:CountrycontributionstoEU28SMEperformance(change2008to2013)..................91
Table19:ValueaddedandemploymentperformanceofSMEsfrom2008to2013inkey
economicsectorsinEU28MemberStates................................................................................99
Table20:PerformanceofSMEsinmanufacturinginMemberStatesfrom2008to2013........101
Table21:PerformanceofSMEsinretailandwholesaletradeinMemberStatesfrom2008to
2013........................................................................................................................................102
Table22:PerformanceofSMEsinbusinessservicesinMemberStatesfrom2008to2013.....103
Table23:PerformanceofSMEsinconstructioninMemberStatesfrom2008to2013............104
Table24:PerformanceofSMEsinaccommodation/foodservicesinMemberStatesfrom
2008to2013...........................................................................................................................105
Table25:PerformanceofSMEsinotherindustriesinMemberStatesfrom2008to2013.......106
Table26:GrowthratesofEnterprises,ValueAddedandEmploymentbysectorandsize,
2008to2012and2012to2013EU28.....................................................................................107
Table27:ClassificationoflevelsofexportintensityEU27.....................................................108
Table28:sectorlabels.............................................................................................................108
Table29:CountrylevelclassificationofsectorsbylevelofexportintensitysectorsBtoF,
2009........................................................................................................................................112

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Table30:CountrylevelclassificationofsectorsbylevelofexportintensitysectorsGtoN,
2009........................................................................................................................................113

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ENDNOTES
1 The nonfinancial business sector includes the following industrial sectors: mining
and quarrying, manufacturing, electricity, gas, steam and air condition supply,
water supply, sewerage, waste management and remediation activities,
construction,wholesaleandretailtrade,repairofmotorvehiclesandmotorcycles,
transportation and storage, accommodation and food services, information and
communication, real estate activities, professional, scientific and technical
activitiesandadministrativeandsupportservices.Theindustriesnotcoveredbythe
analysisincludethefollowing:agriculture,forestryandfishing,publicadministration
anddefence;compulsorysocialsecurity,education,humanhealthandsocialwork
activities,arts,entertainmentandrecreation,otherserviceactivities,activitiesof
households as employers; undifferentiated goods and servicesproducing activities of
householdsforownuseandactivitiesofextraterritorialorganisationsandbodies
2 Commission Recommendation of 6 May 2003 concerning the definition of micro,
smallandmediumsizedenterprises,OfficialJournaloftheEuropeanUnionL124/36,20
May2003.
3
TheThinkSmallFirstprinciplerequiresthatlegislationtakesSMEs'interestsinto
accountattheveryearlystagesofpolicymakinginordertomakelegislationmoreSME
friendly.Arangeoftoolsisavailabletoensuretheeffectiveimplementationofthe
principle.TheseincludetheapplicationofanSMEtesttoforthcominglegislative
proposals,theuseofspecificSMEprovisionsinlegislationinordertoavoid
disproportionateburdenonSMEs,theconsultationoftheSMEstakeholders,thework
oftheSMEEnvoy,theuseofCommonCommencementdatesforlegislationrelevant
forbusinessetc.
4
Albania,FormerYugoslavRepublicOfMacedonia,Iceland,Israel,Liechtenstein,
Norway,Montenegro,SerbiaandTurkey
5 Ideally, one would want to use value added at constant prices as a performance
indicator. However, as Eurostat produces estimates of value added at constant prices
only at the level of a whole industry and not for different enterprise size classes in an
industry,theanalysisfocusesonvalueaddedatcurrentprices.Forinformation,section
IV of the statistical background document provides information on the evolution of
industrywidevalueatcurrentandconstantprices.
6SeesectionVofthestatisticalbackgrounddocumentformoredetailedinformation
on the share of the total economy and total employment accounted for by the non
financialbusinesssectorintheMemberStates.
7 Gross value added is the difference between output and intermediate consumption.
Asanaggregatemeasureofproduction,grossdomesticproduct(GDP)isequaltothe
sum of the gross value added of all resident institutional units (i.e. economic sectors)
engaged in production, plus any taxes and minus any subsidies, on products not
includedinthevalueoftheiroutputs,
8Forconvenience,wewillalsorefertothelattertwosectorsasTradeandBusiness
services
9
See Section I of the statistical background information document for a yearbyyear
comparison of the growth rates of the number of enterprises, value added and
employmentofSMEsandlargeenterprisesovertheperiod20082013.

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10Asnotedearlierinthisreport,thisismostlyduetoabreakintheseriesinSlovakia
statistics.Starting2010,soletraderswereincludedinthemicrocategory.
11http://ec.europa.eu/enterprise/policies/finance/data/index_en.htm
12Inparticular,the2013SMEsAccesstoFinancesurveyAnalyticalReport
13Seestatisticalbackgrounddocument
14TheheightofthebubbleisconstructedastheaveragepercentageofSMEsthatcite
each factor as a problem, across the displayed Member States, weighted by the
proportionofEUSMEsperMemberState
15
WorldEconomicForum,TheGlobalCompetitivenessReport20132014
16
WorldEconomicForum,TheEurope2020CompetitivenessReport:BuildingaMore
CompetitiveEurope,2012Edition
17
ThisprojectwasdeliveredbyaconsortiumcomposedofCARSA,PWCLuxembourg,
Innova,LondonEconomics,DIW,DIWEcon,andtheUniversityofManchester.The
presentreportwasproducedbyLondonEconomics,whilethedatabase(includingnow
castsfor20122013,andforecastsfor2014and2015)wasgeneratedbyDIWEcon.
18Germany,Belgium,Sweden,Malta,LuxembourgAustria,France,UnitedKingdom.
19Greece,Spain,Ireland,Croatia,Italy,Slovenia,Hungary,CyprusPortugal,Poland.
20Duetoscarcityofdata,nodetailedcomparisoncanbepresentedwithothertrading
partners such as China, as no data is available on SMEs for the three core indicators
underscrutiny.ForRussia,BrazilandIndia,thereisscopeforaggregatelevelanalysis:
forRussia,dataisnotavailableforsectorsJ,L,M,Nandnostatisticsonlargefirmsare
observed.ForBrazil,valueaddeddatalacksobservationforsectorsE,I,M,N.ForIndia,
onlydataforAllSMEssizeclassisavailable,butonlyforenterprisesandemployment.
Data for these countries will be however analysed in subsequent sections of this
chapter.
21Consideredapotentialcandidate.
22OfnoteisthefactthatinboththeUSAandJapan,theSMEclassificationdiffersfrom
thestandardadoptedintheEU:mediumfirmscanemployupto299employees,and
thuslargefirmsarethosewithmorethan300.Thisimpedesaonetoonecomparison
oftheenterprisedemographicsbuttheanalysisisnonethelessrelevantinthecontextof
thisreport.
23Seestatisticalbackgrounddocumentfordetaileddata.
24
Duetoastructuralbreakin2009indataforJapan,theanalysisoftimetrendsinthe
sectionwillbecarriedoutbyindexingat2009ratherthan2008.
25DataonIndianSMEsisnotprovidedbysizeclass,andthereisnodataonlargefirms
and on value added. Data on Russian SMEs is based on a different size classification,
andalsolacksdataonlargefirmsandonvalueadded.SizeclassdefinitionsforRussia:
Micro(015),Small(16100),Medium(101250),Large(250+).
26Theanalysisdoesnotcovertheyear2013asyearlynationalaccountsdatafor2013
arenotyetavailable.
27
First, the correlations between the different macroeconomic indicators and the
annual growth rate in the three SME performance indicators (number of enterprises,
value added and employment) were estimated. The results of this analysis are
presentedinannexXVofthestatisticalbackgrounddocument.
Next, the contribution of developments in each intermediate and final demand
component to the performance of SMEs were further assessed through econometric
analysis, and the results are displayed in annex XV of the statistical background
document.Themodelestimatesapanelregressiontoexplainthevariationingrowthof
value added and employment of SMEs by sector, in the EU28. The regressors are the

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components of demand (final consumption of households, final consumption of


government, gross fixed capital formation, exports), all expressed in yearonyear
growth rates from 2008 to 2013. An additional variable, the growth of value added in
the total economy (all sectors and all size classes) is also included, as a proxy for the
intermediate demand taking place along the value chain. The significant coefficients
and Rsquared for each regression are displayed in annex XV of the statistical
backgrounddocument.
28Thestudysanalysisandconclusionsarebasedona2009surveyof9,480SMEsin33
Europeancountries.
29Amongrecentpublications,seeforexample:LeeH.,KelleyD.,LeeJ.,LeeS.(2012)
SMEsurvival:Theimpactofinternationalization,technologyresources,andalliances,
where internationalisation is shown to improve survival probability; Higon D.A., and
Driffield N. (2011) show that exporting firms are also characterized by high levels of
innovation activities, and that product innovation efforts significantly impact the
probabilityofexporting.
30BISEconomicsPaper13,p.32.However,thepercentagefigureissimilartothatfor
largercountriessuchasGermanyandFrance.SeeHouseofLordsSelectCommitteeon
SmallandMediumSizedEnterprises(2013).RoadstoSuccess:SMEExports.Houseof
LordsPaper131,p.20,para.2.7.
31ThecrosscountryanalysisofSMEexportpropensityinthecaseofgoodsexports
canbeperformedcombiningCOMEXTstatisticsoninternationaltrade(encompassing
bothintraandextraEUflows)andStructuralBusinessStatistics.Thestatisticsreferto
thenumberofenterprisesandincludeNACEsectionsB,C,D,EIndustry.
32Dataarefromnationalstatisticaloffices.
33 The database is a combination of National Statistical Offices data, Eurostat, and
econometricestimates.
34 Input output tables for EU27 and a set of candidate countries are available at:
http://epp.eurostat.ec.europa.eu/portal/page/portal/esa95_supply_use_input_tables/da
ta/workbooks
35 Sectors are classified according to NACE Rev 2. Some industries/products are
merged(e.g.,thereisnodetailed2digitbreakdownforsectorsbelongingtoB,Mining
andquarrying).
36 See annex XI for a detailed breakdown of each sector by intensity level within a
country.
37
Inthiscase,themultiplieristheoutputmultiplierofTypeI.Thisisobtainedby
derivingtheLeontiefinversematrixfromtheInputOutputtable,andtakingthecolumn
sumsoftheresultingmatrix.Thismultiplieraccountsforthedirectandindirecteffectof
anincreaseinfinaldemandonoutput.Thedirectimpactistheonethatproducers
immediatelyface,byexpandingtheirproductiontomeettheadditionaldemand.This
directeffectinturndeterminesanincreaseoftheproducersdemandontheirsuppliers,
whichistheindirecteffect.
38
Duetoalackofdataforsomeofthepotentialdrivers,theanalysisislimitedtothe
perdio20092012.
39Thisisthecaseofavariableoncontinuedvocationaltraining,whichisavailableonly
foryear2010.Seestandaloneworkingpaperformoredetailedinformation.
40SeeAnnexIofthestatisticalbackgrounddocumentforayearbyyearcomparisonof
thegrowthratesofthenumberofenterprises,valueaddedandemploymentofSMEs
andlargeenterprisesovertheperiod20082013.

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41 The statistical background document provides detailed information for all Member
States on the distribution of the SME population, vale added and employment across
varioussectors.