No Longer Quiet On The Western Front

 

There are many other examples of EC disharmony. Luckily, though, there has been no deep national or ideological cleavage on the SME issue thus far; both the left and the right want more jobs and innovations and hope small companies can provide them. It was also a good omen that when the Economic and Social Committee Opinion came to the floor, there were only three negative votes and two abstentions among 156 members.

Still, on major issue after major issue, it has taken the EC years to achieve sufficient agreement for the Council to take final action. By the time the December EYSME meeting arrives, clashes of interest in all 10 home countries will probably have made controversy about SMEs more intense than it is today. Reaching a consensus at that point may be far more difficult than it has been so far.

The EC had agreed on one important matter before the EYSME resolution: a common definition for an SME. The EC defines an SME as any business with fewer than 500 employees, the same definition approved by the delegates to the 1980 White House Conference on Small Business. This is no small accomplishment. The more the people of the world accept the same definitions about small business, the sooner they will be able to reach agreement on matters affecting it.

The EYSME proposals put forth so far are also remarkably similar to those advanced by the White House Conference. Our conference called the central problem of small businesses "capital formation and retention"; the EC agenda calls it "the financial promotion of SMEs." Our chief recommendation for improving the climate for small companies was tax reform; theirs is credit expansion. But in its agenda section on "the fiscal environment," the EC makes the same sort of tax proposals. The EC also makes analogous proposals for research and development funding, simplifying government paperwork, making government regulations more flexible, and expanding small companies' share of government business. The two conferences also agree on the need for more education and training of managers and workers, providing information and assistance for small companies, and promoting international trade. Although these parallels are striking, what is more remarkable are the similar responses to the two small business "events." Both conferences had to overcome significant credibility problems. Most people in the media, the government, and the small business community itself doubted that the White House Conference would lead to any significant changes. The account of the EYSME launch in the Brussels Bulletin: The Newsweekly of the Capital of Europe, quoted here at length, has the same tone as initial media responses to the Washington small business conference:

"If the dynamic potential of small-and medium-size companies is to be realized, they must first be set free from the fetters, obstacles, bureaucratic constraints, and unnecessary burdens to which they are subject and, secondly, equality of opportunity must be restored vis-a-vis larger firms in the market."

So said EEC Commissioner Karl-Heinz Narjes during a two-day conference here last week inaugurating the European Year of Small and Medium-sized Enterprises. But the Conference participants had heard it all before. Time and again the Commission has gone on record to say that small companies are the backbone of the economic and commercial structure of the Community and that the financial, fiscal, legal, and administrative conditions under which they operate must be improved.

Exhortations like these hardly amount to concrete support, and it is difficult to see how designating 1983 the year of SMEs is going to improve their lot by much. Not that it is all the fault of the European Commission. It has been constantly prodding member states to legislate in favour of small companies. Cash-strapped national governments, however, have been slow to respond.

Narjes, for one, admits there has been a lot of talk and little action on this front. Referring to the need for an effective strengthening of the investment capability of small companies, he lamented: "There are libraries of useful recommendations on how to do this but a sad shortage of specific decisions, either national or European." (January 28, 1983, page 28)

The White House Conference appeared to many experienced observers as nothing more than a political stunt on the part of the Carter Administration. Yet just three years later it is fair to say that no other White House Conference ever resulted in so many achievements, so quickly. And the momentum for a changed climate, one more favorable to entrepreneurship and small business, has continued. EYSME will be a similar success, if, at the EC level, it can:

* obtain a binding commitment via a council resolution for a long-term (say, 10-year) systematic effort to expand the EC's small business sector

* establish an on-going database that will track, for both the EC and for each member nation, the share of jobs, assets, imports, exports, profits, GNP, and the like held by large companies, SMEs, government entities, and nonprofit organizations. The database should also include a record of business births and deaths, with reasons listed for the failures.

* ensure that the member nations cooperate in such areas as taxes, regulation, credit, patents, and technology

* build SME programs and advocacy units into both the EC commission and the member-nation governments

* help SME owners and managers use the interest generated by EYSME to develop effective leaders and organizations in the private sector. This step will provide the long-term momentum required to keep the governments involved accountable and on their toes.

Of course, EYSME's success or failure will be determined, in large measure, by the individual member nations. In a future column, we will look at the first national program to get under way -- the United Kingdom's -- inaugurated a week after the Brussels Conference.

Of course, EYSME's success or failure will be determined, in large measure, by the individual member nations. In a future column, we will look at the first national program to get under way -- the United Kingdom's -- inaugurated a week after the Brussels Conference.

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