SME Chamber

UEAPME Memorandum

Small enterprises
contribute substantially to economic growth; they are more flexible, they are
important for the local economy, and for employment. They employ more than 80
million people, which are more than 66 % of total private employment in the EU,
and their impact continues to grow.


Therefore, the Member States have
promised within the Lisbon Strategy and the European Charter for Small
Enterprises to put SMEs – and in particular small and micro enterprises – in the
centre of policy decision-making, but the reality still demonstrates the
opposite. In spite of this crucial role of Crafts and SMEs for Europe's economy,
policy decision-making still focuses too much on large companies. It is simply
wrong to predicate decisions on the needs of a few big companies and allow –
sometimes – exemptions for 99,8 % of all companies, which is the share SMEs
represent. If Europe wants to solve its economic problems, it has to alter its
thinking. “Think small first” has to become the basic principle to which the
European Institutions have to commit themselves.

Only a strong performing
European economy driven by innovating SMEs will be able to achieve the common
targets set out by the Lisbon Strategy. All European decision-makers have to
realise that social and environmental targets can only be a reality, if a strong
economy provides the resources for high standards in these areas. Therefore,
UEAPME, which represents more than 11 million Crafts and SMEs from the Enlarged
European Union, strongly urges that all Members of the next European Parliament
accept this interdependence and become more sensitive to the needs of SMEs in

Furthermore, UEAPME sees the need for better coherence between the
policies of the different EU institutions, which, for example, makes a
structured impact assessment during the whole decision-making process necessary.
In such a process the needs of SMEs should be taken into account on a systematic
basis, through hearings involving representative organisations on all relevant
issues and through a more open and transparent process. A mechanism to ensure
that the SME voice is heard and respected should be put in place.

The next
European Parliament needs to find a way to take the small business issues on
board and to involve the representative SME organisations in the process. In
this UEAPME Memorandum on SME Policy for the elections to the European
Parliament, Europe's SMEs present their expectations for the new Members of the
European Parliament. This Memorandum should be used as a guidance to validate
whether a candidate or a party which is running for the election is committed to
the needs of SMEs or not. We invite all European citizens to participate at the
European Elections and to vote for a better economic environment to allow
sustainable development for Small and Medium –sized Enterprises.

UEAPME President Hans Werner Müller
UEAPME Secretary
1. European Crafts and SMEs face mixed experiences on the policies of
the current European Parliament (1999 – 2004)
During the current legislative
period, the Amsterdam Treaty 1997 and the Nice Treaty 2000 twice extended the
power of the European Parliament. The areas for Qualified Majority Voting in the
Council in connection with co-decisions of the European Parliament increased and
the budgetary rights of the European Parliament were extended.
A review of
the SME-friendly performance of the newly empowered European Parliament (EP)
gives a very mixed picture.

SME policy achievements of the current
The reappearance of the SME-Intergroup (all party) and the strengthening
of the SME Circle (EPP) was helpful in getting some issues through, which was
important for SMEs:
ï‚· The EP supported successfully SMEs’ need to introduce a
Late Payment Directive, which really helps them and contributes to easing the
financial situation of small enterprises.
ï‚· The EP earmarked money, which
supported SMEs’ participation in the European Standardisation Process. UEAPME
was able to establish NORMAPME as an important partner for SMEs in this Process.

ï‚· As one of the activities to overcome SME difficulties of access to
finance, the EP increased the money available for financing SME credit guarantee
schemes through the EIF.
ï‚· The EP supported UEAPME successfully in its
campaign for an SME friendly solution regarding Basel II.
ï‚· Pressure from
the EP was very helpful in confirming a 2-year prolongation of the experiment on
reduced VAT rates for labour intensive services.

The current EP had also
shortcomings and produced additional burdens for Crafts and SMEs
On the other
hand the current EP missed some opportunities to support SME needs and, even
worse, put additional burdens on SMEs by amending proposals from the European
ï‚· Too often, SME representatives were not invited to hearings on
relevant issues and the EP did not demand sufficiently systematic impact
assessments on its decisions.
ï‚· While the EP is financing scientific support
for lobby groups of consumers and employees, it refused to allocate relevant
money to an SME think tank/Academy.
ï‚· The EP tried strongly to extend the
social and environmental criteria within the Public Procurement Directive.
The equal treatment directive creates new unjustified burdens on SME employers,
especially though the reversal of burden of proof.
ï‚· The EP regularly
increased environmental standards beyond the proposal from the Commission and
beyond the scientific evidence (electronic waste, volatile organic compounds,
air quality), which damages the concept of sustainability, since economic and
social aspects are ignored.

2. The European Parliament has to press
for the finalisation of the European Internal Market
Twelve years after its
start, the European Internal Market has to be seen as a success. The Internal
Market has increased economic activity and provided more employment.
Nevertheless, there are still too many barriers, which hinder the full
deployment of the economic potential of Crafts and SMEs. For small enterprises
the Internal Market is still not a reality. An important task for the new
Parliament will be to remove the remaining barriers and to press for a better
implementation of existing regulations:

Towards a single market for
The majority of SMEs in Europe are in the service sector, where the
Internal Market is less developed. Therefore, the EP should support:
cutting red tape and increasing transparency at point of authorisation;
harmonisation of quality requirements;
ï‚· better control of the requirements
in the framework of the principle of origin.

Towards a common European
area of taxation:
25 different company taxation regimes and 25 different
administrative procedures for complying with the European VAT System are still a
major barrier for SMEs to cross-border trading. UEAPME expects the EP to
ï‚· reforms of the company taxation systems in order to create a
harmonised tax base, but without interfering with the tax-competition on rates
and thresholds;
ï‚· pilot projects on Home State Taxation;
ï‚· harmonisation
and simplification of administrative VAT obligations (refunds, formulas, single
point of compliance);
ï‚· a definitive solution regarding reduced VAT rates for
labour intensive services, in order to reduce undeclared work.

Make the
European Internal Market a reality for Crafts and SMEs
Further key areas
where Europe's SMEs still suffer from the incomplete Internal Market are:
Different payment systems, both by countries or bank groups, which are still
increasing the costs for cross border payments. SMEs need the introduction of a
Single European Area for Payments and therefore the support of the EP.
ï‚· The
Proposal for a Directive on Unfair Commercial Practices, which concerns
especially small businesses in the retail sector, should also cover business to
business relations (private and public).
ï‚· The modernisation of company law
proposed by the European Commission is aimed mainly at big enterprises. The
regulatory initiatives should allow a more flexible framework for SMEs. Priority
should be given to the simplification of certain rules that are currently an
obstacle for SMEs in their cross border exchanges.
ï‚· In order to reduce cross
border trading costs, the establishment of a cross border mediation or
commercial dispute resolution mechanism is important.

3. The
European Parliament should strengthen its effort to improve European Economic
There is a very complex decision-making system for economy policy
within the European Union, characterised by a wide range of actors on different
territorial and functional levels. The principles of the European Economic and
Social Model enhance this complexity and are at the same time founding elements
of this Model. Better economic governance is needed to improve the consistency
of economic policy by further development of the regulatory framework where

Towards a more coherent European Economic Policy
in economic governance are one of the reasons for the under-performance of
Europe's economy. Therefore, UEAPME expects the new EP:
ï‚· to support a more
flexible interpretation of the Stability and Growth Pact in accordance with the
business cycle and reform necessities;
ï‚· to demand an improvement of
co-ordination between the main economic actors at European level and to
strengthen the role of the European Commission in this process.

better regulation – make it a reality
The principles of Subsidiarity and
Proportionality within the Amsterdam Treaty imposed concertation with economic
actors, impact assessments and simpler legislation. However, unnecessary
regulations resulting in administrative burdens are still the most quoted
problems entrepreneurs have to deal with. This demonstrates that decision-makers
have not recognised the reality of daily business in SMEs. In order to make
better regulation a reality for Crafts and SMEs, we expect the EP:
ï‚· to
implement the "think small first" approach as a guiding principle and promote it
towards other decision-makers;
ï‚· to advocate an obligatory and independent
small business impact assessment;
ï‚· to review existing directives affecting
SMEs with the view to changing these directives if they do not fulfil the
standards of good regulations, and the repeal of outdated regulations;
ï‚· to
allow reasonable and realistic timeframes for the implementation of
ï‚· to support SME friendly procedures (less costly and
administrative burdensome) for the European Patent and certifications (quality,
ï‚· to support effective information campaigns regarding changes
required by new legislation.

Services of General Interests: Crafts and
SMEs need a more efficient provision of services
In a highly competitive
environment, SMEs depend strongly on high quality public services, but these
services have to be produced in an efficient way in order to be provided at
reasonable costs for the customers and the taxpayers. Therefore, SMEs expect the
ï‚· to support private production of these services whenever it is
ï‚· to resist undermining the European State Aid Law and Public
Procurement Law in this sector by a horizontal directive;
ï‚· to consider the
necessity for a system of European regulators as a second review process to
guarantee the implementation of European regulations.

4. The European
Parliament should contribute to "the best possible" business environment for
Crafts and SMEs
Four years after the adoption of the Lisbon Strategy and the
endorsement of the European Small Business Charter, both including many
promising policy approaches in favour of small enterprises, Europe's economy
still suffers from a burdensome business environment. Small and Medium sized
Enterprises will only be able to deploy their potential for economic growth and
employment creation if they are provided with an adequate environment for access
to finance, training and professional qualifications and new technologies.
Furthermore, SMEs, especially small and micro enterprises, need a modern and
flexible network of business support services and an administration, which is
able to deal with their specific situation.

Basel II implementation
should be used to improve access to finance for Crafts and SMEs
access to finance for Europe's SMEs is a necessary precondition for realising
their growth potential. SMEs expect the EP:
ï‚· to implement Basel II without
unnecessary administrative burdens for smaller banks; the possibility of a
partial use of the IBR approach (internal rating) and the full acceptance of
existing guarantee schemes as collateral;
ï‚· to support new instruments to
improve the access of SMEs to venture capital and seed finance as well as an
increase of money for credit guarantee schemes;
ï‚· to increase pressure for
company taxation reform, which is favourable for the self-financing of

Crafts and SME need better conditions for innovation
denying the overwhelming importance of R&D and the "High-Tech" sector for
the performance of Europe's economy, it has to be recognised that more than 97 %
of economic activities are in the so-called "Mid-Tech" and "Low-Tech" sectors.
Most of the innovation, especially in SMEs, happens without explicit R&D.
Europe's SMEs expect support from the new EP for a new innovation policy, which
focuses on access of SMEs to RTD,
ï‚· as a follow-up of the mid-term review of
the 6th Framework Programme on RTD, unutilised SME budget for Priority Thematic
Areas should be redistributed towards SME Specific Measures;
ï‚· strengthening
the bottom-up approach (SME Specific Measures) at the next Framework Programme
on RTD;
but also and more strongly on:
ï‚· access of SMEs to already
existing technologies;
ï‚· developing SME clusters / networks and demand
oriented offers for vocational training;
ï‚· involving SMEs in the reform of
quality standards, like ISO 9000, in order to make them more adaptable towards
innovation of production processes.

The next Multi-Annual Programme for
Enterprises should be used to implement the European Charter for Small
The Multi-Annual Programme for Enterprises is one of the most
important European programmes to support SMEs. The next Programme should focus
on the needs of small businesses. Therefore, Crafts and SMEs expect the EP:
to promote entrepreneurship education through programmes targeted at schools,
public authorities, and public in general, etc.;
ï‚· to propose an awareness
campaign in the field of ICT (such as the Go-digital initiative);
ï‚· to
facilitate activities of businesses, especially SMEs in third markets (up to now
these have only been financed in the framework of investment programmes);
to re-introduce programmes like "Interprise" and

Crafts and SMEs need mobile and well-qualified
Europe’s SMEs are suffering from a shortage of young people with
good quality vocational qualifications. At present European education programmes
favour academic education and the mobility of students to the detriment of
vocational training and the mobility of young workers, trainees and apprentices.
Therefore, SMEs ask the EP:
ï‚· to push for an ERASMUS-style programme for
young workers, trainees and apprentices;
ï‚· to establish a European statute
for apprentices, which recognises foreign vocational training for young
ï‚· to ensure that the new generation of education and training
programmes contains a programme specifically aimed at promoting vocational
training in SMEs and which is easily administrable;
ï‚· to ensure that
vocational education is valued equally to university education and receives an
adequate share of the budget.
5. The European Parliament should avoid
additional burdens for Crafts and SMEs imposed by new labour market, social and
environmental regulations
Europe's SMEs recognise that the Lisbon targets not
only include economic performance, but also social and environmental standards
in order to improve living conditions for Europe's citizens. These targets can
only be achieved if a highly competitive and well-performing economy provides
the resources for a better life. Therefore, policy-makers have to avoid
endangering the economic base of the European Social Model by introducing new
labour market, social and environmental regulations, which have a negative
influence on economic performance and are therefore counter-productive.

SMEs need flexible labour markets
Flexible working time arrangements
are essential for SMEs to increase their productivity and competitiveness. But
they also respond to the increasing new needs of employees. The same is true for
the use of temporary workers, which is very important for the integration of new
entrants into labour markets and to cope with seasonal cycles in activities.

Therefore, SMEs expect the EP in relation to the working time
ï‚· to ensure that the new proposal for working time will not reduce
the current possibilities for flexible working time arrangements with the
suppression of the opt out;
ï‚· to support the extension of the reference
period to 12 months as a general rule.

With regard to the directive on
temporary agency work, SMEs expects the EP:
ï‚· to facilitate the use of
temporary agency workers, whilst respecting the principal of
ï‚· to avoid greater administrative burdens that will
increase costs for the agency and consequently for the user enterprise;
ï‚· to
leave enough room for manoeuvre for the national Members States to adapt the
rules of comparison for workers to their specific situations.

Crafts and
SMEs need a simplification of environmental legislation
SMEs recognise the
opportunities linked to environmental issues and accept the need for high
quality standards, but most SMEs are not in a position to comply with the full
range of administrative and technical obligations. Therefore, SMEs need the
support of the Parliament:
ï‚· to simplify environmental legislation by
adapting it to the size and the nature of the businesses;
ï‚· to provide SMEs
with the necessary financial and technical support in the framework of the
Compliance Assistance Programme proposed by the 6th Environmental Action
ï‚· to integrate SME policy in environmental issues and allow
sustainable development.

6. The European Parliament should listen more
carefully to Crafts and SME needs
Even though there is some lip service by
European and national decision-makers in their recognition of SMEs, too many
concrete decisions are still made without consideration of the needs of SMEs.
Big companies and other stake holders have more resources and /or get financial
support from the EP, which allow them more effective lobbying than small
enterprises and their representative organisations can afford. Therefore, UEAPME
expects that the new EP will listen more carefully to SMEs, create instruments
and provide resources, which allow them to present their opinions.
ï‚· The EP
must insist that for all regulations, which have an impact on enterprises, a
serious "Business impact assessment" is carried out before the first reading in
the EP is finalised. Amendments made by the Council and the EP have also to be
assessed. These assessments must include all compliance costs and administrative
ï‚· The EP must ensure that these impact assessments are carried out
independently and are not be sponsored or financed by involved interest groups.

ï‚· UEAPME expects that the new EP will invite SME representative
organisations to all hearings on issues which are relevant for SMEs and provide
the financial means to allow SME experts to participate in such meetings.
UEAPME expects better involvement of its experts in the work of SME-groups
within the new EP (SME Inter-group, SME Circle).
ï‚· The EP should support the
creation of "Better Regulation Units" within the European Commission and the
European Parliament itself, which will support the services in finding the best
regulatory approach and is responsible for appropriate consultation of all
ï‚· UEAPME expects from the EP financial support for the
establishment of an European Think Tank/Academy for SME policy, as the
Parliament supports employees and consumers.


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