Fabian Demicoli

What does all the nice talk on helping SMEs boil down to?

 Below are the results, in quote, of a study undergone by the European Commission on how different Member States, amongst which Malta, are fairing in areas that are of primary importance to business. While it clearly shows that in Malta SMEs contribute more to our employment, economy and constitute a larger percentage of enterprise when compared to the average, the picture, as we expected, is not at all rosy:

  • The SME sector in Malta has a relatively small-scale structure: the percentage of micro enterprises is higher than the European average.
  • The contribution of Maltese SMEs to the overall economy is – compared to the EU-average – to that of large firms is – in EU-terms – more important.
  • In particular the contribution of micro firms to employment is in Malta (40 %) higher than the European average (30 %). As a consequence the contribution of the total SME sector to employment (77 %) is in Malta comparatively higher than in the EU on average (67 %).
  • From 2002 to 2008, the number of SMEs has grown with 2 %, which is lower compared to the average EU-growth (13 %). In particular, the number of medium-sized enterprises has dropped.
  • In the period 2002-2008 employment growth of Maltese SMEs has fluctuated with an overall decrease of 2 %, which is well below the EU-average growth of 12 %. Employment was reduced in particular in small and medium-sized firms.
  • Value added of SMEs grew almost steadily with 19 %, which is however well below the EU average growth of 28 %.

Entrepreneurship

In Malta, the entrepreneurship rate, measured as the share of adults who have started a business that is still active or are currently taking steps to start one (5 %) is significantly below the EU average of 24 %. The participation in entrepreneurship education also return below-average results.

Think small first

While time required to comply with administrative obligations as a percentage of total SME working time returns a lower and, hence, better value for Malta as compared the EU on average, the share of SMEs stating that they encountered difficulties in the last two years with administrative regulations is above the EU-average.

Responsive Administration

With 95 % of the 20 basic services available online Malta is actually the second best in class, surpassed only by

Austria.

The start-up time is with 5-8 days in line with the EU- average of 7.7 but still outside the goal of three days formulated and agreed upon at the 2009 December meeting of the European Council. The startup costs are cheaper in Malta than in the EU on average, but there still seems to be an issues with the one-stop shop not fully operation for all firms and sectors.

Public procurement and State Aid

The proportion of total State aid devoted to SMEs (1 %), is considerably below the EU-average of (10 %).

Finance

The share of Maltese SMEs experiencing problems with access to finance in the last years is of 35 %, which is considerably higher than the EU-average of 21 %.

Planned share of Structural Funds dedicated to stimulating entrepreneurship and SMEs in 2007-2013 is below the EU-average

Skills and Innovation

Almost all of the innovation indicators return below-EU average results

The sole exception being the percentage of enterprises having received orders on-line which was in line with the EU average.

The share of SMEs using e-learning applications for training and education of employees is on a par with the EU-27 average, the share of SME staff that have tertiary education on the other hand ranks below EU-27 average.

Environment

While the share of SMEs applying simple measures to save energy (30 %) is on par with the EU-27 average (29 %), the share SMEs having comprehensive systems for energy efficiency on the other hand is comparatively lower (Malta: 3 %, EU: 4.25 %).

Internationalisation

The performance on the export side was less impressive: total revenues from export divided by total sales, on the other hand, were below than the EU-27 average (Malta: 3 %, EU: 6 %), while the percentage of SMEs that had any direct exports in 2006-2008 (30 %) is however on par with the EU- 27 average.

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