Analytics, EU – Baltic States, Financial Services, Good for Business, Markets and Companies

SMEs, defined by the European Commission as companies with fewer than 250 employees and an annual turnover of up to €50 million, are hugely significant to Europe’s economy, accounting for 67% of total employment across the EU-28 states.

SMEs as job creation centers

These are some of the findings of the European Restructuring Monitor (ERM) annual report for 2015, which looks specifically at the issue of job creation in SMEs. The report identifies which types of SMEs are dynamic job creators and determines their main drivers and barriers for job creation.

Employment in Europe has been growing exponentially in areas in which SMEs are dominant, notably in professional and administrative services. The diverse nature of SMEs has previously made it difficult to pinpoint their specific potential for growth and job creation. However, the report has used the research available to identify the transversal profile of SMEs that have a strong potential to create jobs.

Youthful ambition was identified as a generally positive factor, with ambition and strategic risk-taking paying dividends both in terms of performance and growth. There is also an important place for experience, with knowledgeable and qualified managers driving internal and external performance.

In terms of the labour market, there should be a sufficient labour supply, a coherent match between skills and business requirements, and more manageable labour costs.

SMEs in business

The Eurofound report also sets the performance of SMEs in the broader business environment. There must be sufficient access to finance and suitable public support for the growth of the business itself. Businesses also tend to succeed in environments that entrepreneurship is regarded positively and a favourable legislative and taxation regime is in place.

The data in the European Restructuring Monitor helps policymakers, researchers and businesses to understand the strong performance of SMEs over the past three years.

It is also important in order to put policy measures in place that will help copper-fasten Europe’s economic recovery and close the gap with other developed countries outside Europe where a more robust post-crisis recovery is already in place.

Note: Job creation in SMEs: ERM annual report 2015 can be downloaded from:  http://bit.ly/ERM2015.