contribution

INTERNATIONAL ASSOCIATION OF ECONOMIC AND SOCIAL
COUNCILS AND SIMILAR INSTITUTIONS
(AICESIS)
CONTRIBUTION
TO THE 2015 INTERNATIONAL LABOUR CONFERENCE
ON “SMEs AND THE CREATION OF DECENT AND
PRODUCTIVE EMPLOYMENT”
”
Rapporteur: ESC of Luxembourg
With the contributions of the Algerian CNES, the Greek OKE and the Bulgarian ESC
(in Appendix)
EN

The world faces serious economic problems, characterised, despite some positive signs, by a
slow emergence from the economic crisis, growing inequality, a distinct lack of newly created
employment, high levels of unemployment, particularly youth unemployment, and disastrous
budgetary situations in many States. The policies pursued do not in fact seem capable of
bringing the economy back on track into sustainable growth, with, furthermore, the creation
of sufficient, decent employment.
While the predominant political discourse seems to advocate short term solutions, a true
reversal of the situation cannot be achieved unless there is a focus on medium and long term
policies, aiming in particular to support the creation of businesses and the promotion of an
enterprise spirit, as well as an increase in the creation of decent employment, by and in SMEs.
SMEs mean jobs and growth!
For this, social partners in AICESIS [The International Association of Economic and Social
Councils and Similar Institutions] need to contribute to providing political decision makers
throughout the world with the necessary guidance in order to create growth, prosperity and
stability in the largest economic sector, namely that of the SMEs. Without them, there would
be no recovery or economic stability, without them there would be no creation of productive
employment, not to mention decent employment.
The role of SMEs in the economy and society
It can be said that 99.9% of businesses are SMEs (2/3 of world firms according to the 2013
ILO Report). Why therefore should one care so much about large enterprises? Indeed, almost
all the legislation at both economic and social levels and relating to the business environment
that has been adopted throughout the world seems to have been inspired by a concern to
regulate aspects of the business environment for major companies (finances, governance,
fiscal matters, ownership rights, etc…) whereas logic would dictate that one should deal first
with SMEs, and only then add layers of legislation relating only to large enterprises.
In Europe, out of over 20 million businesses, there are only 43,700 businesses with more than
250 employees. On the other hand, more than 19 million businesses employ fewer than 10
people (micro-enterprises). The typical business in Europe employs 6 people, including the
owner/entrepreneur, SMEs account for 2/3rds of private employment, and approximately 60%
of added value. 80% of jobs created in the last ten years were in SMEs
1
. These figures are
even more skewed towards SMEs than in other parts of the world.
Political Europe likes to refer to a “Small Business Act” or the principle of “thinking small
first” but quickly forgetting these adages and reverting to a ‘business as usual’ approach when
it comes to establishing a regulatory, legislative framework. And this despite all the evidence,
when it is a question of promoting SMEs with their inherent natural advantages: an enterprise
spirit, proximity, and the creation of employment, value, and wealth.
Promoting economic growth and the creation of decent employment through SMEs entails
first of all respecting certain legislative principles:
 Thinking small, first;
 Just once;
1
EC – Annual report on European SMEs

 Proportionality;
 Taking impact studies into account.
The recent economic crisis has once again demonstrated that SMEs are the stabilising
influence par excellence in the face of economic adversity. Once again, it is the SMEs that
play a major role in initial and continuing professional education, two factors of major
importance for providing the transition from school to employment and for the qualification
of workers. SMEs contribute innovation, even in the absence of formal R&D programmes in
the traditional sense. In fact innovation in SMEs is established in co-operation with
employees, suppliers and clients, while working on specific projects, and their
competitiveness depends largely on their capacity to improve their products and services on a
constant basis. The transition towards a sustainable economy, towards a “green” economy,
will be provided by SMEs, through the integration of energy efficiency strategies and the
development of products and services that meet the criteria of sustainability.
SMEs are at the heart of economic and regional and local social stability, with a strong
involvement in communities, providing products and day-to-day services, and as a presence at
the heart of towns and villages and in rural areas. With their employees, owner/entrepreneurs
have long-term strategic and entrepreneurial views of the development of their company at the
local and regional level, where shareholders and managers would only see short term profits
and market share.
SMEs, the creation of businesses, and decent employment
SMEs have the potential to bring the economy out of the crisis and to contribute to the
development of employment throughout the world. But they cannot do this on their own;
policies need to support them and to put in place the economic and social framework that is
favourable for creativity and the enterprise spirit, the creation of businesses and the
development of decent, productive employment.
The formalisation of structures and governance
Entrepreneurs need well-established structures such as organisations of employers or
professional chambers. This formalisation of business structures is essential, because they
encourage the governance of States, of communities and of SMEs, and contribute in particular
to the putting in place of joint programmes, for example in the field of initial and continuing
professional training. Organisations of employers are the natural counterpart to workers’
organisations; together they represent the two sides of the same coin. States need to ensure
that freedom of association is guaranteed and to encourage the establishment of these social
partner structures.
Limitation of the informal sector
Concerning SMEs, alongside the practical support that these structures can offer, they are
essential in limiting competition from the non-formal sector. Illegal, undeclared,
clandestine, illicit working, and the “grey”, informal economy are many factors preventing the
ordered establishment of businesses, particularly in emergent or developing economies. The
informal sector, by preventing the taking of profits, renders illusory the related investments

and gains in productivity, prevents the putting in place of stable employment relationships and
systems of professional training leading to qualifications. The informal sector even goes so far
as asphyxiating any fair form of taxation, which is after all the basis of the State. Hence the
key importance for States of avoiding as far as possible the emergence of an informal sector
that renders economic and social progress derived from the SMEs impossible.
Professional training
The most efficient economies throughout the world are characterised in particular by a system
of work-linked training, with the involvement of businesses and educational establishments.
These so-called dual systems of training are ideally administered by established organisations
of social partners with attention paid to quality, recognition through certification and
continual adaptation. This dual training can play a driving role in training for
entrepreneurship, as demonstrated by the German example of dual training, and particularly
the type referred to as “Handwerk” – craftsmanship – where the three facets of “Geselle”
(journeyman) – Meister (master) – Niederlassung (establishment)” can serve as an example
throughout the world. This system, through the strong involvement of entrepreneurs with a
direct interest in training their staff, who may also be their potential successors, may be cited
as an example of the genre. Furthermore, the significant decentralisation of the system
through training provided in companies enables States to put in place an effective professional
training system that has relatively limited financial impacts in relation to other training
systems.
Social partners are even better placed to put in place continuing professional training systems
due to their involvement in companies. Through these structures, social partners can
effectively promote the productivity of businesses, thereby also creating bases for the
sustainable improvement of working conditions.
Access to finance
Both in developed countries and in developing countries, SMEs are experiencing difficulties
with access to finance for their investments. In order to promote the development of SMEs, it
is thus essential to support the banking sector with a particular emphasis on the development
of regional and local banking initiatives. Alongside traditional banking instruments such as
loans, States and International institutions should promote the putting in place of venture
capital or guarantee deposits and securities (co-operatives or mutual funds), particularly for
covering larger financial risks. In this order of ideas, the simplification of regulations relating
to the stock exchange would certainly be a way of facilitating access to investment for SMEs
in many countries. In developing countries, above all access to micro-finance can be a key
element for the development of SMEs.
"If the banks appear to be the natural partners of enterprises, it is imperative to develop new
ways of thinking and to find innovative mechanisms to strengthen their own funds. The
banking system should be more used for development of small and medium enterprises, taxes
should be used to increase capital for SMEs and allow inheritance rights SMEs development
over several generations. On the financing of the industry, as part of an industrial strategy, all
the structures that support the financing of actions in a dispersed manner must coordinate their

interventions under the responsibility of the Ministry for Industry.
2
»
Key ideas: Tax simplification for SMEs, reform of inheritance rights, creation of new
mechanisms for strengthening SMEs own funds, coordination of funding of SMEs actions.
Access to markets
Guaranteeing access by SMEs to markets is essential to enable them to develop. Many points
need to be addressed in this context:
 Administrative simplification;
 Costs of licences and rights linked to intellectual property;
 High quality public services; and utilities;
 Public contracts and tenders;
 Reciprocity in access to supply contracts;
 Organised crime (forgery, social dumping practices, etc...)
 Internationalisation of SME business activities.
States can thus contribute significantly to the development of SMEs, enabling these
substantial aspects for SMEs to be given adequate consideration. Public contracts are of
particular importance in this context. In fact, States can organise public contracts in a way that
actively supports the development of SMEs by instituting and effectively respecting certain
principles such as separation into lots for the purchasing of products or tendering by separate
trades in specific, different services. The consideration of criteria of sustainability (learning,
continuing training, respect for certain social standards, ecological aspects, CO2 footprint,
etc.) alongside simply financial aspects can enable the encouragement of access to public
contracts for SMEs, and thus the creation of decent and productive employment in these
businesses.
Energy
A last, particularly important point to enable the development of SMEs and the creation of
decent and productive employment is that of access to energy, and more particularly,
electrical energy. This point may seem derisory for developed countries – although the
problem of equitable access to energy does remain in respect of distortions in competition that
may be linked to it – it is a much more acute problem in developing countries where electrical
energy is totally lacking, or subject to irregular or erratic supply do not enable its rational use
in a production process. It is thus essential for States and international institutions to develop
access to (electrical) energy supply networks specifically so that businesses can operate
efficiently, and thus to promote societal development. This goes hand in hand with control
that does not amount to a stranglehold by States (with good governance) or by institutions, on
networks, to guarantee clean, ecologically sustainable energy, a universal service and at
affordable prices for all populations and SMEs.
Relations with major groups
2
From the French ESEC opinion « Win the battle of export with SMEs » (February 2012).