The importance of SMEs in Europe

Did you know?

The 23 million SMEs  in Europe act as incubators of entrepreneurial culture, and provide 100 million jobs.

SMEs make up 99% of all companies operating in Europe and the SMEs provide 67% of total EU employment.

Pie chart showing that SMEs make up 99% of all companies operating in Europe and large companies only 1%

SMEs make up 99% of all companies operating in Europe

Pie chart showing that SMEs provide 67% of employment in Europe

SMEs provide 67% of employment in Europe

SMEs play a fundamental role in the European economy

It is also important to remember that all large companies start as SMEs. The figures above have  led industrial policy in the European Commission to become more centred on SMEs in recent years. “Small enterprises are the backbone of Europe’s economy and the key to our competitiveness” Manuel Baraso, 2005

Quote from Manuel Baraso stating that Small enterprises are the backbone of Europe’s economy and the key to our competitivenessEU Flag

Overall, SMEs make a significant contribution to a country’s GDP and employment.  This can vary on a county to county basis, depending on its political and economic history. For example, SMEs in Belarus and Ukraine contribute less than 5% of the formal economy to GDP, compared to that of 80% in Chilli and Thailand. In Europe alone, the GDP contribution from SMEs can range from 9% in Switzerland to 80% in Greece. In general, the higher the GDP contribution from the SME sector, the higher the percentage employment from SMEs

SMEs are important to society in general

SMEs are important for economic and social reasons.  SMEs are the providers of a range of essential products and services that we use in our daily lives, from the hair dresser to the electronics company. SMEs  provide high quality and diverse employment opportunities. The employment an SME provides to its employees may not allow for significant career advancement, but the diverse set of skills required to work in an SME is good for job quality and satisfaction. The SME plays an important role in social cohesion and inclusion and fuels the creative and Information Communications and Technology (ICT) sector

Graphic depicting society with 3 people connected to each other

SMEs Need Support

There is recognition that incentives for entrepreneurship are important. This is because the 23 million SMEs  act as incubators of entrepreneurial culture and provide millions of  jobs. In order for SMEs to maintain their contribution to the economy, they need  support to expand into new markets, increase revenue and create more employment within member countries.

Hand out with support spelled out with keys from a computer

Watch out for future posts on SME supports and funding opportunities in the EU

One thought on “The importance of SMEs in Europe

  1. Pingback: SME Business | Pearltrees

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