Author: CEA-PME

Let’s exit the confinement, get back to work and restart the EU’s economy in a coordinated European way

Available for download here

European Entrepreneurs CEA-PME, the biggest European confederation of voluntarily associated Micro, Small and Medium-sized companies, together with ESBA, the European Small Business Alliance, and EVBB, the European Confederation of Professional Training Providers, and with AMSP, the Czech SME Association, – this is all together 35 business associations from all over Europe – remain deeply concerned about the health and economic situation in Europe in relation to the COVID-19 pandemic.

But first encouraging signs of slow improvement of the health situation in many European countries allow us to underline again the urgent need to go back to work as soon as possible, avoiding to make more damages to the economy, and with that in the end also to health care systems and governments, which are both needed.

Again, also in this case, the European Union is called to take over its part for and together with Member States. This is why we call the EU to discuss and decide together on a Roadmap to ease in a harmonised way the COVID-19 restrictions in the single Member States to free movement of people and goods as currently, and to launch a comprehensive economic recovery programme with European SMEs in the centre of it.

Both aspects together we call it the post-COVID-19 “ Reload Europe Strategy ”.

This Strategy needs to be implemented by the EU and Member States with common principles:

1. Recognise the sense of responsibility of entrepreneurs and citizens

As soon as possible does of course not mean not to care about risks for human lives and health, but to define the best practices to re-gain – step by step – pieces of normal life. No company has ever thought and would never dare – and not only for legal reasons – to put the health and lives of their workers and employees at risk. Particularly after more than 1 month of lockdown of economic activities and in many countries confinement of people at home, everybody has learned the lessons regarding social distancing and hygiene necessary to limit the spread of the virus. We will all contribute to do our best, to respect and further develop these elementary rules. But we are adults, not children .

2. Learning from each other – as much and as fast as possible

The crisis management in different countries should ideally be analysed and compared on a scientific base. But time is running and for the moment results count. Much can be learned from practical experience. We need to listen to each other. The EU should organise and finance all opportunities and means to learn from each other practically and on all levels comparing results: for doctors, for what regards treatment methods of the COVID-19 disease, for health managers about limiting the spread, treatment and testing capacities, for entrepreneurs and engineers to arrange practical solutions to get back to work in safety or to find new markets, sales channels and technologies, for schools and local administrations to teach from remote with equal access to knowledge and support for all children and parents, for governments on how to support SMEs, etc.

3. Think of the effects of your policies on other member states

The European Union has still internal borders, and we learned that now again, despite Schengen. But our lives and economies are too much interconnected to do without the others: the automotive industry cannot produce if suppliers from all over Europe can’t deliver because factories or border are closed. If one country continues to work or re-starts earlier, while other countries take time, this causes unfair competition. Europe was before COVID-19 one single space to freely move and work. We must regain this space again . This requires all Member States’ attention: your policies might not only harm or favour your citizens and companies, it might harm or favour also those in other countries.

Based on these 3 principles, we ask the European Union and the Member States to take immediate action for the following 7 measures of a common Reload Europe Strategy:

1. Masks and ventilators for everyone

The EU’s action in making masks and all other protection material available all over Europe, in cooperation among countries and companies, included opening the cross-border and international supply chains for this purpose must be continued and intensified: companies need urgently sufficient stocks of protection material to get back to work in safety, hospitals need medicines, tests and medical tools like ventilators.

2. As much tests as possible

All member states should do as much as possible to increase at least targeted testing of suspected infected persons and of all contacts they had before. Best would be a testing of the whole population. This costs much less than to continue the lockdown. The network of testing laboratories in Europe should be better coordinated to boost testing capacities.

3. “Recovered” certificates and anonymous Bluetooth-based contact tracing

Fast identification, approval and distribution by health care services of antibodies tests of immunity to COVID-19 in order to allow as much citizens as possible to obtain soon an individual certificate guaranteeing the presence of COVID-19 antibodies, and thus the status of “immune” or “recovered”. These would allow to get back to work or to get access to certain public spaces, transport means, etc. Our proposal is to test at the companies’ costs all workers below 60 years of age especially in the manufacturing sector. In addition, we support the voluntary use of Bluetooth-based anonymous contact tracing Apps, that should be compatible and interoperable all over Europe, to make cross-border tracing possible and thus allow also more free movement in Europe.

4. Make the Single Market work again – step-by-step – until summer 2020

The Single market is one of the most important assets of the European Union, it makes the 3 freedoms be a reality and it boosts our economy. The EU must work intensively with the Member States to remove again all possible barriers, compatibly with reasonable safety and health provisions. Limits could be lifted or re-established if necessary on regional levels, not only for entire countries. Some regions perform better in managing the emergency or have simply less exposure, others perform less well or are less lucky. This might be decided using commonly accepted, objective criteria like the number of days to double the infected individuals or the infection spread coefficient (one person infecting how many others?). For transports inside the EU, empty truck tours should temporarily not pay any highway tolls, and double quarantine at borders can be avoided through an EU register of quarantined drivers.

5. Liquidity measures for all SMEs and self-employed in the whole EU

– Direct financial aid to Self-employed, Solo-Entrepreneurs, Micro- and Small Enterprises small associations, which have all severe difficulties to obtain even guaranteed loans

– 100% guaranteed emergency loans at 0% interests all over Europe for all SMEs

– Significant temporary tax reliefs: no corporate taxes for 1-2 years, less income taxes or tax cuts, no electricity taxes, no tax anticipations, etc.

– Pay in 7 days – especially public administrations and the EU’s services – and change now the EU’s “Late Payment”-directive, obliging also private companies to pay their service providers and subcontractors after max. 1 month.

All this should be priority for all Member States and the EU-Commission. Our Economy after 1,5 months of lockdown is severely damaged. There is no such thing as doing like we always did. Unusual decisions have to be taken. Liquidity is crucial, otherwise the whole economy will fail. In particular SMEs should be in the centre of the EU’s economic recovery agenda.

In this sense, it is important to underline that self-employed under normal conditions are not entitled to receive short-time work compensations or unemployment cheques. Therefore, either the member states do direct financial transfers to them, or the EU does it in their place. Best the EU ring-fences min. 20% of the SURE funds for self-employed, obliging Member States have to pay direct financial aid, beyond existing national welfare rules.

Exceptions to State-aid rules, like for 100% publicly guaranteed loans, which are already approved by the EU for one country, can easily be extended to all Member States.

Service providers of the EU and grant beneficiaries in EU projects should now be paid out in max. 7 days. This would create immediate liquidity for many SMEs & local administrations.

6. A European Reload SME Programme funded with min. 10, best 50 Billion Euro

This should be planned now and opened not later than in 1 month, calling for proposals to be submitted latest until beginning of June, in particular for heavily impacted, typical SME sectors like event organisation and fairground services companies, the building industry, retail shops, tourism companies, hotels, bars and restaurants, etc.

This programme should be for all sizes of SMEs as the EU defines them today. It should give small flat-rate grants to at least 1-5 Million companies in Europe that have to relaunch their competitiveness and need a second chance: everything that boosts new ideas, develops new services, or finalises new products should be welcome.

Fast roll-out, easy application and short-term implementation are crucial. Parts of this programme can be already successful models, like DigitaliseSME, to support digitalisation of SMEs, or MobiliseSME, the Erasmus for SMEs and their employees, to find new clients and markets abroad. Cross-border activities should be encouraged particularly.

7. Prepare for the future: EU-management of pandemics must be reinforced

Pandemics like the COVID-19 can happen again, particularly in a globalised world and probably also facilitated by climate change. As European entrepreneurs, we are favouring a world with global economic and social cooperation. Therefore, we also want the European Union to be ready for the next pandemic: public health is a competence shared between Member States and the Union. This means, the EU can and must do more, Member States must share competences. No isolated national initiatives anymore, cooperation in prevention and crisis management, and – most of all – production of necessary medical and protective equipment in Europe, if needed with EU-subventions, to guarantee a European sovereignty also here.

If Europe cooperates and if it puts its citizens in the heart of its political efforts, and SMEs in the centre of its economic strategy, we can face and overcome all challenges and crises together.

Unanimously approved during the online conference on April 17^th 2020 of European Entrepreneurs CEA-PME, presided by Mario Ohoven,

by David Caro, President of ESBA the European Small Business Alliance, by AMSP, the Czech SME Association, as well as

by EVBB, the European Association of Institutes for Vocational Training.

European Entrepreneurs CEA-PME, the biggest European confederation of voluntarily associated Micro, Small and Medium-sized companies, together with EVBB, the European Confederation of Professional Training providers,with ESBA, the European Small Business Alliance, and with AMSP, the Czech SME Association, are deeply concerned about the health and economic situation in Europe in relation to the COVID-19 pandemic.

Not only hundreds of thousands of people are infected and suffer, and tens of thousands are dying, but also hundreds of thousands, if not millions of Micro-, Small- and Medium-sized enterprises risk to die. It is inevitable to fight the pandemic by limiting the economic activities and the movement of the European citizens, but it is equally inevitable to urgently avoid the risk of losing everything as a great part of the more than 23 million MSMEs in Europe is running.

This is a task for the European Union too. National governments cannot always and not everywhere do enough to prevent this risk. We need European Solidarity now. We need this solidarity particularly for the Micro-Enterprises, Self-Employed, Solo- and Small Entrepreneurs. They are the most hit entrepreneurs in this crisis, because they don’t get higher loans or unemployment cheques, and they risk to lose everything: skilled and loyal colleagues, machines, offices, workshops, often carefully equipped hotels, restaurants & shops.

The Self-Employed & SMEs have answered to a survey of European Entrepreneurs, and ask mainly for 7 things the EU should do now, in a logic of subsidiarity with Member States:

1. A coordinate EU-response for pandemic emergency health care

A coordinate EU-response for pandemic emergency health careThe EU’s rescEU Initiative should be strongly supported by all Member States and broadened in scope, in order to have the most efficient coordination at European level on all aspects of the health care systems,, where single countries might be overloaded or ineffective without the help of other countries. This regards for example. the fast equipping with and fair distribution of masks, protection suits, sanitisers, lung ventilators, medicines, etc. but also reciprocally help out with medical staff wherever possible.

2. Immediate direct financial aid to Self-employed, Solo-Entrepreneurs, Micro-, Small and Medium-sized Enterprises incl. small associations and cooperatives

Closing the gaps that member states leave open and making sure that the majority of entrepreneurs get over the worst period and safeguard their basic assets. This shall be done with all possible funds available in the European Union’s already approved annual budget 2020 that are not yet contractually committed and are dedicated to competitiveness for growth and jobs (e.g. HORIZON 2020 and COSME), the 37 Billion of funds in the Coronavirus Response Investment Initiative in the hands of the Member States, as well as all funds for SME Financing in the budgets of the European Investment Bank and the European Investment Fund. Immediate means now, in a few days, direct means without intermediaries: EU-Commission/EIB => Entrepreneurs.

3. A European Reload SME Programme with min. 10 Billion Euro of Funds

To be planned now and opened in 1 month, calling for proposals to be submitted latest until beginning of June, in particular for heavily impacted, typical SME sectors like event organisation and fairground services companies, the building industry, retail shops, tourism companies, hotels, bars and restaurants, etc. This programme should be for all sizes of SMEs as the EU defines them today. It should give small flat-rate grants to at least 1 Million companies in Europe that need to relaunch their competitiveness and need a second chance: everything that boosts new ideas, develops new services, or finalises new products should be welcome. Fast roll-out, easy application and short-term implementation are crucial. Parts of this programme can be already successful models, like DigitaliseSME, to support digitalisation of SMEs, or MobiliseSME, the Erasmus for SMEs and their employees, to find new clients and markets abroad.

4. Max. 1.5% interests on crisis loans

We hear that in some countries some banks offer new loans with excessive interest rates. Trying to take advantage from desperate SMEs shall not be allowed in any EU country. The commercial banks have been saved by us in 2008-2013, and now they should save our economy. We call the European Commission, the ECB andthe European Banking Authority to use all their powers to monitor and limit such abuse, to make sure 1,5% is the max. interest rate for SMEs in this period, particularly if they are guaranteed by public funds.

5. EU and all other public authorities should “Pay in 7” days

We fully support the campaign of ESBA and ask that the EU and all public authorities, particularly those entrusted with payments of EU-funds (e.g. Agricultural, Social & Regional Development Funds, etc.) should now make their payments to beneficiaries and service providers in 7 days. This would create immediate liquidity for thousands of SMEs & local administrations.

6. An EU-wide coordinated EXIT STRATEGY

If people don’t get back to work, it will cause a drop in income, followed by fewer tax payments, less public funds, an economic collapse of the health systems and hence even more fatalities. Our most important proposal for an EU-wide Exit Strategy is to test at the companies’ costs all workers below 60 years of age in the manufacturing and building industries, in transports, agriculture, and in all non-direct public contact services, to re-start production again. We need governments to approve this rapidly and the EU to coordinate production, purchase and distribution of fast COVID-19 antibody tests as already available.

7. No corporate taxes for SMEs until end of 2021

To relaunch the economy, companies need to recover. One important aspect would be to temporarily suspend all corporate taxes for SMEs for 2 years, until end of 2021. This needs to be coordinated at EU-level and agreed by all Member States, to avoid unfair tax competition.

Unanimously approved in online conference on April 2^nd 2020 by the Extraordinary General Assembly of European Entrepreneurs CEA-PME presided by Mario Ohoven,

by David Caro, President of ESBA the European Small Business Alliance,

by AMSP, the Czech SME Association, represented by its president Karel Dobeš,

as well as by EVBB, the European Confederation of Professional Training providers, represented by its Secretary General Horst Dreimann.

The European Union is currently undergoing the finalisation of its funding programmes for the 2021-2027 period. One of the key elements concerning new funding opportunities is that the SME Instrument, a funding programme mostly aimed at small and medium-sized companies that was present in the 2014-2020 period, will be cancelled. This is a problem.

In its place the European Commission is proposing a new programme called the European Innovation Council, composed by two parts: the Pathfinder and the Accelerator. Neither of these parts however has been designed to specifically support SMEs as we know them.

The Pathfinder aims to cover the following areas of research and innovation:

– Human-Centric Artificial Intelligence
– Implantable autonomous devices and materials
– Breakthrough zero-emissions energy generation for full decarbonisation
– Future technologies for social experience
– Measuring the unmeasurable –– Sub-nanoscale science for Nanometrology
– Digital twins for the life-sciences

While sounding very ambitious and technical, these are not areas where it is feasible for SMEs to work on. Already by choosing a technology centered approach, DG R&D was most probably only consulted by Universities and decided to open the measure to Universities and research centres.

The mixture of vague concepts and goals that aim to revolution our technological world in broad strokes make for a very abstract focus, in contrast with the clear concrete needs and objectives that an SME must build upon to succeed when innovating. They simply cannot afford to engage alone in such far-fetched innovation research, so they are bound to depend on Universities.

But SMEs don’t want to be guinea pigs in the research laboratories of Universities. They want to grow. Maybe thanks to innovation and technological progress. But innovation that is adapted to their business model.

The Accelerator part is equally problematic as it offers funding for late-stage development of innovative technologies in the areas mentioned above, likewise a private start-up accelerator. In fact, if you look at the members of the “SME Jury” of the EIC, you will find more supposed “venture capitals” and “investors” (which normally use the money of others), instead of Entrepreneurs that have been standing in their workshop for years.

This approach, while well-meaning, completely ignores the reality of Small and medium-sized enterprises. Accelerator is a tool designed for Start-ups. Maybe those born before in the laboratories of Universities and research centres and that then seek public funding to maintain the employees’ incomes at tax payers’ risk.

Even assuming such a start-up would be able to develop a revolutionary technology and business model, the best and fastest way to profit from it is to sell it to bigger companies that can afford to transform any prototype into a product for purchase on the mass market. Most of these companies are not European.

What SMEs need is not so visionary goal and a financing approach that ignores markets, but a concrete approach to help them integrate digital technologies in their business so that they can become more efficient and competitive. Our project DigitaliseSME showed one way to achieve this and we believe it is still possible to build upon it – it is better to support 10.000 well-functioning garages than one non-existent unicorn!

Stefan Moritz

Managing Director European Entrepreneurs CEA-PME

Our Portuguese Member COTEC has represented European Entrepreneurs CEA-PME at the First Meeting of the Stakeholder Advisory Board for Alternative Dispute Resolution of the EU Intellectual Property Office (EUIPO).

Digitalisation had a far-reaching impact on businesses in general as it puts a strong demand for innovation. Small and Medium-sized companies are particularly affected as they have to keep up with the demand for innovation while having to be more careful on how they use their resources. Furthermore, because of the intrinsic nature of digital innovation, the risk of Intellectual property (IP) being stolen or used without permission has increased, which, when it happens, requires engaging further resources in litigation to protect one’s products and processes.

The EU Intellectual Property Organisation has recognised that this process puts too big a burden on the shoulders of SMEs, which are not necessarily in the best position to withstand the pressure. To respond to this issues, it encourages the use of Alternative Dispute Resolution, which means to offer alternative mechanism for the protection of Intellectual Property besides legal litigation.

For this purpose, the organisation has set up a Stakeholder Advisory Board on the topic, which met for the first time on October 28-29 in Alicante. We are delighted to say that European Entrepreneurs CEA-PME has been invited to join this body as full member. Our Portuguese member COTEC, represented by its Director for Legal, Fiscal and Public Affairs, Mrs. Susana Barahona Ferreira, kindly accepted toparticipate to this first meeting of the SAB in Alicante.