GRTU wants support plan for SMEs speeded up

The government needs to base its support for SMEs on four main pillars, namely helping the sector survive the credit crunch, supporting it to maintain as many people as possible at work, promoting entrepreneurship and protecting SMEs against unnecessary burdens, a report by the Chamber of Small and Medium Sized Enterprises - GRTU has concluded.

It says that while work on the strengthening of the SME sector – which it says is crucial for an economic recovery - has already started, its implementation has been slow.

The report says that the European Small Business Act, launched during the French EU presidency, will only have positive effects if the commitments made are fulfilled at a European, national and local level.

“The Maltese government has to grab the chance now that the policy is still fresh to focus on its implementation – but to do so, it will have to tackle the real needs of the crafts and SME sector,” it says.

The report, entitled Restoring Confidence for a New Start by GRTU director-general Vince Farrugia was recently presented to Prime Minister Lawrence Gonzi.

The report says that the Maltese government must do its share in re-stabilising financial markets by ensuring that any public support given to banks as well as interest rate cuts are passed on to consumers and not used in favour of bank shareholders.

It also says the economic recovery must be supported by policies which aim to bring back confidence to all economic actors and to stabilise economic demand, without endangering fiscal stability in the long run. The Cabinet, it says, must contribute to a policy mix, which uses the extended possibilities offered by the new State aid regulations to support SMEs, especially with public guarantee schemes, including guarantees for working capital; stimulates additional private demand by setting the right incentives, such as energy saving investments in private houses as well as public and private demand by investments in infrastructure also via public-private partnerships.

Te report points out that smaller businesses have so far been more reluctant to lay off workers compared to larger enterprises. However, small enterprises have specific problems as regards labour market regulations, access to social benefit systems and access to training, which they cannot solve alone.

The government, it says, must support employment in SMEs by, among others, taking appropriate measures within the European Social Fund and European Globalisation Adjustment Fund at all levels so that SMEs can effectively benefit from adapted short time working arrangements, combined with effective retraining and re-skilling measures.

It also says the government must ensure equal access to labour market instruments, such as short time working arrangements or “part time work” or other types of partial unemployment, like large enterprises have. Other proposals include avoiding distortion of competition for SMEs coming from subsidised employment in the public or semi public sector and reducing non-wage labour costs, especially at the lower end of the labour market.

The report highlights that a key contribution for achieving an SME-friendly environment is a change in the perception of the role of entrepreneurs and risk-taking: entrepreneurship and the associated willingness to take risk should be applauded by political leaders and the media, and supported by administrations.

It says legislation and programme planning at all levels must respect the “Think Small First” principle if they have any effect on small enterprises.

“Internal market barriers resulting from 27 different tax systems, which are prohibitive for small enterprises, must be removed by a common tax base or by mutual recognition of the home tax system.

“The existing rules on late payments must become more effective and include also business-to-consumer relations, fixing a maximum period for public authorities and include measures that avoid that SMEs are pre-financing the big enterprises, in order to avoid a deterioration of the financial situation of SMEs,” the report argues.

The GRTU argues that the needs and particularities of SMEs have to be taken compulsorily into account in all relevant policies, programmes and negotiations at EU and national level.

“Furthermore, the current economic crisis must lead to a review of all pending legislation that may put unnecessary burdens on small enterprises. Policy projects that were started in good economic times must therefore be re-assessed and checked against the new reality.”

It says the Prime Minister must push these principles among the Cabinet of Ministers to review and reassess particular legislation which may be especially burdensome for SMEs such as the new proposal for a Directive on Consumer Rights where the GRTU would like more balanced regulations towards SMEs, the Eco-design Directive so that it only applies to products made in series and the Waste Electrical and Electronic Equipment Directive.

Another revision called for regards the Maternity Leave Directive. “I do not see any need to increase the duration of maternity leave and disagree with the increase of payment allowances, taking into account the changes made by the European Social Partners in the Parental Leave directive,” Mr Farrugia said.