Contribution of EU 27 SMEs in Terms of Production and LAbour

Posted on April 5, 2012 by

The European Commission had submitted a report on SMEs in EU. According to the report the following are the findings:

The turnover of non financial businesses in SMEs of EU-27 was found to be € 23 billion; which on an average is equivalent to € 1.1 million per enterprise. But the turnover per enterprise varies among different size-classes, i.e. between € 234,000 in micro enterprises, and € 232 million in LSEs. Taking the production value as a measure for production, the total amount is € 15 billion: only two thirds of turnover. It was found that the total share of MSMEs in turn over is 48%, while it is 52% in production value. This difference is due to large presence of SMEs in trading sector, in which the purchase value plays a significant role. But when the production measure is changed from production value to value added, the total production in non financial business in EU 27 is value added is almost € 6 billion, with SMEs contributing to 58% and LSEs contributing to 42%.

The direct contribution to value added by SMEs is lower than the contribution of SMEs to employment, suggests a below average labour productivity of SMEs. Labour productivity is found to be varying from € 32,000 in micro enterprises to € 59,000 in LSEs, with SMEs in between. This difference can be explained by taking different sectors in to consideration. For example, the number of SMEs are high in construction, hotels and restaurants and trade, but they have the lowest labour productivity of € 39,000, € 20,000 and € 36,000 respectively. As average SME has lower than average labour productivity, it implies that average SME is either less capital incentive or is too small to make use of economies of scale. Another reason for this may also be low qualified employees in an average SME and lower labour cost per employee.

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