What is the place of microenterprises in the EU?

Facts

In the EU 27, 92% of all NFBE** enterprises are microenterprises (1-9 persons employed) that represents more than 18 million of microenterprises. They employ 38 million people (30% of total employment), and created 1,100 billion euro of value added (21% of total value added). The sectors with the highest share of total employment in microenterprises are real estate (56%), hotels & restaurants (45%) and motor trades (43%). So they potentially play in the EU economy in terms of employment creation and economic growth.

For the Members States, the share of microenterprises in the total employment is the most important in Greece (56%), in Italy (47%), in Portugal (43%) and in Cyprus (40%) and, is the weakest one, in Slovakia (13%), in Germany (19%) and also in Denmark and in Luxembourg (20% each).

Eurostat, News Release STAT/08/47, April 2008

Economic contribution

Often enough, microenterprises are craft enterprises. The heads of such enterprises are fully involved in all aspects of the business and remain in direct contact with customers; they participate actively in the employment of local people. European Initiatives are necessary to support their actions at the local level and make them successful.

Small enterprises and microenterprises are, first of all, different in terms of criteria their turnover, their balance sheet and their headcount and also they differ in the positive effects they bring to the EU economy.

According to the 2007 Annual Development Impact Study, microenterprises create less new jobs than small enterprises. Indeed the overall net average number of jobs created per microenterprise was 2.99 whereas it was 9.80 per small enterprise. However microenterprises, have a lower level of job losses (about 2% of job losses) than small enterprises (about 30% of job losses).

The study thus shows that small enterprises contribute to job creation whereas microenterprises are more important in sustaining employment.

Weaknesses and threats

Microenterprises with their small size and limited resources face particular problems. The main challenge is to find finance to run a new business or to grow an existing one. Moreover, microenterprises have to carry out a high amount of administrative tasks and red tape and have to find staff with the right skills who can update them continuously. Microenterprises are vulnerable to competition; especially when they are sources of innovation and when they face the introduction of new products by counterparts, they face lack of resources enabling them to respond quickly.

European Commission , Enterprise and Industry, Entrepreneurship
 

**The non-financial business economy (NFBE) excludes agriculture, public administration and other non-market services, as well as the financial services sector.