Member of the European Parliament Petri Sarvamaa claimed that small and medium-sized enterprises employ 90 percent of the workforce in the EU area. This false claim was made on 12th April 2019 in a press meeting at the Finnish bureau of the European Parliament in Helsinki.
Sarvamaa made the claim when asked what differences parties have and why people should vote the European People’s Party (EPP). According to Sarvamaa the EPP strives to make investments for research and innovation. Investing in these would benefit small and medium-sized enterprises (SME), which hold a strong position as employers in the EU area, he adds.
Sarvamaa represents the centre-right National Coalition Party of Finland, which is a member of the EPP. He was ranked as the 14th most influential member of the European Parliament by a non-governmental organization VoteWatch in April 2019.
Eurostat is the statistical office of the European Union. In their statistic Annual enterprise statistics by size class for special aggregates of activities it is stated that in 2016, more than 99 percent of all enterprises operating in the European Union area were small or medium-sized enterprises. The statistics show the employee numbers in different size classes operating in the European Union area. According to European Commission Press Officer Mirna Talko the Commission estimates that 99 percent of the enterprises are SME.
The European Commission published a User Guide to the SME Definition in 2016. It tells us that the size class is important to know so that financial support given by the European Union can be targeted to those enterprises who need it.
Definition of small and medium-sized enterprises
According to the User Guide to the SME Definition it’s not always easy to define what small and medium-sized enterprises are. The problems in defining them arise from diverse ownerships and holdings between different enterprises. The enterprise might have a small or medium-sized by characteristics, but it might hold notable resources, if it is connected with large companies.
The official definition of small and medium-sized enterprises in the European Union is published in the European Union Official Journal issue L124. It states that the enterprises in this category are those which:
– employ no more than 250 employees AND
– their revenue is no more than 50 million euros OR their balance is no more than 43 million euros AND
– no more than 25 percent is owned by an enterprise that is not an SME.
The claim is exaggerated
Sarvamaa claimed that small and medium-sized enterprises employ 90 percent of the workforce in the EU area. Eurostat statistics Annual enterprise statistics by size for special aggregates of activities shows that the workforce working for SME was 66.7 percent in 2016. The statistics was updated on March 2019 and the most recent information available is from 2016.
The article deals with only those employed by enterprises and specifies those who are employed by SME enterprises. It does not include the share of employers of the public sector or the third sector. It also ignores the unemployed.
The User Guide to the SME Definition by European Commission states that in the EU area: ”Nine out of every ten enterprises is an SME, and SMEs generate two out of every three jobs.” According to President of the European commission Jean-Claude Juncker small and medium-sized enterprises created more than 85 percent of the job openings during the years 2010-2015.
The claim is false. Small and medium-sized enterprises have a significant role as an employer in the European Union, but a share of 90 percent does not hold true. The Eurostat statistic clearly shows the share accounts for 66.7 percent.
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