POSITION PAPER

CONSULTATION ON THE REVIEW OF THE “SMALL BUSINESS ACT” FOR EUROPE

COOPERATIVES EUROPE – the European region of the International Co-operative Alliance – is the biggest membership organization in Europe promoting the co-operative model of enterprise for sustainable economic progress with social objectives. It represents a force for economic growth and social change of 123 million member co-operators owning 160.000 co-operative enterprises and giving jobs to 5,4 million European citizens.

INTRODUCTION
COOPERATIVES EUROPE welcomes the European Commission’s Consultation on the review of the Small Business Act. The result of the consultation should be the basis of adjustments or new guidelines for future actions. A co-operative is an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democraticallycontrolled enterprise. Co-operatives put people at the heart of all their business. The co-operative
business model has proven particularly resilient to the economic and financial crisis.

As 95 % of our members are SMEs acting in all sectors of activities, SBA is a very important issue for co-operatives. COOPERATIVES EUROPE participated to the previous SBA consultation processes, through different position papers1, and is therefore very much interested in being involved into the review of the SBA. The European Parliament recognised in its opinion the specific input that cooperatives could give in the implementation of the SBA.

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Cooperatives Europe position paper (21/3/2008). Cooperatives Europe proposals on SBA (01/2008). Cooperatives Europe Communiqué of 22/9/2008.

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COOPERATIVES EUROPE ASBL – EUROPEAN REGION OF ICA CO-OPERATIVE HOUSE EUROPE – AVENUE MILCAMPS 105 – 1030 BRUSSELS TEL. (32/2) 743 10 33 – OFFICE@COOPSEUROPE.COOP

GENERAL REMARKS
From co-operatives point of view, beyond the questions asked in the consultation document, other specific issues deserve to be addressed concerning the assessment of the SBA. The new context since the adoption of the SBA: resilience of co-operatives in times of crisis Since the adoption of the SBA in 2008, the context changed with the economic and financial crisis that particularly impacted industry. The ongoing recession is likely to leave deep and long-lasting traces on economic performance and entail social hardship of many kinds. The crisis also has shown that the traditional business model needs controlling and cannot grant a sustainable growth alone. In this context, co-operatives, if compared to many other forms of enterprises, have shown a higher capacity to resist, to react and to have a proactive role in tackling the difficult situation. Co-operatives have been affected by the crisis and suffer the consequences. However they have not been at the failure origins, and they have proven to be particularly efficient, especially regarding their contribution to economic and financial stability, maintenance of employment and job creation. These aspects have been underlined by the International Labour Organization (ILO): “historical

evidence and current empirical evidence that proves that the cooperative model of enterprise survives crisis, but more importantly that it is a sustainable form of enterprise able to withstand crisis, maintaining the livelihoods of the communities in which they operate.” The ILO considers cooperatives “a means to address the current crisis and avert future crisis”.2
values and principles and the cooperative banks which rely on members' funds and are controlled by local people have generally been able to resist the crisis very well.”3

The President of the European Commission Barroso confirmed that resilience of the co-operative business model, saying in a speech that “Cooperative businesses that have stayed faithful to cooperative

Plurality of entrepreneurial legal forms The SBA considers the diversity of SMEs regarding to their size and calls “policies addressing the needs of SMEs […] fully recognize this diversity”.  COOPERATIVES EUROPE believes that the pluralism and diversity of the different types of business are aspects that are valuable to the European Union. “Protecting and preserving this

Economic and Social Committee (EESC), adopted on October 1st , 2009. Therefore it would be important to expressly acknowledge this into both the SBA and the EU 2020 Strategy, with a specific focus on co-operatives societies.  COOPERATIVES EUROPE believes that the SBA should consider too the diversity of legal forms, differentiating for example private stock companies from co-operatives societies where ownership is collective and power is exercised democratically. Business transfers

diversity is very important for achieving the single market and maintaining the European social model, as well as for meeting the Lisbon Strategy's objectives for jobs, competitiveness and social cohesion” according to the Opinion on the “Diverse forms of enterprise” by the European

 The SBA should include and promote different models of transfer of business, such as business transfers to employees when viable. As stated in the Commission Recommendation 94/1069/EC of 7 December 1994 on the transfer of small and medium-sized enterprises, « the employee buy-out
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International Labour Organisation (ILO), Report “Resilience of the Cooperative Business Model in Times of Crisis” (2009). 16/01/2009

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COOPERATIVES EUROPE ASBL – EUROPEAN REGION OF ICA CO-OPERATIVE HOUSE EUROPE – AVENUE MILCAMPS 105 – 1030 BRUSSELS TEL. (32/2) 743 10 33 – OFFICE@COOPSEUROPE.COOP

 Co-operatives have proven successes in “workers’ buy-outs” ensuring the saving of companies and jobs. In times of crisis, and regarding companies threatened by bankruptcies and closures, such a system appears as a solution to maintain existing jobs.  Co-operatives have developed financial tools and instruments that make possible and easier business transfer. Enterprise support services Enterprise support services should be promoted and should integrate the specificities of cooperative societies, and employee and member-owned forms of enterprise. The existing support services, in particular the Enterprise Europe Network doesn’t consider this diversity. Among the various business support services needed, a key one is management consultancy and training.  Co-operative networks are being established everywhere in Europe in a diversity of sectors, allowing microenterprises, independents and craftsmen to associate and mutualise certain resources.  Because they are locally rooted, co-operatives are particularly fit to maintain existing jobs. Such processes would not been possible without co-operative support services provided by regional cooperative federations as the Confédération Générale des SCOP (CGSCOP) in France for example. In Italy there exists a tool acknowledged by a national law of 1985 (Marcora law) which has the goal to financially support the start-up of cooperatives among workers and employees who lost their jobs due to the failure of their former employers. In order to ensure the development of such experiences but also the development of cooperatives in general, COOPERATIVES EUROPE calls for the creation of specific funds dedicated to reinforce equity capital, measures aiming at facilitating the creation of co-operative groups at the European level, and the development of enterprise support services.  Accompanying programmes should take into account co-operative specificities in order to contribute to the promotion of the co-operatives and their input to the realization on SME’s policies. The European exchange programme for entrepreneurs to which COOPERATIVES EUROPE has participated is a first relevant experience in this context. 

is a form of transfer which should be encouraged; such a buy-out safeguards the existence of the entreprise and the transfer of know-how and previously acquired experience […]”.

Innovation The SBA wants to promote “all forms of innovation”.  COOPERATIVES EUROPE strongly believes that measures promoting innovation shouldn’t be restricted to methods of production, technical and technological aspects.  COOPERATIVES EUROPE insists on the needs for promoting social and managerial innovation – for example democratic and participative governance. Co-operatives, positioned on competitive markets, have succeeded and continue to succeed in marrying their social objectives with profitability and economic effectiveness.  The strong link between the members and clients provides co-operative enterprises with the opportunity to get first-hand information on people’s expectations and needs. This close contact boosts the development of research and the creation of innovative activities and products. This dynamic system of knowledge transmission leads to a strong commitment of co-operatives to increased creativity and technological, social, environmental, cultural innovation.  The European Union should provide co-operatives SMEs with tools in order to facilitate their actions as social innovators into the territories. Social innovation should be fully recognised, integrated and should benefit from all support measures dedicated to innovation in general.  COOPERATIVES EUROPE invites the European Commission to take a close look at co-operatives led clusters’ creation. These clusters add value to the traditional concept of clustering (which 3
COOPERATIVES EUROPE ASBL – EUROPEAN REGION OF ICA CO-OPERATIVE HOUSE EUROPE – AVENUE MILCAMPS 105 – 1030 BRUSSELS TEL. (32/2) 743 10 33 – OFFICE@COOPSEUROPE.COOP

focuses above all on economic objectives and interests of the cluster partners) by intergrading social objectives and democracy. Financing and accounting framework COOPERATIVES EUROPE calls the Commission to promote and encourage:  Policies taking account of the realities of the co-operatives when reviewing the policy on State aid.  Policies on incentives for investment in new enterprises formed by groups that encounter difficulties in accessing the labour market. The establishment of a European micro-finance facility for employment and social inclusion to support entrepreneurs and micro-enterprises, requests to increase this kind of instruments.  The opening of new lines of finance in order to facilitate the SMEs access to credit.  Programs to foster the creation of capital risk companies and mutual guarantees companies specialized in developing SMEs. Co-operatives have developed tools in this way, for example CoopEst, a financial facility aiming at initiating and fostering the development of co-operatives, mutual societies, associations, foundations and social enterprises. The target countries of CoopEst in Central and Eastern Europe are Poland, Hungary, Czech Republic, Estonia, Latvia, Lithuania, Slovakia, Slovenia, Bulgaria, Romania, Croatia, Albania, Bosnia and Herzegovina, the Republic of Macedonia, Montenegro and Serbia. The creation of CoopEst is based on the evidence that the access to long-term financing (private and public) in Central and Eastern Europe is still very limited and difficult for SMEs – mainly due to the weakness of their financial structure. Therefore, CoopEst aims to provide longterm financial support both in terms of equity (subordinated loan), long-term loans and guarantees to sustainable and socially responsible projects in the target countries enabling them to leverage further funding for the development of their activities.  The expertise of co-operative banks specialized in the financing of co-operatives, and that develop specific financial engineering.  Furthermore, COOPERATIVES EUROPE asks the Commission not interfering with national tax and in the field of corporate law, when they promote the development of SMEs in the framework of national laws.  COOPERATIVES EUROPE adds that small and medium co-operatives must benefit from a stable legal framework, and an accounting framework that should not be too complex.

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COOPERATIVES EUROPE ASBL – EUROPEAN REGION OF ICA CO-OPERATIVE HOUSE EUROPE – AVENUE MILCAMPS 105 – 1030 BRUSSELS TEL. (32/2) 743 10 33 – OFFICE@COOPSEUROPE.COOP

SPECIFIC QUESTIONS
I. Linking the SBA closely to the Europe Union 2020 strategy and looking for new actions in key areas  COOPERATIVES EUROPE introductory remark: Setting up monitoring mechanisms COOPERATIVES EUROPE welcomed the EU2020 strategy’s attention towards SMEs, and call for close coordination of EU2020 and SBA strategies, objectives and implementation, in order to make them converge. Nevertheless it is important that the particularities of the Small Business Act be maintained. Both SBA and EU2020 objectives have to coexist, and requirements of the SBA should not be downgraded in any way. The EU2020 strategy introduces monitoring mechanisms for an overall assessment of progress achieved both at EU and at national level in implementing the strategy. COOPERATIVES EUROPE calls for a similar approach for the SBA: setting up efficient monitoring mechanisms is a key for the successful implementation of the SBA.

1. How could the Commission/Member States strengthen their actions/initiatives in the above-mentioned areas?  COOPERATIVES EUROPE asks that member states strengthen their knowledge of the different forms of businesses. As for example in this way, the French Ministry of Economy and Finance has posted on its website a document explaining the benefits of handicraft co-operatives.  COOPERATIVES EUROPE believes that the revision of the directive on delay payments is essential, as SMEs are particularly confronted to late payments from their suppliers.

2. What new policy/legislative actions would usefully contribute to achieving the objectives set out in the above-mentioned areas? Promoting entrepreneurship, especially among women  Women entrepreneurship is very spread within co-operatives, as distinctions attest for: as part of the European Commission’s SME Week 2010, two co-operative women entrepreneurs have been highlighted4. Moreover co-operatives enterprises are representing innovative and specific business models that have to be included in the establishment of EU and National policies and in European programs for businesses in the fields of research, innovation and education.  Moreover, cooperatives represent a form of business particularly fit to enhance women’s entrepreneurship since through the establishment of cooperatives women can put together resources and skills, share the business risks and catch opportunities, enter into cooperative network and systems allowing them to face challenges linked to their entrepreneurial activity. Women in cooperatives can find a flexible organizational structure capable of meeting their need, for example conciliating life-work times. For the above-mentioned reasons and on the ground of manifold cases in all the Member States COOPERATIVES EUROPE urges that within the measure devoted to promote women’s entrepreneurship be included also the cooperative women’s entrepreneurship.  COOPERATIVES EUROPE calls the Commission to consider co-operatives in all programs promoting entrepreneurial activities and to recognize their specificities in terms of
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Anna Darzenta (EL) from ’To Kastri’ Women’s Agro-Tourist Cooperative, and Luciana Delle Donne (IT) from Officina Creativa Soc Coop Sociale

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COOPERATIVES EUROPE ASBL – EUROPEAN REGION OF ICA CO-OPERATIVE HOUSE EUROPE – AVENUE MILCAMPS 105 – 1030 BRUSSELS TEL. (32/2) 743 10 33 – OFFICE@COOPSEUROPE.COOP

management. School curricula on entrepreneurship should include different form of SMEs including co-operatives societies. COOPERATIVES EUROPE suggests that a survey should be undertaken on teaching the cooperative model of enterprise in schools and university.

Promoting internationalization of SMEs  Grouping of co-operative enterprises are an entrepreneurship model stimulating cooperation and partnership strategies between SMEs and co-operatives. Such a cooperation instrument enables SMEs to face the challenges of globalization and be more competitive.  COOPERATIVES EUROPE is convinced that such co-operative groups should be supported and promoted at the European level. This enables SMEs and co-operatives to develop a common brand name or range of goods and services to access European and international markets. This may also be used in the development of the clusters programme that SBA should take into account and support.  In this perspective, the European Cooperatives Society could also represent a tool for enhancing the internationalization process of co-operatives and SMEs. As well, it would be necessary to promote the co-operative model within the Enterprise Europe Network that helps small companies make the most of the business opportunities in the European Union. Turning environmental challenges into opportunities for SMEs  Co-operatives have launch the Action for Climate Threat (ACT) programme and another action dedicated to energy in order to encourage co-operatives to do more and to do it together within a framework. At the foundation of these actions are case studies of best practice and communication. This is used as a cross sector knowledge sharing interface and aims at encouraging cross border project collaboration.  COOPERATIVES EUROPE calls the Commission to encourage such initiatives as they contribute to the diffusion of good practices among SMEs. 3. What other areas should the Commission/Member States consider in order to make SMEs more competitive? What new action(s) would you propose? COOPERATIVES EUROPE suggests that in order to make SMEs more competitive:  Every year Member States should submit a draft regulation containing the necessary interventions and measures, included those aiming at reducing administrative burdens for SMEs;  A quota of measure should be dedicated to SMEs, including co-operatives, in order to promote innovation, internationalization and capitalization.

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COOPERATIVES EUROPE ASBL – EUROPEAN REGION OF ICA CO-OPERATIVE HOUSE EUROPE – AVENUE MILCAMPS 105 – 1030 BRUSSELS TEL. (32/2) 743 10 33 – OFFICE@COOPSEUROPE.COOP

II.

Implementing the SBA and improving governance

4. How could the Commission better monitor the implementation of the SBA in the Member States?  COOPERATIVES EUROPE believes that:  The SBA must set up on the same structure as the Commission legislative work programme with strategic and priorities initiatives. The core of the SBA should be legally binding.  Impact assessments and regular evaluation of the projects of the SBA should be conducted, including impact on co-operatives enterprises.  SBA must improve and coordinate the statistics on SMEs with Eurostat, with a sectoral classification and include data on co-operatives - for example the employment they generate. Such efforts could be supported by creating a statistical register of enterprises taking into account the plurality of legal status - including co-operatives - in each EU Member State, establishing satellite accounts by sector and branch of activity in each Member State and enabling such data to be input into the Eurostat system of European statistics.  At national level it is important to have in place mechanisms of consultations and monitoring by national authorities which include all the business associations, included the cooperative organizations. 5. Which role could the other EU institutions (Competitiveness Council / European Parliament) and stakeholders play in monitoring the implementation of the SBA?  COOPERATIVES EUROPE asks the Commission to set up a joint monitoring committee on the implementation of the SBA, involving representatives of SMEs including co-operatives societies.

Brussels, 5th July 2010 END

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COOPERATIVES EUROPE ASBL – EUROPEAN REGION OF ICA CO-OPERATIVE HOUSE EUROPE – AVENUE MILCAMPS 105 – 1030 BRUSSELS TEL. (32/2) 743 10 33 – OFFICE@COOPSEUROPE.COOP

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