Europe’s SME’s back to pre-crisis employment levels

Employment levels and value added in Europe’s smaller businesses rose for the third consecutive year in 2016, exceeding 2008 levels for the first time since the financial crisis, an EU report showed recently.

The Annual Report on European SMEs for 2016/2017 – prepared by the European Commission – shows continuing recovery by smaller businesses (SMEs).

EU SME employment has fully recovered from the 2008/2009 economic and financial crisis and in 2016 exceeded the 2008 level by 0.6 %.

The value added generated by EU SMEs showed even greater recovery, as in 2016 it was 11 % higher than in 2008. At sectoral level, the employment recovery in SMEs was most dynamic in services industries.
The reports finds that general macro-economic environment strengthened SME activity in all industries due to the expansion of all categories of final demand (i.e. household and government consumption, exports of goods and services, as well as capital investment by households, governments and businesses). In previous years, the main driver of the SME recovery was exports.

In 2016, the recovery encompassed nearly all EU Member States. SME employment growth surpassed 3 % in Malta, Croatia, Slovakia, Portugal, Cyprus, Lithuania and Luxembourg, while SME value added increased by more than 5 % in Romania, Malta, Bulgaria, Croatia and Ireland. Latvia did not record growth in SME employment, while Greece and Poland were the two EU Member States that did not see the SME value added increased in 2016.

While EU SMEs as a group have recovered, the picture is more mixed at Member State level, showing a clear north-south devide.

A few additional years of solid economy-wide growth will be necessary to leave the effects of the crisis fully behind. EU SMEs are expected to continue their relatively steady pace of growth in 2017 and 2018. Their employment is forecast to increase by 1 % in 2017 and 0.9 % in 2018, while their value added is predicted to grow by 2.5 % in 2017 and 3.8 % in 2018.