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News - 30 March 2007

EU rules are not helping small businesses to grow

The Federation of Small Businesses (FSB) has expressed concerns that further EU proposal on labour legislation will stifle growth and do little to ease the administration burden on small businesses.

The Federation of Small Businesses (FSB) has called on the European Commission to reconsider its proposals contained in the Green Paper on EU labour law saying that it is missing a chance to slash unemployment.

The FSB has highlighted Europe’s poor track record on growing small businesses by drawing a comparison with the US. In the States 80% of current big businesses were small businesses in the eighties. In Europe 80% of current big businesses were medium sized businesses in the eighties that have since merged.

The FSB is concerned that the Green Paper seeks to create a 'one size fits all' approach to labour markets across the EU, which would further reduce flexibility in the UK labour market and put future small business and employment growth under threat. There is also little in the document to protect the right to be self-employed.

Although the Green Paper accepts that there is a need to reduce administration burdens for small businesses, the FSB is now calling for action after many years of undelivered promises.

Many workers prefer the traditional informality, flexibility and convenience of working for small businesses. Twelve million people work for small businesses in the UK alone.

Over 50% of jobs in the EU are created by less than 5% of hi-tech SMEs and 99.8% of businesses are SMEs and yet trade unions talk to big business at the exclusion of all others.

Alan Tyrrell, FSB Employment Chairman, said, "Decision-makers in the European Union need to bear in mind that if every small business in the EU created one new job there would be no unemployment in all 27 member states. That is the priority for employers and employees alike - small business growth leading to new jobs. The Commission must ensure flexible labour markets are restored in the EU in order to achieve this. The current Green Paper misses an opportunity to slash unemployment in the EU.

"Diversity in labour markets in different EU member states is not a 'problem' to be fixed in Brussels. It is a strength from which each country benefits. A uniform labour market across 27 countries is neither desirable nor practical.

"The Green Paper is right to focus on reducing the administration burden for small businesses. Administration costs and time spent filling in forms must be reduced. However, we have heard these promises before from the EU institutions. It is now time for action on this issue, which is of the greatest concern for our members."

Read related items on:
Federation of Small Businesses
Tyrell, Alan

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