The European system of small- and medium-sized enterprises

Abstract

As the European Commission has indicated, SMEs have a key role to play in stimulating job creation and in improving European competitiveness. This article provides an overview of the position of SMEs in the economic system of the European Union and highlights the weaknesses that constrain SMEs in fulfilling that key role. The article also explores the factors that promote profitability in SMEs at the expense of productivity, including low pay, poor working conditions and long working hours. It proposes that there is a contradiction between the representation of SMEs as a strategic lever in pursuit of the Lisbon goals, and the reality that European SMEs are generally incapable of generating either technological innovation or continuing education and training, leaving them ill-equipped to compete in global markets.