With all the doom and gloom talk about the economy, some refreshingly positive news is always welcome, if not wholly encouraging.
One such instance cropped up this week when a European Commission report found that Malta’s small and medium enterprise sector, the very backbone of this economy, is one of just three member states that have not only weathered the financial storm of recent years but is actually doing better than it was in 2008.
Moreover, the report forecasts that Malta’s SMEs will continue to weather the crisis well until the end of 2012.
Over a year in which SME performance across the EU has seen considerable differences, the SME sectors in Malta, Austria and Germany, according to the report, did “particularly well”, having succeeded in exceeding their pre-crisis 2008 levels in terms of both employment and gross added value – which includes depreciation, rewards to labour, capital and entrepreneurial risk; basically, what remains when intermediate costs are deducted from sales and turnover.
The finding contrasts sharply with the vast majority of EU member states which have, according to the report – SME Performance Review 2012 – so far been unable to regain the pre-crisis levels.
SMEs in Malta represent 99.9% of all businesses and account for 64.5% of the economic added value and 76.3% of employment in the private non-financial sector. 25% of SMEs are active in the high-tech manufacturing and knowledge intensive service sectors which are considered key for the country’s future competitiveness. Micro businesses, those employing less than 10 people, are crucially important for Malta’s SME sector, a parallel report on the implementation of the EU’s Small Business Act points out, and this is “exceptional” in the EU context due to Malta’s small size.
It is no surprise that the report finds micro businesses make up 95 out of 100 businesses with fewer than 10 employees, and accounts for the largest share of micro-firms out of all firms in the EU. Micro businesses in Malta account for 39,000 employees, or slightly more than one-third of private sector employment.
On the whole, the report found that so far, Malta’s SME sector has been much less affected by the crisis engulfing the eurozone. Even the sharp and sudden downturn in employment and turnover immediately after the outbreak of the crisis in 2009 that occurred in most other EU member states “is hardly visible in Malta’s SME statistics”.
The forecasts for the foreseeable future, until the end of 2012, suggest a stabilisation in the current levels of the three main indicators – the number of businesses, employment and value-added.
While the implementation of supporting measures for SMEs is still unbalanced with some measures being ignored by a substantial number of countries, such as facilitating a second chance for entrepreneurs who failed once, or taking into account the characteristics of small businesses when designing legislation, the report added Malta has made considerable progress in the implementation of the Act, especially in the areas of ‘Think Small First’ and ‘Access to Finance’.
On the whole, the Commission said that increasing divergence in the performance of Europe’s SMEs is contributing to a jobless recovery, and called for more cross-border efforts and a new entrepreneurial policy to redress the situation.
Malta, fortunately for us, is bucking the EU wide trend and is finding success – through a mixture of policy and the mettle of Maltese small business owners – which has not been found in other, far larger economies. Something is clearly working well and with an election soon approaching, the country must be very wary indeed of tampering with what is working well and over and above the EU bar.