Must-dos to Move Out of the Crisis: SMEs and COVID-19

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Must-dos to Move Out of the Crisis: SMEs and COVID-19

This article is part of a series in which OECD experts and thought leaders – from around the world and all parts of society – address the COVID-19 crisis, discussing and developing solutions now and for the future. It aims to foster the fruitful exchange of expertise and perspectives across fields to help us rise to this critical challenge. Opinions expressed do not necessarily represent the views of the OECD.

To keep updated on all of the OECD's work supporting the fight against COVID-19, visit our Digital Content Hub.

Tackling coronavirus (COVID‑19) Contributing to a global effort

COVID-19 has brought unprecedented challenges to the global community. Apart from the large number of human losses and the intense pressure on the healthcare systems, the coronavirus has been a “crash test” for the world’s economy. 

Worldwide, businesses have been directly or indirectly affected in various sectors (horeca, retail, tourism, events, construction, production etc.). About 90% of small and medium enterprises (SMEs) in Europe report loss of turnover. In the most affected sectors, 50% of companies are faced with liquidity problems, which may turn soon into the risk of insolvency. Furthermore, according to the latest SMEunited survey, the restart seems to be slower than hoped and the crisis will last into 2021.  

More on the Forum Network: Big Ideas for Small and Medium Enterprises: Helping SMEs achieve digital transformation by Stuart Nash, Minister for Small Business, Revenue, Fisheries and Police, New Zealand

More on the Forum Network: Big Ideas for Small and Medium Enterprises: Helping SMEs achieve digital transformation by Stuart Nash, Minister for Small Business, Revenue, Fisheries and Police, New Zealand

Measures taken by governments in Europe have several elements in common: access to funding, postponement of tax and social contribution payments, debt payments extension, protection of employment and sanitary guidelines for the protection of staff and customers. The implementation of agreed measures experienced delays in certain countries and a significant number of SMEs had to deal with bureaucratic procedures.  

SMEs face several challenges coming out of this pandemic. Firstly, the containment measures should be lifted in a tailor-made and gradual way, respecting local situations. Moreover, authorities should be ready to contain new outbreaks without imposing another general lockdown.

Secondly, SMEs require support to assess the continuing risks and correctly implement sanitary measures to protect employees and customers from infection. This should be done with as few burdens and costs as possible. SMEunited emphasises it is also important to provide clear and concise information to consumers on how to behave and comply with health and safety measures in order to reduce risk of spreading COVID-19.

Read in full: Coronavirus (COVID-19): SME Policy Responses

Read in full: Coronavirus (COVID-19): SME Policy Responses
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The corona crisis poses challenges for international trade and thus also for our globally interconnected economies. As a third action, global solutions are needed to address the problem comprehensively. We need global, open and rules-based trade that fully respects WTO rules. Many SMEs are dependent on uninterrupted global supply chains. At the same time, transparent and proportionate emergency measures have to be implemented during a limited timeframe when an outbreak occurs. A renewed view on trade policy should focus on SMEs and help them to rebuild their value chain.A fourth point relates to the solvency of SMEs. Over the coming months, liquidity support remains necessary to allow viable companies to exit the crisis and restart. Additionally, strengthening the solvency of SMEs more broadly is necessary. Many SMEs are reaching over-indebtedness and should reinforce their equity. This will allow them to finance investments and innovation. Moreover, authorities should set up a mechanism of professional support for SMEs to ensure a viable turnaround.

SMEunited demands that the emergency measures be continued when and where needed. For instance, providing liquidity, short-term work schemes and income support to the self-employed in sectors which cannot resume activities or only partially.

As a fifth element, the recovery of our economy will depend on how the digital and green transformation of SMEs is fostered. Especially now, a more elaborate strategic approach is required. SMEs function in a specific investment timeframe that must be taken into account when setting out policy and new requirements. Additional burdens on SMEs during the recovery phase need to be avoided. Innovations and changes introduced during this crisis will force SMEs to reconsider working methods, business models and habits. To further withstand this shock, SMEs need support to invest in further developing their new ways of working (e.g. online sales, teleworking, etc.). In this regard, education and training to close the digital divide are imperative.

More on the Forum Network: Rescuing SMEs from the COVID storm: What’s next? by Lamia Kamal-Chaoui, Director, Centre for Entrepreneurship, OECD

More on the Forum Network: Rescuing SMEs from the COVID storm: What’s next? by Lamia Kamal-Chaoui, Director, Centre for Entrepreneurship, OECD

Furthermore, public procurement accounts for a significant share of GDP. The aftermath of the 2008 financial crisis has shown that it is an effective stimulus for the economy. Authorities should take action by dividing contracts into lots, allowing SMEs consortia, etc. to make them more accessible to SMEs.

Finally, SMEunited calls on all public authorities to ensure a flexible regulatory environment for SMEs and to avoid introducing new, burdensome legislation. Applying the Better Regulation principles is more important than ever.

On the occasion of the International SME Day, 27 June, we should remember the importance of SMEs for economic development, employment and social cohesion. In these challenging times, SMEs can make the difference

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