Remarks by Minister Cowen at the Annual Christmas Evening of the Small Firms Association, 15 December 2003

I am very pleased to be with you here this evening as Guest of Honour at your ‘Annual Christmas Evening'. I want to thank your Association for your kind invitation and take the opportunity to congratulate Kieran Crowley on completing his term of office as Chairman of the Association and to wish Angela Kennedy every success as she takes over this role in the New Year. We all know the small firms sector to be one of the most hard working so its nice to see so many people here this evening getting the opportunity to enjoy a sociable evening with their peers.

I imagine there are few here this evening who need convincing that while it is the large corporate investments which get the most attention from the media, it is small firms that are in many ways the lifeblood of the Irish economy. They represent the great majority of our employers and are where we find our greatest proportion of natural born entrepreneurs. They are deeply committed and passionate about their company, often having invested and borrowed heavily in order to give substance to their dream.

Small firms contribute enormously to job creation. They hire a larger proportion of employees who are either younger workers or part-time workers. Their flexibility enables them to hire many thousands of workers who would otherwise be excluded from the workforce. They give many people their first experience of working and their first taste of entrepreneurship. In short small firms encapsulate the title of E.F. Schumacher's famous book, “Small is Beautiful: Economics as If People Mattered”.

Arguably, small firms contribute more to the dynamism of society, the sense of community, the sum of human happiness than can be the case working in larger and more impersonal organisations. They are certainly more flexible and, in that sense, more family-friendly and it is particularly important at this time of year when our minds are focused on our families and communities to pay tribute to this.

Small firms are deeply knit not only into the community but into the business life of the country. Their horizon is not a limited one: they have developed first-hand linkages with larger companies at home and abroad. They have to adapt to technological change. They know more about the importance of maintaining competitiveness and about the continual upward pressure on costs than anyone else especially the costs of wages and insurances. They know the market and their customers without the need to commission expensive market research.

They may be small, but each individual running a small business probably has a more comprehensive knowledge of the business and regulatory environment in which they are operating than the executives of many large companies whose perspective is limited by their specialisation.

In the past Ireland's development strategy tended to focus on inward investment and assisting growth in indigenous enterprise above a minimum size. Back in 1994 the Task Force on Small Business highlighted the issues facing small business. It called for the recognition of the bona fides of Small Business in economic policy so that small firms could be encouraged to realise their full potential and contribute to economic development and job creation. I am happy to note that roughly two thirds of the recommendations of the Task Force were implemented in part or in full.

The Department of Enterprise, Trade and Employment is continuing to work closely with the sector and encourages entrepeneurship and provides incentives through the likes of the Seed Capital Scheme, the work of Enterprise Ireland and the County Enterprise Boards, the launch of the new Competitiveness Fund and eBIT initiative in addition to the Business Innovation and Incubation Centres and the new FAS Competency Development Programme.

Pat Delaney spoke last month about Irish-owned enterprises exporting more services to the UK than they do to the thirteen other EU member States combined. It is no surprise that small exporters, especially first-time exporters, should depend to a large degree on their nearest geographic market. Most small exporters everywhere do and indigenous companies have been hugely successful in the UK. The main reason why this reliance on the British market can be a problem is that it leaves Irish companies exposed to fluctuations in the external value of the euro.

Pat also outlined the challenges and opportunities small business faces operating within the EU both now and into the future with an enlarged union. I would not wish to underestimate the obstacles, but many small firms have shown an ability to overcome the obstacles and take advantage of the opportunities presented by EU membership. There will still be obstacles as well as real opportunities when the EU is enlarged again next May with the accession of ten new Member States. The Accession countries will give Irish exporters access to an additional 110 million people in an enlarged Single Market of 480 million. They are developing markets and as they develop they will provide growing markets for Irish goods and services.

‘Ireland at the heart of Europe' is the bold headline on the cover of the association's current issue of ‘Running Your Business' which refers to the importance both Government and the business sector attach to Ireland's role as President of the EU for the next six months. We intend to use our term as EU Presidency next year to achieve progress on implementing the Lisbon strategy which commits the Union to becoming the most competitive and dynamic knowledge-based economy in the world by 2010. Our approach will be strongly oriented towards promoting a culture of competitiveness and business expansion in Europe. We are aware of the urgent need to re-inject momentum into the Lisbon strategy and are planning to focus on what we see as key issues for 2004.

One of our particular priorities is to remove the barriers to business expansion in Europe. Viewing the services sector as an important motor for growth and employment creation, we intend to focus on pressing forward with the Directive on the Internal Market for Services. This will enable the services sector to operate more easily across national borders throughout Europe. We consider that progress in this area will have clear benefits for the SME sector.

Similarly we are planning to foster growth by promoting investment in transport, energy and telecommunications infrastructure and in developing our human capital. We see a particular need to agree policies to support innovation as an important means of adding value to our economic output and enhancing our competitiveness in the global economy. We also see an opportunity to support businesses to develop and make greater use of environmental technologies in the interests both of enhancing competitiveness and of fostering sustainable growth.

We recognise, of course, that Governments can support competitiveness by introducing greater flexibility, particularly in terms of worker mobility and through the provision of education and training to improve overall skills levels in the EU economy. We intend, in this regard, to finalise the reform of Regulation 1408 which will facilitate greater worker mobility by making it easier for employees to access entitlements in other EU Member States.

I welcome the report of the Employment Taskforce, headed by former Dutch Prime Minister, Wim Kok. The Taskforce confirmed that Europe needs to achieve better flexibility and adaptability in its workforce, greater investment in R&D and better training opportunities for its workers if it is to improve its employment situation. The recommendations of the Kok report mirror our own analysis of the key priorities for Europe in terms of job creation.

It is also important to ensure that effective structures are in place at EU level to support competitiveness. To this end, we have sought to develop an integrated strategy for business, using the resources now available to us through the Competitiveness Council. In keeping with its role as "guardian of competitiveness", it will be important for the Council to assess the impact of new EU decisions.

Similarly, we consider that the policies that we put in place to promote competitiveness must be developed on the basis of regular dialogue with the business community. We intend to organise opportunities for contact between Ministers and business people during our Presidency.

I would also like to mention this evening one area which I know is close to the top of the agenda of many business people concerned about Europe's competitiveness. That is the bureaucratic burden and the perception that the EU is over regulated. We need, of course, to ensure that the regulations that we develop are of good quality and do not impact adversely on the EU's competitiveness.

The EU Commission has made significant advances in the area of better regulation and is committed to reducing the current volume of 80,000 pages of rules by 25% by 2005. I know that the EU is frequently compared to the US in terms of our competitiveness. It is interesting to note, however, that the House of Representatives in 2000 reported that the Federal register exceeded 83,000 pages of rules!

I welcome the European Commission's Action Programme on Regulation, published in June 2002 as an important step forward in improving practices at EU level with regard to better regulation. I also welcome the Commission's decision to begin a process of undertaking impact assessments of major regulatory proposals.

We intend to adopt a similar national approach which will be aimed at ensuring that future regulation does not impose an undue burden on business.

In conclusion, can I say that this Government acknowledges and appreciates the valued contribution which the small firms sector has made and continues to make to economic growth and development at a national level. We readily acknowledge the need to encourage entrepeneurship and to provide incentives through the likes of the Seed Capital Scheme, the work of Enterprise Ireland and the County Enterprise Boards, the launch of the new Competitiveness Fund and eBIT initiative in addition to the Business Innovation and Incubation Centres and the new FAS Competency Development Programme.

My thanks again for the invitation to be here with you this evening and I hope that each and every one of you get to enjoy a well earned break over the Christmas period.

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