EMCC European Monitoring Centre on Change

The Netherlands: ERM Comparative Analytical Report on ‘Public policy and support for restructuring in SMEs’

  • Observatory: EMCC
  • Topic:
  • Published on: 13 May 2013



About
Country:
Netherlands
Author:
R.H. van het Kaar
Institution:

Disclaimer: This information is made available as a service to the public but has not been edited by the European Foundation for the Improvement of Living and Working Conditions. The content is the responsibility of the authors.

Although SMEs get a lot of attention in the Netherlands, there is no specific debate on SMEs and restructuring. A range of public instruments directed at SMEs exists, but their focus is mainly on growth and expansion. Many instruments are fiscal in nature. There are no public or social partner instruments specifically aimed at restructuring in SMEs. The existing instruments often appear to be better suited for larger companies than for SMEs. Considering the above, one can not really point to a good practice in the Netherlands.

QUESTIONNAIRE

We stick to the definition in the background note, but most of the research sets the upper limit at 100 employees.

Part 1: Overall policy context

1.1. Has there been public or policy debate on the specific challenges for SMEs and/or their employees in restructuring before the global recession of 2008/09? Please specify, for example:

It would go too far to speak of a debate, but one can distinguish several fields of attention with regard to SMEs, of which the most important were:

  • Lowering the administrative burden
  • Financial support for start-ups and for business growth
  • Measures to facilitate transfers of business (follow up)

There has been no real debate on the issue of restructuring SMEs. A major reason was the very tight labour market. Mention should be made of the more general debate on the specific problems posed to SMEs by the legislation on dismissal and on disability. We will come back to this issue later on.

• If so, since when (e.g. up to 3 years before, 3-10 years before, longer), at which level (national, regional, sectoral, all of them) and in which form (‘real’ policy debate mirrored in policy documents or rather public debate mirrored in media, or both)?

To the extent one can speak of a debate, this has mainly taken place on the national level (public policy). It has been a more or less permanent issue (10 years or more).

• Which policy areas (for example, SME policy, entrepreneurship policy, employment policy, social policy, regional policy etc.) were involved? Particularly: Does SME policy specifically deal with restructuring? Does ‘restructuring policy’ specifically deal with SME issues?

The main issues revolved around entrepreneurship policy.

• Did the public and policy discussions deal with restructuring as such or were specific types or phases of restructuring covered?

No

• Which were the issues/contents that have been discussed? Which specific characteristics of SMEs in restructuring were considered in this context? Was the specific case of SMEs as subcontractors a topic for discussions?

Issues were growth, and business transfers, especially with follow up/succession problems.

• Did the discussions rather deal with the enterprise perspective or with the employee perspective or both?

Not applicable.

1.2. Did the global economic and financial crisis of 2008/09 cause any change in focus of the above (for example, increased/decreased focus on SMEs and their employees in restructuring, change in policy areas or issues covered)?

With regard to SMEs, there has been no shift in focus, with the possible exception of one item: the existence of barriers for SMEs (and especially smaller SMEs) to make use of the part time unemployment arrangement, due to limited profession staff. This issue has not been resolved, however.

1.3. Are social partners or employers’ and employees’ organisations involved in public and policy debate on restructuring in SMEs?

There has been a debate on dismissal legislation, albeit not specifically directed at SMEs. The last in first out rule has been modified, firstly by introducing age cohorts in electing employees to be dismissed, and secondly by giving more room to employers in choosing employees for dismissal with the aim to retain socalled indispensable employees. The union federations have opposed the second measure, which has especially be welcomed by the SME employer federation.

• If so, which (types of) organisations and at which levels?

See above

• What are their opinions, perspectives, recommendations?

See above

• Did they succeed in convincing governments or public authorities at various levels of their viewpoints?

See above

Part 2: Support instruments

To start with, one should note that the large majority of instruments is not specifically directed at either restructuring or SMEs, let alone restructuring in SMEs. The instruments below are presented by the Ministry of Economic Affairs, Agriculture and Innovation as the list of available subsidies and arrangements for companies. Some are specifically directed at starters, others are effectively meant only for SMEs.

* fiscal deduction for R&D, with extra arrangements for starters (including self employed) (WBSO); research and development deduction (RDA), conditional on being covered by the abovementioned WBSO-arrangement

* security for SME-credits, which makes it possible to increase bank loans for SMEs (BMKB)

* assistance for self-employed, who earn less than the social minimum (Bbz)

* arrangement for venture capital for start ups

* support for a safety scan for small firms (10 fte and upwards) that want to grow

* arrangement where unemployed can start a business, while retaining the unemployment benefit

* fiscal deduction for starters (startersaftrek; zelfstandigenaftrek)

* credit facilities for innovation for SMEs (Innovatiekrediet, SEED Capital-regeling)

* Innovation fund for SMEs (Innovatiefonds MKB+)

* special deduction of fiscal profit for SMEs (MKB-winstvrijstelling)

* micro financing for starters (microfinanciering)

* fiscal deduction for small investments (kleinschaligheidsinvesteringsaftrek, KIA).

* Growth facility (groeifaciliteit). The Ministry of Economic Affairs takes over 50% of the risk of investors supplying capital to SMEs.

* information and advice service for SMEs in doing business abroad

* regional databases with labour market information

* Prepare2start, aiming at SMEs that want to expand internationally

A second category of instruments is mainly directed at classical restructuring (avoiding job losses, mitigating effects for employees etc.), mainly supplied by the Ministry of Social Affairs and Employment and/or the social partners:

* Part time unemployment benefit. This arrangement was meant to cope with the crisis, and is not specifically aimed at SMEs; it has been terminated.

* Accreditation of prior learning

* sectoral training and development funds (O&O fondsen)

* mobility centres; there are 33 mobility centres, each of which has one fte earmarked for SMEs, to support the transition of redundant workers (ex post or ex ante)

* anticyclical training in the construction sector (partly paid by ESF-subsidies)

* gatekeeper centres (Poortwachter); mainly meant for the reintegration of sick employees, but to a lesser extent also involved in employees that threaten to lose their job due to restructuring;

* flexpools, to support the transition of redundant workers (ex post or ex ante)

* Debt restructuring and insolvency assistance for SMEs

* sectoral service points; set up by employers, local governments and public employment authorities to deal with labor market issues; sometimes the unions are also involved Their main function is advisory.

Then there is a third category that focuses on the problem of follow up in SMEs, trying to facilitate succession, mainly supplied or supported by the Ministry of Economic Affairs.

* business angels

* scorecard business succession, to assist (preparation of) transfer/succession.

* database on buyers and sellers of companies

A research report, published in 2010 with a focus on SMEs distinguished six types of measures within two broad categories of policy measures. The first is preventive, the second curative. Support measures include involvement of the public employment bureaus (UWV WERKbedrijf) and mobility centres. Both the employer and the employee (under certain conditions) can use the facilities.

Information and consultation in SMEs

Full information and consultation rights apply in organisation with 50 employees or more (although in some collective agreements, this threshold has been lowered to five). In smaller firms, I&C-rights are more limited, and in organisations with less than ten employees, there are no I&C-rights, unless the employer voluntarily grants them to the employees. There is a special I&C-arrangement in case of mergers and acquisitions. These rights are also limited or non-existent in case of small organisations (more or less the same thresholds).

In many sector collective agreements, there are provisions on restructuring and social plans. In principle, these agreements only apply to employers who are a member of the relevant employer organisation. However, many of these sector agreements are declared generally binding (extended) by the Ministry of Social Affairs and Employment, with the result that they cover all employers and employees (including micro firms), but not self-employed without employees. This does not mean however that all SMEs are covered by social plan. According to EIM (2011), only 3% of the firms with 1-10 employees were covered by a social plan. This percentage rose to 23% for firms with 10-99 employees and 74% of larger firms (not only SMEs). One of the main reasons is that most social plans apply for restructuring involving 20 employees or more.

Furthermore, in many sectors the social partners have established training and education funds and sometimes funds for social assistance. In many cases, these funds are declared generally binding as well, and therefore cover all firms, including SMEs.

2.1. Please provide an overall assessment about how accessible and suitable public and social partner based restructuring support for companies in general are for SMEs or their employees.• Do SMEs and/or their employees generally have access to the available instruments and are these suitable for their specific needs in restructuring?

Generally, the different instruments apply to the employers, and are readily available through the internet (websites of the Ministries, Chambers of Commerce etc.). The number of instruments directed at employees is far lower (with the exception of the measures aimed at self-employed). In all probability, availability is somewhat more problematic for employees. It is impossible to make a general statement on the suitability of the wide range of instruments for restructuring in SMEs. Research (EIM, 2010) shows that SMEs on average have used socalled work to work activities (like training, outplacement, job pools etc.) less than larger firms. Therefore, in all probability they will also make less use of public and social partner support instruments. One of the recommendations following from the research is to stimulate SMEs to make more use of the available instruments, especially support by the public employment authorities. Just over 50% of the SME-employers in EIM 2011 stated that the public employment authorities ‘could do more’; around 36 % stated the same opinion with regard to the sectoral employer organisation.

Employees (a sample of 454 that were interviewed) have a preference for support by a mobility centre or an outplacement bureau. Employees share the opinion of the emloyers that UWVWERKbedrijf and sectoral organisations should do more.

• Are there specific (types of) instruments (for example, targeting specific types or phases of restructuring, offered at specific administrative levels) that are more/less accessible and suitable for SMEs and/or their employees that for larger firms? If so, why?

Quite a few instruments are only meant for SMEs, by putting limits to the availability for larger firms. These are without exception measures aimed at business growth or at start ups.

A general problem is the low quality of HRM in any SMEs, and the mistrust by quite of few SME-employers towards the quality of work of the public employment authorities (UWV), stemming from unfavourable past experiences with applicants for jobs sent by the UWV.

2.2. Do there exist specific public or social partner based support instruments explicitly targeting at SMEs and/or their employees in restructuring? Please specify, for example:

Many of the specific support instruments have already been mentioned above. Their aim is business expansion, and they are directed at the employer.

• If so, by whom are they offered (public vs. social partners/employers’/employees’ organisations) and at which administrative levels (national, regional)?

These specific instruments are mainly public and operate at the national level, although there is a recent tendency for some local governments to get more involved. The reason is that they have become financially responsible for paying out social assistance once employees have lost their entitlement to the unemployment benefit. There are also some regional instruments (for example the mobility centres and the gatekeeper centres), but these have been set up from the national level.

• Are the activities of different support service providers coordinated? If so, how and how well does this work?

The EIM (2011) research shows that a frequent complaint of the SME-employers actually is the lack of coordination between the different instruments.

• Which phases of restructuring do they target?

Some are anticipatory (giving information to employers,for example employers that want to expand to other countries). Some take place during the process of expanding (for example fiscal deductions). With regard to classical restructuring the aim is to avoid unemployment, helping employees at job to job (work to work) transitions.

• Which types of restructuring do they target?

Most instruments for SMEs are directed at business growth, innovation and invesment and start ups.

• Do they target SMEs in general, or specific size classes, sectors, regions, legal forms, roles (for example, as subcontractors) etc.? Do they target employees of SMEs in restructuring?

Sometimes at micro enterprises (often at starters), or small firms, rarely or not above 50 or 100 employees.

• What type of support do they provide? What specific challenges for SMEs in restructuring do they address?

Financial (often fiscal) support and information with regard to business expansion.

• Is there some information about how well they are known among SMEs and their advisors and about how they are generally assessed by the SME sector? What are their strengths and weaknesses? Are there recommendations for improvement

They are less well known by SMEs than by larger firms. SMEs tend also to be more critical than larger firms on some of the instruments (EIM 2011).

Part 3: Good Practice

To my opinion, there is not really a good practice in the Netherlands with regard to support of restructuring in SMEs. There are several reasons for this.

Firstly, there is a broad range of support instruments for SMEs which are revolved at business expansion, many of them fiscal in nature. However, the link of these instruments to the subject of restructuring is weak.

Secondly, there are several restructuring instruments which have been deemed rather successful, especially by the actors involved. These include the mobility centres and the part time unemployment scheme. However, there are two problems here. The first is that the amount of success is not undisputed (How many jobs have really been saved? How many placements are really due to the activities of the mobility centre?). More importantly, these instruments have been less successful in SMEs compared to larger firms, especially the part time unemployment instruments, and they are not specific for SMEs.

Commentary

According to recent estimates (EIM 2011) some 100,000 employees involuntarily change jobs in SME firms in the Netherlands every year, so measures aimed at restructuring are definitely relevant. However, the number of public and social partner based restructuring instruments that are specifically developed (or even suited) for SMEs is very limited. The exception are instruments aimed at business growth and expansion, but their relationship to classical restructuring (measures to protect employees) is weak.

References

EIM, Van Werk naar Werk in het MKB, Zoetermeer, September 2011

Robbert van het Kaar, AIAS/HSI

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