Summary on the survey of entrepreneurs in regards to EU structural funds

In the framework of the cooperation programme of the Estonian Employers' Confederation and the Economic Education Centre of the German federal state Mecklenburg-Vorpommern, titled as "Development of Social Dialogue in EU Accession Countries by Involving Social Partners" and with the financing of the Federal Ministry of Economics and Labour (BMWA - Bundesministerium für Wirtschaft und Arbeit) of the Federal Republic of Germany, the Estonian Employers' Confederation performed a survey among its members in order to clarify the involvement of employers in drawing up the Estonian National Development Plan for the Implementation of the EU Structural Funds - SPD 2004 - 2006  ). As is known, SPD with the programme supplement attached to it forms the source document for the implementation of the European Union structural funds. Therefore, it is possible to apply for support only for developing those fields of activity that are established in SPD.

The Confederation also obtained useful feedback from the survey for planning future training, as well as ideas for a more vigorous intervention in the programming work of the next SPD. The composition work of the next SPD should start at the end of this year.

On the basis of the survey it can be affirmed that the awareness of entrepreneurs of SPD is modest, and in many cases the entrepreneurs did not even know that it would be possible for them to participate in the composition of the SPD.

In comparison to the entrepreneurs, the awareness of the branch associations of the SPD is a bit higher. The reason for that is likely that the branch associations were more involved in the compilation of the SPD. The participation of companies, however, already depended on how actively the branch associations could involve the companies in the discussion of SPD. Additional tension was created by the relatively tense time schedule.

The Ministry of Finance should certainly have also had to pay more attention on the general informative work concerning SPD.

The majority of the participants in the survey did not have a clear understanding on which activities are financed from the means of EU structural funds.

The entrepreneurs are still positively minded and hope that the measures established in SPD will contribute to the development of entrepreneurship in Estonia as a whole.

Which measures would contribute best to the development of entrepreneurship in Estonia?

In the opinion of the entrepreneurs, in order to encourage the development of entrepreneurship, first of all it would be important to create a business environment that is friendly to entrepreneurs, which means flexible legislation and stabile tax policy.

Bureaucracy and corruption, as well as all kinds of over-regulation are to be avoided. For the purpose of raising the quality of laws and facilitating their application, it would be essential to involve the representative organisations of employers and entrepreneurs (representatives of branch associations) actively in the legislative process.

It would be necessary to increase the number of entrepreneurs in Estonia. The decision to become an entrepreneur naturally depends on what the business environment of the country is like and on how easy it is to start a business. Becoming an entrepreneur will also be favoured by an easy access to training on entrepreneurship.

The measures of EU structural funds might be involved for:

• assisting innovative SMEs and carrying out innovative projects;
• for small enterprises and exporters it would be important to establish a national risk capital foundation;
• the entrepreneurs of Tallinn might also qualify for the programme of developing the infrastructure of entrepreneurship;
• the amount of financial means meant for creating new jobs should be substantially higher;
• it would be necessary to increase the amount of support in the field of environment.

The present system has prescribed high fines for entrepreneurs who are not capable of investing in their production technology in time in order to comply with all the requirements set forth in EU directives. The payment of a fine naturally has a destructive impact on the competitive ability of the company. It would be more reasonable instead to motivate entrepreneurs to produce in a more environmentally friendly manner by helping them to carry the obligation of investment and providing environmental support for certain manufacturing enterprises.

Proposals:

• A more understanding attitude is expected from Enterprise Estonia;
• More active informative work and training on the procedures of applying for entrepreneurship support measures etc.

Accession to EU has brought along the necessity for increasing the amount of investments in companies. In the opinion of entrepreneurs, it would be reasonable to involve the means of EU structural funds for helping the entrepreneurs to comply with the obligations taken with accession to EU.

Start-up assistance for starting entrepreneurs (maximum amount of support 160 000 EEK)

The sufficiency of the amount of start-up assistance depends on the field of activity, objectives and scale of the company to be founded. The entrepreneurs admitted that a start-up assistance of 160 000 EEK might be sufficient for founding a relatively simple service sector enterprise, but certainly not for starting production.

The start-up assistance for starting production should be at least 1 million Estonian kroons.

In the opinion of entrepreneurs, start-up assistance might be differentiated and its payment could be divided in various stages. The differentiation of start-up assistance might take place on the basis of the type, field of activity etc. of the company. The effecting of payments in stages would help to manage risks, whereas the usage of the first stage start-up assistance according to intended purpose would be the precondition for qualifying for the next stage start-up assistance.

The main task that Estonian enterprises confront is staying in competence. The current 0% company tax rate has helped to make the necessary investments in the company. (e.g. to perform widening of production area, reconstruction, to modernise the technical basis etc.).

The majority of entrepreneurs are interested in applying for the financial measures of EU structural funds already in this period (2004-2006). At the same time the entrepreneurs acknowledge that they do not have a clear idea of how much energy and time the formation of project applications and the application process itself would take. What lacks most at the moment is adequate information, so that there is a real necessity for training on EU structural funds.

The training could be provided by the organisations of employers in cooperation with the respective application units (Enterprise Estonia, Labour Market Board etc.).

For certain companies and branch associations, the performance of the self-financing part is a problem. Taking into account that EU funds will be paid out to the applicants only on the basis of paid invoices, a certain amount of entrepreneurs feels the necessity for state guarantees for obtaining a loan from the bank in order to start carrying out the project.

In conclusion it could be ascertained that in order to take maximum advantage of the financial measures of EU structural funds meant for enterprising support, social partners should be involved in all stages of managing the financial measures of EU structural funds. The time that has been left until accession will have to be used for increasing awareness through training and informing.

Please also see:
a) Estonian National Development Plan for the Implementation of the EU Structural Funds - SPD 2004-2006; and
b) Estonian National Development Plan for the Implementation of the EU Structural Funds - SPD 2004-2006; Programme Complement;

at the web site:
http://www.struktuurifondid.ee

Composed by: Eve Päärendson
Estonian Employers' Confederation