Small and medium enterprises (SME) are the backbone of the European economy and play a crucial role in employment creation and value generation. According to the definition of the European Commission, SMEs are companies with less than 250 employees and an annual business volume of less than 50 million euros or a general balance of less than 43 million euros.
According to the Annual Report of the European Commission on European SMEs, in 2023, approximately 25.8 million SMEs operated in the EU-27, which represents an amazing 99.8% of all companies in the non-financial business sector (SNF ). These SME gave employment to 88.7 million people (65.2% of the total), which shows its importance in the labor market.
Although SMEs constitute almost all companies in the non -financial business sector, they represent just over half of their added value. This is because the largest companies benefit from economies of scale, which allow them to produce goods and services more efficiently and a lower cost per unit. Consequently, large companies generate more added value than their smallest counterparts. Despite this, SMEs play a crucial role in economic diversity, innovation and resilience. They provide flexible business models that can meet the demands of market niches and contribute to local economies.
Together, SMEs form an integral part of the European economic structure. Its important presence and contribution demonstrates the essential role that these companies play in the maintenance and improvement of the economic vitality of Europe.