two ways to face the economic recovery

There is no doubt that the intrinsic characteristics of Spanish SMEs and large companies make them face the new situation in a very different way. The impact of the pandemic It is a clear example of how their idiosyncrasy has had very different effects that has contributed to further widening these differences.

When it comes to differentiating between an SME and a large company, the usual thing is to examine the number of employees, their turnover, the geographical location in which they operate, or the amount of taxes they pay, among other aspects. But nevertheless, these features take on a new dimension when they have a direct relationship with its evolution and contribute to deepen the gap between one and the other.

The COVID-19 pandemic has shown that its impact has not been the same in SMEs as in large companies, taking into account these characteristics, and the former have seen their situation of vulnerability increased.

So much so that, according to data from the Central Balance Sheet of the Bank of Spain, one in five SMEs closed their 2020 financial year, which ended last June, in a situation of technical bankruptcy. In fact, 19.2% of companies with fewer than 250 employees ended their first fiscal year in times of a pandemic in “legal cause of dissolution due to losses”, that is, with more debt than the company is worth.

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In this situation, being an SME or a large company has a significant influence: the smaller the size of the organization, the more common this situation is. Due, insolvency situations they are becoming more common in the form of payment suspensions and settlements. The drop in consumption, the slow economic recovery, together with the scale of prices for energy, transport and raw materials in the midst of a logistics crisis, has only complicated this situation for smaller Spanish companies.

The wage gap widens

One of the most immediate consequences of the impact of this crisis can be seen in the wage gap between SMEs and large companies and how it has increased in the last two years. According to the latest “Business Growth” report prepared by the Spanish Confederation of Small and Medium Enterprises (CEPYME), the difference in average salary between companies with more than 200 workers and those with less than 50 employees increased by 2020 approaching 665 euros per month, that is, about 8,000 euros per year.

However, in some sectors this gap is even greater, such as in construction, with a difference of almost 800 euros per month, about 10,000 euros per year.

This further aggravates the complicated situation that small and medium-sized Spanish companies are going through, with our country being the one with the highest percentage of SMEs at the European level in a state of economic vulnerability, with 7.1%.

One of the consequences of this wage gap it is undoubtedly the destruction of employment, which in turn generates another great inequality vis-à-vis large organizations, a key factor in times of crisis. This is shown by the report of CEPYME in which it is highlighted that, in the economic crisis experienced between 2007 and 2013, more than half of the total lost employment occurred in companies that had between 10 and 249 workers. Without a doubt, a key point considering that this segment of companies only had a third of total employment.

In a situation like the current one, SMEs need greater flexibility to be able to adapt to the constant changes they experience, as well as to maximize hiring. Considering that these companies are under the sectoral collective agreement, which allows them to reduce the costs of negotiating working conditions in each job, this can lead to an excessive corset at certain junctures.

Being able to detach from this agreement, or adhere to all or some of the sections, would contribute to providing these SMEs with greater flexibility to negotiate their own agreements internally.

Along with this, it must be taken into account that, currently, and in a context of pandemic, in the countries of the European Union, the largest companies are experiencing, on average, higher productivity than SMEs. The calculations suggest that, on average, the productivity gap among large and medium-sized companies it is 2.3 times more.

Again, the Spanish situation here is above the European average since it is estimated that large organizations are up to 2.6 times more productive than SMEs.

And, again, this entails another consequence with a negative impact for small and medium-sized Spanish companies. By having a lower production, export it also decreases. According to the aforementioned CEPYME report, only 2.2% of Spanish micro-companies are exporters, a percentage that reaches up to 60% in the case of companies with more than 250 employees.

This factor has an enormous impact on the economy of these companies since, with lower sales abroad, the average exports of micro-companies bring them just over 500,000 euros. Undoubtedly, a figure much lower than that of large companies, whose exports bring them 64 million euros per year.

The necessary investment of SMEs

Although it is true that Spanish SMEs are going through a significant economic downturn, investing in the business is key to remaining competitive and moving strongly into the future. For many of them, any financial outlay can have a fatal impact on their business. However, many of them are already checking how investment in technologies It is providing them with important benefits that help optimize their efficiency, performance and competitiveness.

The digitization of Spanish SMEs is already a reality, but there is still a long way to go for many of them to make that leap and lose their fear of betting on technologies that help their investment bring great benefits in the short, medium and long term .

Analyzing in detail the needs of the business, studying which technologies are adequate to achieve certain objectives, and establishing a digitization plan is essential for this investment to bear the desired results.

The financial outlay required by many of these projects has become the main obstacle for small and medium-sized companies to decide to tackle them. Their economic capacity, which is far from that of large corporations, is in the spotlight at a time as delicate for them as the current one.

The implementation of initiatives such as the Digital Kit Program, which will distribute 3,067 million euros of European Fund Next Generation EU in bonds of up to 12,000 euros for small and medium-sized companies and freelancers for their digital transformation is a clear example of this.

However, the difficulty of access to financing that SMEs have compared to large companies is another gap that continues to contribute to the fact that the former cannot tackle many projects, with the consequent impact that this entails for their businesses.

Bet on attracting talent

Although access to aid and financing is essential, having talent in companies has also become another critical aspect.

And here too there are big differences between SMEs and large corporations. The capture and retention of talent It is more challenging for small and medium-sized businesses compared to larger organizations with higher budgets, allowing them to offer economic benefits that smaller ones cannot.

Faced with this new obstacle, SMEs must undertake the recruitment and retention of talent exploring new formulas that go beyond the economic motivation for these workers. According to the report Employer Brand Research 2021 of Randstad, the main factor when accepting a job offer is, in 70% of the cases, the salary, however, the work conciliation and working in a good environment has become, in 66% and 64 % of cases, in two increasingly valued aspects.

According to Sodexo, given the great capabilities of large organizations, SMEs must take advantage of their better size to establish close relationships, offer social benefits, or even bet on flexible remuneration. In this case, although SMEs do not take into account remuneration alternatives such as large companies, with flexible remuneration the purchasing power of the employee can be increased through the exchange for services of up to 30% of gross salary, without involving a higher salary cost for the company.

Currently, SMEs are at a crucial moment when making key decisions for the future of their businesses. Without counting on the resources of large firms, they must address the necessary transformation of their businesses to move towards a future in which their value proposition is as attractive as that of large companies and have the talent and capabilities that a company requires. world in constant change for which you have to be well prepared.

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