The challenges faced by SMEs in Austria and policy response

Presentation by Karin Bachinger to the ERC State of Small Business Britain Conference 2024

1. Karin Bachinger / Austrian Institute for SME Research The challenges faced by SMEs in Austria and policy response

2. Over 80 projects per year Since 1954 active in economic research The Austrian Institute for SME Research is an independent non-university research institute in the field of economics and social sciences. Small and medium-sized enterprises (SMEs) are a core area of our research activities. About us

3. The Austrian institutional framework – What‘s special ? Key challenges faced by Austrian SMEs Austria’s policy response Transitioning to a climate neutral economy - Austria's policy response based on findings from ongoing r esearch Recap & conclusion Outline of the presentation

4. The responsibility for SME policy lies with the Ministry of Labour and Economy Corporatism / s ocial partnership - important role of the C hamber of C ommerce Strong direct funding system Austrian Research Promotion Agency (FFG) P romotional bank of the Austrian federal government ( aws ) Important driver from the regulatory side : EU What‘s special ? (I) The Austrian institutional framework

5. No formal governance structure specifically designed to coordinate SME policies Monitoring tool : Report „SMEs in focus “ (KMU im Fokus) Annual analysis of the state of Austrian SMEs & overview of SME policies Monitoring progress towards the European SME Strategy for a sustainable and digital Europe What‘s special ? (II) The Austrian institutional framework www.kmuimfokus.at

6. Adoption of digital technologies Transformation to climate neutrality Attracting, training, and retaining skilled workers Business dynamism and productivity / low startup rates Rising costs ( energy , raw materials , production , and labour ) Innovation / innovation capacity Resilience to multiple crises Equity and venture capital financing Key c hallenges faced by Austrian SMEs

7. Adoption of digital technologies Transformation to climate neutrality Attracting, training, and retaining skilled workers Business dynamism and productivity / low startup rates Rising costs ( energy , raw materials , production , and labour ) Innovation / innovation capacity Resilience to multiple crises Equity and venture capital financing Key Challenges faced by Austrian SMEs

8. Key Focus Topics of the “SMEs in Focus” Reports Over the Past Decade Austria’s policy response Enhancement of Dual Vocational Training a nd D evelopment of the Skilled Workforce Strengthening Competitiveness and Location Attractiveness , and the Promotion of Startups Promoting Digitalisation and Cutting R ed T ape Mitigating the effects of the COVID-19-crisis and the Russia -Ukraine w ar Tackling the Skilled L abour S hortage Transformation towards a climate-neutral economy Source : Austrian Institute for SME Research

9. Key Focus Topics of the “SMEs in Focus Reports” Over the Past Decade Austria’s policy response Enhancement of Dual Vocational Training a nd D evelopment of the Skilled Workforce Strengthening Competitiveness and Location Attractiveness , and the Promotion of Startups Promoting Digitalisation and Cutting R ed T ape Mitigating the effects of the COVID-19-crisis and the Russia -Ukraine w ar Tackling the Skilled L abour S hortage Transformation towards a climate-neutral economy Preliminary r esults of our ongoing research project „TranS4MEr“ Source : Austrian Institute for SME Research

10. TranS4MEr research project : Transformative SME Policy for Broad-Based Decarbonisation Objective : Develop climate mitigation policy goals for SMEs Funded by the Austrian Climate and Energy Fund Background : Transformation to a climate-neutral economy (in Austria by 2040) as a key policy objective, important role of SMEs -> Where and how should the federal government intervene ? Methodology : Enterprise survey R epository of 267 policies – an appraisal of the Austrian climate policy mix from an enterprise perspective I nterviews with 21 policy experts Austria’s policy response

11. TranS4MEr research project : Transformative SME Policy for Broad-Based Decarbonisation Objective : Develop climate mitigation policy goals for SMEs Background : Transformation to a climate-neutral economy (in Austria by 2040) as a key policy objective, important role of SMEs -> Where and how should the federal government intervene ? Methodology : Enterprise survey R epository of 267 policies – an appraisal of the Austrian climate policy mix from an enterprise perspective I nterviews with 21 policy experts Austria’s policy response

12. Exploratory analysis of the Austrian policy mix - Economic instruments predominate Austria’s policy response Policy repository Compilation of policies at the federal level contributing to climate neutrality of enterprises policies active in 03/2023 – 02/2024 total of 267 policies Source : policy repository (n=267), Austrian Institute for SME Research

13. Thematic scope - Energy transition policies predominate Austria’s policy response Source : policy repository (n=267), Austrian Institute for SME Research Number of policies Federal policies contributing to the climate neutrality of enterprises

14. Thematic scope - Energy transition policies predominate Austria’s policy response Source : policy repository (n=267), Austrian Institute for SME Research Number of policies Federal policies contributing to the climate neutrality of enterprises e.g. Subsidies for energy technologies e.g. waste management

15. Many policies do not specifically target enterprises No climate strategies or implementation plans dedicated to enterprises Few policies are targeted only at SMEs: other categories are more important Target group specificity Austria’s policy response Source : policy repository (n=267), Austrian Institute for SME Research Federal policies contributing to the climate neutrality of enterprises

16. Key intervention points for transformative change towards climate neutrality Rooted in different scientific debates and disciplines Where and how should the federal government intervene ? Austria’s policy response Transformative policy approaches 1) Reorienting towards a climate -neutral economy 2) Ensuring a socially inclusive and just transition 3) Shifting to transformative governance arrangements 4) Creating favourable market frameworks 5) Investing in infrastructures for climate-neutrality 6) Building competitive environmental goods and services industries 7) Stimulating eco-entrepreneurship 8) Fostering the adoption of low-carbon alternatives 9) Creating spaces for experimentation and collaboration 10) Supporting businesses to reduce their carbon footprints Source: Austrian Institute for SME Research

17. Austrian government intervenes in many areas – but some are neglected Austria’s policy response Federal policies contributing to the climate neutrality of enterprises Source: Austrian Institute for SME Research

18. Key challenges for SMEs : Digitalisation , transformation to climate neutrality, skilled labour Austrian p olicy r esponse : Key challenges are being addressed Stable framework conditions through some long -term support programmes Enterprises are confronted with a large number of diverse policy interventions High proliferation of direct funding / subsidies – Complex funding landscape Few regulatory interventions Recap

19. Transformation to climate - neutral economy : Austrian p olicy r esponse Ambitious target : climate neutrality by 2040, important role of SMEs Thematic scope : Many measures are too narrowly focused on energy Target groups : Often implicit rather than explicit targets, rarely tailored to SMEs No climate strategies dedicated to the enterprise population Intervention points : The Austrian policy mix is broad, but some key intervention points are neglected, in particular those related to socially inclusive and just transition processes Recap

20. Simplification and guidance e.g. through One-stop shops, policy packaging Target group specific policies Clear objectives and communication for SMEs What is needed ? for the transformation to climate neutrality

21. Senior Researcher Austrian Institute for SME Research [email protected] Karin Bachinger Thank you for your attention !