The presented\nReport on the State of Small and Medium-Sized Enterprises in the Slovak\nRepublic in 2020 presents a comprehensive view of the state and development of\nthe business environment in the SME sector and SME support in the period under\nreview. The purpose of the Report is to highlight developments and the most\nsignificant legislative changes adopted and effective in the monitored year\nthat have an impact on small and medium-sized enterprises. At the same time, it\nseeks to highlight existing barriers together with proposals for measures to\nimprove the business environment for the benefit of SMEs. <\/p>\n\n\n\n
The importance\nof small and medium-sized enterprises in the Slovak economy is described by\nseveral indicators. Small and medium-sized enterprises account for 99.9 %\nof the total number of business entities in the Slovak economy. They account\nfor almost two-thirds of employment in the business economy and contribute more\nthan half of total value added.<\/p>\n\n\n\n
The year 2020\nwas exceptional in terms of the development of exogenous factors that changed\nthe development of both the Slovak and the global economy in an extraordinary\nway. The COVID-19 pandemic was unquestioningly central to the economic\nenvironment in 2020. The year 2020 was not only characterised by a significant\ndrop in economic performance. The spread of a new type of coronavirus in 2020\nwas also largely associated with a relatively high level of uncertainty and\nrisk, primarily based on the evolution of the epidemiological situation, which\nis also linked to the economic activity of business entities. <\/p>\n\n\n\n
The performance\nof the Slovak economy slumped due to the pandemic after years of continuous\ngrowth.The recorded decline was\nsteepest in the second quarter of 2020, in which a decline of almost 11 %\nwas recorded. In the second half of the year, the Slovak economy managed to\nmoderate the pace of its decline. GDP decline in the second half of the year\nwas much lower (it was -2.1 % in the fourth quarter). <\/p>\n\n\n\n
The decline in\neconomic activity did not occur only in Slovakia, but was also characteristic\nof other countries. In the European Union as a whole, economic performance\ncontracted by 6.1 %, mainly due to the slump in the major EU economies.\nAmong the V4 countries, Poland recorded the lowest year-on-year decline in economic\nperformance. Slovakia and Hungary ranked significantly behind Poland. As a\nresult of the complex pandemic situation, the Czech Republic experienced the\ndeepest slump of the Visegrad Group countries.<\/p>\n\n\n\n
In terms of the\nproduction side of the gross domestic product development, the economic slump\nof the Slovak economy was related to a decline in gross output (by 9.0 %),\nintermediate consumption (by 11.7 %) and value added (by 4.7 %). Net\ntaxes on products decreased by 4.8 % year-on-year. The downturn in the\nSlovak economy was also related to a decline in domestic demand. Household\nfinal consumption decreased by 1.1 %. Government final consumption\nstagnated after previous growth. Investment activity also experienced a\nnegative trend in 2020. Gross capital formation fell by 12 % year-on-year.\nTotal exports of goods and services also decreased by 7.5 % compared to\n2019. Goods and services worth EUR 78,469.8 million were exported from\nSlovakia.<\/p>\n\n\n\n
The decline in\nthe performance of the Slovak economy was also reflected in the labour market.\nIn the months of April and May 2020, there have already been year-on-year\ndeclines in employment across almost the entire spectrum of industries. The\nrelaxation of anti-pandemic measures during the summer of 2020 has contributed\nto a temporary improvement in the labour market situation. At the beginning of\nthe fourth quarter of 2020, the labour market situation deteriorated again, due\nto the second wave of the pandemic and the tightening of restrictions.\nEntrepreneurs operating in the accommodation and restaurant services sector in\nparticular had problems retaining their employees. The construction and\nindustrial sectors were among the other sectors with a significant decline in\nemployment. The only sector of the economy in which labour demand grew was the\ninformation and communication services sector. <\/p>\n\n\n\n
In 2020, SMEs\naccounted for 74.2 % of employment in the business economy. The share of\nSMEs in total employment in the Slovak economy was 59.1 %. Despite support\nmeasures to maintain employment, the average number of persons employed in the\ncategory of small and medium-sized enterprises (including natural persons\n– entrepreneurs) decreased year-on-year by 2.1 % (i.e. by 29.9 thousand\npersons) to 1,400.9 thousand persons employed. Employment declined\nyear-on-year in all size categories and legal forms except micro-enterprises,\nwhich recorded a 1.4 % year-on-year increase in the number of persons\nemployed. Small enterprises (down 4.5 % year-on-year) and medium-sized\nenterprises (down 3.3 %) struggled to retain employees. <\/p>\n\n\n\n
The negative\nimpact of the corona crisis on the Slovak economy was also reflected in the\neconomic performance of the small and medium-sized enterprise sector. The\nunfavourable economic situation affected all monitored economic indicators of\nSMEs. The value added of SMEs – legal entities decreased by 3.8 %\nyear-on-year. Although negative results were recorded in all size categories,\nthe most significant drop in value added was recorded by small enterprises.\nIndustry remained the most important sector in terms of SME value added. Labour\nproductivity also confirmed the lower level of economic performance of the\nSlovak SME sector. In the EU-27, labour productivity in SMEs is more than twice\nas high as in Slovakia. The gross output of SMEs – legal entities also\ndecreased (by 4.8 % year-on-year). Gross fixed capital formation of SMEs\ndeclined by 13.6 % and profit before tax of corporate SMEs decreased by\n11.8 % year-on-year. <\/p>\n\n\n\n
In 2020, the\ngrowth trend in the number of active business entities was also suspended. According\nto the data of the Statistical Office of the Slovak Republic, the achieved\ngrowth in the number of active SME business entities was only 0.3 %, which\nwas influenced by the negative contribution of small and medium-sized\nenterprises. Micro-enterprises have managed to maintain their dominance. Their\nshare was 97.2 %. Slovakia is also characterised by the highest share of\nmicro-enterprises in the EU countries in the size category of\nmicro-enterprises. <\/p>\n\n\n\n
The SME entrepreneurship\nrate remained almost unchanged at 21.8 % in 2020. Slovakia ranks among the\nEU countries with the highest number of small and medium-sized enterprises in\nrelation to the total population. <\/p>\n\n\n\n
In 2020, the\nnumber of active natural persons – entrepreneurs decreased by 2.9 % after\nthe previous increase. The decline is mainly due to the lower number of sole\ntraders as the most important legal form of natural persons – entrepreneurs. <\/p>\n\n\n\n
The pandemic\nhas also contributed to a reduction in the number of new businesses in 2020.\nAccording to the data, there has been a 2% reduction in the number of SMEs\ncreated
\n(or by 1,709 business entities). Interest in going into business has increased\namong self-employed farmers\nand freelancers.<\/p>\n\n\n\n
Paradoxically,\nthe situation associated with COVID-19 and the measures taken to prevent the\nspread of the coronavirus in order to protect the life and health of the\npopulation in 2020 have not led to an increase in the number of disappeared\nentities. Conversely, the number of terminations decreased by 15.1 %, to a\ntotal of 47,648 business closures. The lower number of business closures\nis also due to the adoption of coronavirus support measures, the use\nof which was conditional on the maintenance of business activity. The\nnumber of disappearances decreased most significantly in the liberal\nprofessions (by 32.1 %). Closures of enterprises – legal entities did not\nchange significantly year-on-year. <\/p>\n\n\n\n
More than\nfour-fifths of the total number of disappeared entities were sole traders\n(82.1 %). The year-on-year evolution of the net increase in business\nentities was therefore
\nto a significant extent influenced by the development of the number of entities\nthat were closed. Compared to 2019, the amount of net increase increased by\nalmost one-quarter (23.4 %) to 35,526 business entities.<\/p>\n\n\n\n
The gender\nstructure of natural persons – entrepreneurs did not change significantly\nin 2020. The representation of women among natural persons – entrepreneurs\nremained at 28.2 %, identical to 2019. In terms of individual\nlegal forms of natural persons –\nentrepreneurs, the representation of women shows differentiated results. The\nhighest proportion of women is among freelancers (49.8 %). The share\nof women in the legal form of sole traders is considerably lower\n(26.7 %). The development of the age structure of natural persons – entrepreneurs in\nthe medium term is characterized by an increase in the representation of entrepreneurs\nin the younger age categories less than 30 years old. In recent years, there\nhas also been a slight increase in the representation of older entrepreneurs\naged 60 and over. The largest number of natural persons – entrepreneurs is\nin the age category of 40\u201349 year olds. <\/p>\n\n\n\n
In line with\nthe long-term development tendencies observed in the sectoral structure of\nSMEs, entities operating in the services sector had the most significant\nrepresentation in 2020 (47.4 %). The construction sector has shown a\nslight increase in representation in recent years, accounting for 18.1 % of all\nentities within the SME size category in 2020. 16.9 % of SMEs were active\nin trade, 13.6 % in industry and 4.0 % in agriculture.<\/p>\n\n\n\n
Disrupted\nbuyer-supplier chains during 2020 (especially during the first wave) and\ndeclining demand have also negatively impacted our export-oriented SMEs.\nAccording to the preliminary data of the Statistical Office of the Slovak\nRepublic, there was a decline in exports, which amounted to 3.1 % in the year\nunder review. The decline in export activities was recorded for all size\ncategories of enterprises, but most significantly on the side of medium-sized\nenterprises (by 4.0 %). Small enterprises (3.1 %) and\nmicro-enterprises (1.6 %) recorded a slightly lower decline, which\ncontrasts with the evolution of the share of SMEs in total exports. Given that\nthe decline in exports of large enterprises was more pronounced\n(by 9.8 %), there was a year-on-year increase in the share of SMEs in\ntotal exports (by 1.5 p.p.). The territorial structure of SME exports is\ncharacterised by strong links to the EU common market. Only 11.7 % of\ntotal SME exports went to non-EU countries. Compared to other EU countries,\nSMEs in Slovakia have the lowest share of total exports to third countries. <\/p>\n\n\n\n
The business\nenvironment in Slovakia is characterised by frequent legislative changes which,\namong other things, affect the obligations and requirements affecting the SME\nsector. In 2020, a number of important pieces of legislation were passed (and\neffective) to respond to address the emergency situation that arose in the\nSlovak Republic due to the outbreak of the COVID-19 pandemic in the economic,\nsocial and economic spheres. The legislation was primarily aimed at reducing\nand minimising the negative impacts of the pandemic. Among the most important\nof these is the entry into effect of Act No. 198\/2020 Coll. – “Lex\ncorona”. A package of 115 measures to improve the business\nenvironment and reduce the administrative burden has been reflected in the text\nof the law. Most of the measures have been reflected in the text of specific\nlaws. Others include: the introduction of tenant protection and temporary\nprotection for entrepreneurs; the provision of financial assistance to ensure\nthe liquidity of SMEs; the regulation of the provision of rent subsidies; the\nprovision of subsidies to support small and medium-sized enterprises; the\nsuspension of trades for less than 6 months; the regulation of the\nso-called “home-office”; as well as other provisions of emergency\nmeasures in connection with the pandemic of the COVID-19 disease in the\nfinancial sector, among others. <\/p>\n\n\n\n
The total\namount of support for SMEs in 2020 in the context of the COVID-19 pandemic was\nmany times higher than in previous years. In terms of the structure of the\nforms of financing of regular support (excluding the so-called COVID support),\nthe direct form of support dominated, accounting for 79.1 % of the total\nsupport for SMEs. The indirect form of support amounted to 20.9 % in the\ncase of ordinary support (a slight year-on-year increase in the indirect form\nof support). The overall real use of ordinary support was lower year-on-year.\nThe main reason for this was that funds earmarked for planned activities in the\ncurrent year were partly reallocated (and\/or also increased) and accumulated in\ninstruments and measures with the intention of mitigating the negative impacts\nof the COVID-19 pandemic. The most significant share of support for SMEs in\nterms of individual categories of ordinary support was accounted for by the\ncategory of subsidies, NFA, grants (42.9 % of the total support provided\nto SMEs) and the category of credits or loans (30.2 %). In the context of\nthe evaluation of the COVID support provided to the SME sector in 2020, it can\nbe stated that financial or direct support prevailed. The most important\nproviders of COVID support included the Ministry of Labour, Social Affairs and\nFamily of the Slovak Republic, the Ministry of Economy of the Slovak Republic\nand SIH. A more detailed overview of support for SMEs is given in Chapter 3.<\/p>\n\n\n\n
In 2020, the\nSlovak Business Agency (hereinafter referred to as “SBA”) continued\nto meet its objectives in the area of providing comprehensive assistance\ntargeted at the sector of small and medium-sized enterprises, while continuing\nto support them through the implementation of a number of national projects,\noffering a wide portfolio of services for SMEs and those interested in\nentrepreneurship, whether in Bratislava or in the individual regions of the\nSlovak Republic. SBA also implements international (pilot) projects for the\npurpose of opening up the topics of the “Small Business Act”. <\/p>\n\n\n\n
SBA actively\nevaluated materials with an impact on the business environment, provided\nopinions and comments on proposals for new regulations through the Better\nRegulation Centre (hereinafter referred to as “BRC”). In the\nmonitoring year, the BRC assessed (in terms of content and process) the realism\nof the impacts captured in all the Business Impact Analyses produced and\nprovided detailed opinions containing suggestions for better capturing the\nimpacts of the new regulation on the business environment. <\/p>\n\n\n\n
The present\nReport on the State of Small and Medium-Sized Enterprises in the Slovak\nRepublic in 2020 also contains a complex of proposals and recommendations,\nprimarily for the purpose of supporting the continuous improvement of the\nbusiness environment in the SME sector in relation to improve their\ncompetitiveness and support growth dynamics. <\/p>\n\n\n\n
Supporting the creation and growth of businesses, especially small and medium-sized enterprises, is one of the key activities that ultimately improves the performance not only of regions but also of the economy as a whole. In line with the needs of SMEs, it is therefore essential to continue to streamline support for SMEs (at both regional and national level). Entrepreneurship support is an important tool for the development and stabilisation of the business sector and the competitiveness of the country. In order to promote a stable business environment, it is necessary to continue systematic cooperation and a coordinated approach of all involved ministries, as well as to take into account the suggestions and recommendations of individual entities. Mutual and intensive cooperation should be aimed at improving business conditions for SMEs.<\/p>\n","protected":false},"excerpt":{"rendered":"
The presented Report on the State of Small and Medium-Sized Enterprises in the Slovak Republic in 2020 presents a comprehensive view of the state and development of the business environment in the SME sector and SME support in the period under review. The purpose of the Report is to highlight developments and the most significant […]<\/p>\n","protected":false},"author":2,"featured_media":5601,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"tdm_status":"","tdm_grid_status":"","cybocfi_hide_featured_image":"","footnotes":""},"categories":[39],"tags":[],"class_list":{"0":"post-5878","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-news"},"yoast_head":"\n