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Small and medium-sized business (SMB) is a basis for economic development, employment and creation of new jobs and the key source of budget revenues in any country.
The relevant regulatory and legal framework builds on the term “small and medium-sized enterprise”. Small and medium-sized enterprises include businesses with up to 250 employees, up to EUR 50 million of annual income as well as sole traders. In the Ukrainian context, the terms “small and medium-sized business” and “small and medium-sized enterprise” share the same acronym — SME. This makes the two terms equal and fails to demonstrate the important role played by sole traders (ST) in small and medium-sized business.
In this study, SME will be used as abbreviation for small and medium-sized enterprises, and SMB — as abbreviation for the whole sector of small and medium-sized business (legal entities and sole traders).
SMB’s share in Ukraine’s economy is as large as 99%. SMB employs 79.1% of Ukraine’s total workforce. Therefore, public authorities should elaborate social and labour policies primarily with due consideration of the opinion of representatives of small and medium-sized business.
Ukraine’s small and medium-sized business has its unique characteristics, among which:
- High level of distrust in public authorities and NGOs in the SMB sector;
- Decentralised support infrastructure for small and medium-sized business;
- Poor management resulting from inconsistent vertical and horizontal communication between public authorities regulating the small and medium-sized business and lack of proper communication between public authorities and representatives of SMB at both the national and regional levels;
- Lack of knowledge, culture of and experience in market relations both among public authorities and in the SMB environment;
- Poor representation of SMB in the decision-making process in social and labour sector.
Taking account of these peculiarities for the purposes of reforming and regulating the social and labour sector will facilitate better communication between the business and public authorities, improve the quality of managerial decisions, increase employment rates and develop the SMB in the country.
Efficiency of the SMB policy depends on whether or not public authorities and the business have a common vision of the future in this sector. That is why the policy-making process should build on transparent and continuous cooperation between public authorities and representatives of the SMB.
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