Micro-enterprises usually employ fewer than 10 persons and their annual balance sheet or turnover does not exceed 2 million EUR. The large majority of European companies are micro enterprises, which are a substantial part of the business environment as they employ two-thirds of the European workforce. At the same time, they are also responsible for causing an estimated 30% of the environmental impact.
What defines a Micro Enterprise?
“Micro-enterprises are defined as enterprises that employ fewer than 10 persons and whose annual turnover or annual balance sheet total does not exceed EUR 2 million” (European Commission, 2020, p. 11).
What are distinctive characteristics of micro enterprises?
Across the OECD, almost one person out of three is employed in a micro enterprise with less than 10 employees (OECD, 2019), supporting the importance of SMEs for the implementation of circular economy practices. Based on 2008 data, the non-financial business economy workforce in the EU-27 area related to microenterprises can be characterized as follows: 92 % of the total enterprises belong to microenterprise group that employ 29 % of employees and add 21.8 % in business value (Eurostat, 2013; Ščeulovs & Gaile-Sarkane, 2012).
Beyond that, SMEs have been the main drivers of job creation and contribute to the identity and social cohesion of local communities in urban and rural areas (OECD, 2019; Rizos et al., 2016). Usually, micro and small firms in professional, scientific and technical services tend to be more productive than large enterprises which could be related to less hierarchical structures and faster decision-making pathways. Regarding geographical distribution, micro enterprises are overrepresented in e.g., Australia and Southern European countries (OECD, 2019). However, usually shortage of human resources and financial constraints are among the shortcomings.
According to the European Economic and Social Committee (2014), there has been considerable job creation in the «green jobs sector» (i.e., environmental goods and services sector (EGSS)), even during recession and crises years. Interestingly, there is significant potential of employment creation linked to the production of energy from renewable sources, energy efficiency, waste and water management, air quality, restoring and preserving biodiversity and developing green infrastructure.
How can micro enterprises benefit from more circular business approaches?
As 92% of European companies are microenterprises, an estimated 18 million companies, responsible for an estimated 30% of the environmental impact, so there is huge potential environmental benefit stemming from circular economy implementation. However, most are too small to use environmental management systems. Therefore, campaigns for environmental impact reduction, energy labels, eco-labels, test and certification of products will enable these companies to reduce their impact (Constantinos et al., 2014).