SMEs lose employees

While the number of small and mid-sized enterprises (SMEs) is rising, the number of their employees is decreasing. Sofia Suleanschi, director of Winrock Moldova, an international organization which supports the development of this segment of business in our country, explains that the situation is due to the fact that many SMEs can barely make ends meet and some are even operating at a loss. Sofia Suleanschi told a program on Radio Moldova that the reason for this are some fiscal policy measures which were adopted without prior consultation with business representatives. “A big number of decisions were adopted during a longer period of time. Then some of those measures were scrapped, with the 1st, 2nd and 2nd+ Guillotines being implemented. However the regulatory framework, instead of getting simpler, became more incoherent”, said Sofia Suleanschi. Eugen Roscovanu, the head of the Small Business Association, told the same program that things were changing in appearance only. “I don't know how to explain this, but after business associations send their proposals to the ministries, none of them is found in the final version. This undermines the SMEs' trust in state institutions”, complained Eugen Roscovanu. He added that despite efforts made by the authorities, the extent of gray economy was diminishing very slowly. “Of the 141,000 firms registered with the State Registration Chamber, only one third present reports to the Fiscal Inspectorate and the Statistics Bureau. People, even after 20 years of independence, are afraid that if they declare all of their transactions they will be unable to pay their employees and feed their families”, said Eugen Roscovanu. In his opinion, the 4% rate of the corporate income tax for companies with annual sales of up to 600,000 lei, which is proposed to be introduced from 2012, should be even lower – 2% or 1%. In 2010 the number of SMEs rose from 43,700 to 45,600, as the number of their employees decreased from 316,000 to 209,000.