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NEWS - 5. March 2021 11:00

Survey: feeling of security among small enterprises has fallen to levels seen a few years ago

  • In the industrial, retail and construction sectors, small and medium-sized enterprises saw a respectable growth in turnover of 14 per cent.
  • Small and medium-sized enterprises in Estonia are more optimistic than in the other Baltic Republics.

This year, 23 per cent of Estonian small and medium-sized enterprises (SMEs) are forecasting a decrease in turnover, although 11 per cent believe that turnover will increase by more than 15 per cent this year, according to the Baltic Business Outlook (BBO) survey conducted by SEB. Based on these indicators the feeling of security among SMEs has fallen to the level of three years ago.

‘The previous survey, which took place prior to the coronavirus wave, showed the highest level of optimism among Estonian SMEs in the last six years, because at that time only about one tenth of the surveyed companies saw a decrease in turnover. But, as we know, the reality in 2020 was quite different, and many sectors in the economy had to fight for survival. In the new survey, this year’s turnover forecasts correspond to the level of three years ago. However, it must be taken into account that the Baltic Business Outlook (BBO) survey took place in December, when the spread of the coronavirus and restrictions were not as extensive’, said Tatjana Vakulenko, Head of the SME Segment at SEB Pank.

According to Vakulenko, it is positive that despite last year’s economic downturn, there are more enterprises that are expecting turnover growth than those forecasting a downturn.
This year, the largest declines in turnover are among accommodation and catering SMEs (36 per cent), followed by transport and logistics (29 per cent), the cultural and entertainment sector, and the construction sector (both 28 per cent). Truly optimistic SMEs, which are forecasting turnover growth in excess of 15% this year, are most often found in the industrial, retail, and construction sectors (14 per cent of respondents in each). ‘According to the study, the signals in construction are conflicting, with some SMEs being under pressure and others seeing opportunities in the situation’, commented Vakulenko.

In a comparison between the Baltic Republics, Estonian SMEs are more optimistic, as 31 per cent of SMEs in Latvia and 35 per cent in Lithuania are forecasting a decline, which is the lowest figure in both countries since 2015.

The impact of Covid-19 on turnover is clear, but the high tax burden continues to frustrate

As expected, the Covid-19 crisis will inhibit the growth of turnover among SMEs the most this year, the impact of which is assessed by entrepreneurs with a score of 3.4 on a five-point scale. This is followed by a high tax burden (3.1), problems finding a market for one’s products and services (2.8), as well as burdensome legislation and excessive bureaucracy (2.7). Problems involving product or technology development (2.1), the insufficient skills of employees, and difficulties in finding foreign partners or entering foreign markets are low impact (both 2.2).

‘It is good to know that SMEs are satisfied with their employees’ skills and capacity for technological development. However, SMEs have perceived the tax burden to be one of the biggest problems in their operations for many years. This is closely linked to the concern of burdensome legislation and excessive bureaucracy, as some people in the company are dealing with taxes and laws at the expense of full-time work, and hiring a full-time accountant is not feasible for the company. Even so, the problem of a high tax burden has been declining steadily over the years, and in the year of corona it was no longer the most burning issue for the first time’, said Vakulenko.

The SEB survey took place in December 2020. A total of 3071 enterprises in the Baltic Republics took part, with 1019 located in Estonia. Among the enterprises that took part in the survey, 86 per cent had up to 10 employees.

Additional info:

Evelin Allas
Communications Manager
Marketing and Communications Division
SEB Pank

Phone: +372 6655 649
Mobile: +371 5111 718
Address: Tornimäe 2, 15010 Tallinn


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