The Decline of Small and Medium Enterprises (SMEs)

The Decline of Small and Medium Enterprises (SMEs)

November 5, 2024

I recently received an insightful post from Eugene Boeldak on LinkedIn, shared of Antoine Houben. It paints a sobering picture of the state of Small and Medium Enterprises (SMEs) in the Netherlands in 2024. According to a 2023 study by CBS, only 31% of the Dutch econ-omy now stems from SMEs, a sharp decline from 62% in 1996. This decline means that what was once considered the "engine of the econ-omy", the backbone, has largely faded. Among all EU countries, the Netherlands now has the most negligible GDP contribution from SMEs.

Dutch political leaders, but also in Curaçao, seem to have been asleep when it comes to supporting SMEs, perhaps due to the low percentage of politicians with a business or economic background. So, what has replaced SMEs?

According to the same CBS analysis, foreign-owned corporations, especially American multinationals, dominate the Dutch economy today. This shift from SMEs to multinationals has had widespread yet largely unaddressed consequences for Dutch society—issues that are rarely discussed in mainstream media or acknowledged in political discourse.

One immediate impact is taxation: these foreign multinationals of-ten pay minimal or no tax on profits earned in the Netherlands. Their earnings are transferred to their parent companies, often in the U.S. or countries with favorable tax climates, like Ireland. This results in a substantial loss of corporate tax revenue for the Dutch government, which pressures average citizens with higher taxes on labor to fill the gap.

Fewer SMEs = Higher Tax Burden on Citizens

Another consequence is that our economy is increasingly shaped by the interests of foreign shareholders rather than Dutch entrepre-neurs and family-owned businesses. This influences both governmen-tal policy and our nation's cultural landscape.

This shift is also visible in the composition of the Dutch elite. In the 1990s, our economy was led by Dutch "captains of industry" like Jan Timmer from Philips, Cees van Lede from Akzo Nobel, and the Fentener van Vlissingen family. Today, we see the CEO of BlackRock meeting with our Prime Minister and ministers for trade and econom-ic affairs, indicating the significant influence of foreign capital in the Dutch local decision-making.

The Netherlands urgently needs a new political composition and level of expertise to keep the economy healthy. Too many policies are now formulated abroad . The situation in the Netherlands isn’t unique; it mirrors what’s happening in Curaçao and many other coun-tries worldwide. The economic elite holds the reins, and neoliberal thinking has spread since the 1980s. The middle class and small businesses are under pressure, and the influence of international capi-tal extends deep into local economies. This situation does not benefit the average citizen and requires correction. It explains the recent elec-tion results in the Netherlands, and it’s clear that the current cabinet is not the corrective force needed.

On Curaçao, we will have to wait and see what unfolds, with elec-tions set for March 2025.

Miguel Goede