Posted on 02/05/2014

Small firms contribute greatly to job growth

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The Institute of Public Policy Research (IPPR) has found that SMEs have been instrumental in raising British employment levels. A report by the Institute says that small businesses have created 80 per cent of total jobs in the past three years. These businesses employed 1.2 million of the total 1.5 million jobs created since 2008.

Engines of the economy
SMEs were especially important in hiring previously unemployed individuals, with 88 per cent of those formerly without work finding jobs in smaller businesses. With each company hiring between 0-249 people, John Allan, the National Chairman of Small Businesses said: “We hear a lot about how small businesses are the engine of the economy and this research confirms this.”

Job creators in recession
The Chairman went on to explain that small companies have ‘by far and away been the biggest job creators since the recession’ meaning they have been instrumental to strengthening the backbone of the economy. This was attributed to SMEs’ ‘innate flexibility’ which allowed prospective employees to work on zero-hour contracts or part-time as the business expanded, before taking on a more permanent role.

Encouraging equality
An economic analyst at IPPR, Spencer Thompson, has highlighted the fact that SMEs regularly employ ‘groups that face labour market disadvantage, such as the disabled, younger and older workers and those with low levels of educational attainment and formalised skills.’ The Report has recommended that SMEs be encouraged to continue this, through the introduction of a business-led insurance scheme which offers maternity and sick pay in return for regular contributions.

Continued importance
SMEs will continue to lead the way in creating new opportunities as Britain claws its way out of recession. The Report’s suggested incentives, if implemented, would go a long way in ensuring that more job seekers find work in the future, as Thompson asserts: “SMEs are…vital to efforts to tackle labour market disadvantage and promote full employment.”