Photographer: Bryan Mitchell/Bloomberg

Supporting Small Businesses Pays Off for Jobs

Small- and medium-sized firms now account for more than a third of employment, ILO says in World Employment Social Outlook

Politicians looking to boost local employment might want to forget thinking big and focus on small businesses instead of multinationals.

That’s the conclusion from the International Labor Organization’s latest World Employment Social Outlook which shows that the number of full-time employees at small and medium-sized enterprises nearly doubled between 2003 and 2016, with the share of total employment attributable to the sector rising to 35 percent from 31 percent.

In developing economies such as Afghanistan and Ethiopia, SMEs account for more than half of total employment, while they make up a third in emerging countries – China and Mexico for example – and some 40 percent in their developed peers.

Still, while SMEs outperformed larger companies employment growth in the years before the financial crisis, that disappeared between 2009 and 2014. And over the past two years, the share of employees has languished, the ILO said, calling for action.

“To reverse the recent trend of employment stagnation in SMEs, we need policies to better promote SMEs and a better business environment for all firms,” said Deborah Greenfield, ILO Deputy Director-General for Policy. That includes access to finance, she said. 

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