Do SMEs create more and better jobs?

European Commission Directorate General Enterprise and Industry via BizResearch by Tracey Ellis

The European Commission (has) published a study analysing the important role small- and medium-sized enterprises play in creating more and better jobs. According to the analysis, 85% of net new jobs in the EU between 2002 and 2010 were created by small- and medium-sized enterprises (SMEs). This figure is considerably higher than the 67%-share of SMEs in total employment. During this period, net employment in the EU’s business economy rose substantially, by an average of 1.1 million new jobs each year.

With 1% annually, the employment growth for SMEs was higher than for large enterprises with 0.5%. A clear exception is the trade sector, in which employment in SMEs increased by 0.7% annually, compared to 2.2% in large enterprises. This is due to the strong increase of large trade enterprises, in particular in sales, maintenance and repair of motor vehicles.

Within the SME size-class, micro firms (less than 10 employees) are responsible with 58% for the highest proportion of total net employment growth in the business economy.

Secondly, the study has shown that new firms (younger than five years) are responsible for an overwhelming majority of the new jobs. New enterprises operating in business services create more than a quarter (27%) of the new jobs, while the new firms in transport and communication contribute least (6%).

Click here to read the full report (PDF 163pp)

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