Who Is Creating Jobs?

Who Is Creating Jobs?

by Cynthia A. Sheehan

Small and medium-sized enterprises (SMEs) account for more job creation than large businesses. In fact, estimates run from 60 to 80% of jobs are created by SMEs, not by big businesses and industrial giants. It does make sense when you think of it, when it becomes big enough, a business tries to slim down and become more efficient, most often by cutting jobs rather than by creating them. On the other hand, when you are just starting out, the only way to go is up. But one must distinguish small businesses from new or “early-stage” businesses. Yes, all new businesses are small: one rarely starts a company with 300 employees on day one. But not all small businesses are new. Some are old, very old, and they want to stay that way.

Let us say you are a government official and you wish to encourage job creation. Statistics show that encouraging entrepreneurship is the way to go. But what kind of entrepreneurship? Did you know that 47% of businesses in Quebec have only one employee – the owner! In that list is included every self-employed accountant, consultant, translator and hairdresser operating under a business name. Of course, one job created is still one job created, but when we look at the big picture, shouldn’t efforts be concentrated on businesses with the most chance of creating lots of jobs?

A recent study published by the World Economic Forum on growth strategies for new businesses confirmed the important impact startup businesses have on job creation. But the study went a step further to try and figure out which businesses created the most jobs. It turns out not all new businesses are equal on the job-creation front. In fact, the top 1% of new companies created 40% of all jobs in their sector.  The top 5%, created 72% of jobs! Also interesting is that at the other end of the spectrum the bottom 1% of new startups accounted for 46% of job losses.  But what really paints the picture is that a lot of companies go from one end of the spectrum to the other: this year’s dud could be last year’s champion! In fact, a lot of business owners explain that creating growth is one thing but maintaining it is quite another. So new businesses create a lot of jobs, but they loose a lot too, in essence cancelling out a large part of jobs created. Imagine what it would be like if these businesses were able to maintain these jobs.  I will let you guess.

For an in depth look at the study’s findings you can download a copy for on the on the World Economic Forum website.

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Cynthia A. Sheehan is an Entrepreneurship lecturer at Laval University and one of the owners of Ross & Sheehan inc.
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Does an article like this want to make you look for work in English in Quebec City?

Categories: Business, News

About Author

Cynthia A. Sheehan

Cynthia A. Sheehan grew up in a bilingual family in Quebec City. She teaches entrepreneurship and management at FSA Laval and is working on many projects including a book on entrepreneurship and the organisation of the TEDxQuébec. You can follow Cynthia on Twitter @SheehanCyn.