Small Businesses Creating Most Employment

Research commisioned by the Federation of Small Businesses (FSB) has found that nearly nine in ten people seeking employment are finding work with small and medium-sized enterprises (SMEs).

The report, Back to work: the role of small businesses in employment and enterprise, was carried out by the Westminster Business School and looked at employment trends over the last 15 years.

The observation regarding SMEs has been particularly positive over the last 4 years. Since the recession began in 2008 the data shows that:

  • 88% of jobseekers found employment with an SME
  • 27% found work with a small firm (50 or fewer employees)
  • 24% of those looking for work joined a micro business (10 employees or fewer)
  • 17% started their own business

Seizing upon the findings, the FSB is asking the Government to do more for the UK’s small and medium-sized businesses and is calling for the Government to urgently review its policy, as it did last year, on National Insurance Holidays.

Since September 2010 first year startup businesses have been allowed to claim up to £5,000 in National Insurance Contributions for their first ten employees. The FSB believes that by extanding the scheme to exisitng firms, they will be incentivised to take on more staff and create more employment.

The FSB are also calling, once again, for the Government to make the New Enterprise Allowance, offered to entrepreneurs on JobSeekers Allowance, to be made available from day one and to be in line with the National Minimum Wage. Removing the barriers to this scheme would act as a further incentive to allow budding business people to get their business ideas off the ground.

John Walker, the FSB’s national chairman, said of the research:

"The numbers speak for themselves — small firms are responsible for creating the majority of jobs and are more likely to take on people out of work, including those that have been out of work for some time."

"In the current economic climate, with costs increasing and cashflow tight, small firms need all the help they can get. Giving people the ability to start their own business and small firms the incentive to take on staff through extending the National Insurance Contributions holiday will help to boost economic confidence and growth, which is vital."

The report, Back to work: the role of small businesses in employment and enterprise, and its full findings will be published on the 20th Septmber.

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