Self-employment, micro and small
enterprises play a far more important role in providing jobs than previously
believed, according to new International Labour Organization (ILO) estimates.
Data gathered in 99 countries found that these so-called ‘small economic units’
together account for 70 per cent of total employment, making them by far the
most important drivers of employment.
The findings have “highly relevant” implications for policies and programmes on
job creation, job quality, start-ups, enterprise productivity and job
formalization, which, the report says, need to focus more on these small
economic units.
The study also found that an average of 62 per cent of employment in these 99
countries is in the informal sector, where working conditions in general tend to
be inferior, (i.e. a lack of social security, lower wages, poor occupational
safety and health and weaker industrial relations). The informality level
varies widely, ranging from more than 90 per cent in Benin, Cote d’Ivoire and
Madagascar to less than five per cent in Austria, Belgium, Brunei Darussalam
and Switzerland.
The information is published in a new ILO report, Small matters: Global evidence on
the contribution to employment by the self-employed, micro-enterprises and
SMEs .
The report finds that in high-income countries, 58 per cent of total employment
is in small economic units, while in low and middle-income countries the
proportion is considerably higher. In countries with the lowest income levels
the proportion of employment in small economic units is almost 100 per cent,
the report says.
The estimates draw on national household
and labour force surveys, gathered in all regions except North America, rather
than using the more traditional source of enterprise surveys that tend to have
more limited scope.
“To the best of our knowledge, this is the first time that the employment
contribution of so-called small economic units has been estimated, in
comparative terms, for such a large group of countries, particularly low and
middle income countries,” said Dragan Radic, Head of the ILO’s Small and Medium
Enterprises Unit.
The report advises that supporting small economic units should be a central
part of economic and social development strategies. It highlights the
importance of creating an enabling environment for such businesses, ensuring
that they have effective representation and that social dialogue models also
work for them.
Other recommendations include; understanding how enterprise productivity is
shaped by a wider “ecosystem“, facilitating access to finance and markets,
advancing women’s entrepreneurship, and encouraging the transition towards the
formal economy and environmental sustainability.
Micro-enterprises are defined as having up to nine employees, while small
enterprises have as many as 49 employees.