13.6m people work in Small and medium sized enterprises (SMEs) – 6 out of 10 private sector workers. Big business accounts for 9.2m jobs – 4 out of 10 of UK private sector workers. The graph shows the jobs splits between SMEs and big business since 1994:
It is noteworthy that SMEs have been the UK job creators, responsible for 1 million more jobs since 2001. Meanwhile, big business employment has fallen by 1 million over the same period.
Will that continue to be the case? One guide is to look at the job vacancies table in the ONS' Labour Market Survey (although it should be noted that this does not include start up one man bands and many SMEs fill jobs informally). The trend is that big business vacancies have been falling in recent times. In late 2008, big business vacancies were 361,000 while small business vacancies were 197,000. The latest figures are small business vacancies at 189,000, while big business is down to 279,000. So it looks as though smaller businesses are still set to be the job creaters.
Government policy on jobs should focus on where the jobs are being created in our economy. We need to look at where the jobs are, not the size of the business. It is important to ensure that businesses in a position to grow are incentivised and encouraged to steam ahead, enjoy success and create the jobs and money that will drive our economy out of Labour’s recession.
This is why the Government is right to have allocated funds for 50,000 apprenticeships focussed on SMEs and to have axed Labour’s Future Jobs Fund. The Future Jobs Fund only applied where 30 or more jobs were being created or more jobs were being created (i.e. big business or public sector only) and cost £7,500 of public money per job. The “jobs” created are basically make work fake jobs in the public sector. The Coalition’s policy on the other hand costs £3,000 per apprenticeship, means real skills are learned on the job and is highly targeted on new jobs in growing parts of the wealth creating private sector.