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European Commission - PRESS RELEASES - Press release - Do SMEs create more and better jobs? The European Commission published today a study analyzing the important role small and medium sized enterprises play in creating more and better jobs. Given their importance in the European economy, they are also essential for the economic recovery and for reducing the negative employment effects of the crisis.
In 2010, there were 20.8 million enterprises in the non-financial business economy1, providing employment for 87 million people in the European Union. Note: the contribution of size classes to total employment growth is controlled for the population effect1. The main effects of the economic crisis reported by enterprises during 2009 and 2010 were the overall negative effect on total demand, the increase in customer payment terms and the problems with obtaining finance. Note: Questions regarding the negative effects of the current crisis referred to the effects in the past two years. An enterprise's decision on whether (and when) to hire or fire employees depends on many different factors. Note: Questions regarding publicly supported employment protection schemes referred to the past two years.

The study was prepared by EIM Business & Policy Research with financial support from the European Communities, under the Competitiveness and Innovation Programme 2007-2013.
The 'non-financial business economy' covers enterprises in industry, construction, trade, and services (NACE Rev. SMEs provide a vital contribution to the European economy, being responsible for more than two thirds of the total employment in the private sectors and 85% of the net job growth. A post-crisis informed and effective policy making process requires and should be based on an expert analysis of how the recent crisis has affected the creation of new jobs in SMEs, as well as the quality of existing ones.
Between 2002 and 2010, the SMEs had a much higher employment growth rate (1% annually) than the large enterprises (0.5%).
In most of these countries, job creation by the SME-sector has been more than proportionate to its share in employment. Smaller enterprises more often mentioned negative effects of the crisis than larger enterprises.
This conclusion holds at country level: innovative countries have experienced fewer negative impacts of the economic crisis. These include the state of the economy as a whole and the competitiveness of the individual enterprise as well as the extent to which the labour market is regulated and employment is protected.

Due to a very strong correlation between the two characteristics, the same is true if competitiveness is considered.
It does not comprise enterprises in agriculture, forestry, fishing or the largely non-market services such as education and health. Thus, the results of the enterprise survey indicate that enterprises in more innovative economies have suffered less from the crisis than the ones in less innovative economies: in innovative economies, enterprises are less likely to mention a reduction in the demand for their products, more likely to report an increase in the demand for their products, and the labour market is still relatively tight. These measures include temporary short-time working arrangements, wage subsidies and non-wage cost reductions (two examples of such measures are included in Boxes 5 and 6). Many of these measures have been introduced or enlarged as a reaction to the crisis, and in 2010 all Member States had such measures in place but their use by enterprises varied a lot in between countries.

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