SMEs are driving job growth, but need higher investment in skills, innovation and tech to boost wages and productivity

Business 19

(Taylor Grote, Unsplash)

This article is brought to you in association with OECD.


Small and medium-sized enterprises (SMEs) have been a significant driver of employment growth in recent years, mainly through the creation of new firms, including in high-growth sectors such as information and communication technologies (ICT). But the new OECD SME and Entrepreneurship Outlook highlights that most SME job creation has been in sectors with below average productivity levels, with SMEs typically paying employees around 20 percent less than large firms.

While SMEs are more engaged in new organisational or marketing practices than large firms, and sometimes more innovative in developing new products and processes, many continue to struggle disproportionately to navigate the increasing complexity in technologies and markets.

We need a fundamental rethinking of SME and entrepreneurship policies to improve business conditions and access to resources. This will enable workers to have higher wages and greater productivity, as smaller employers harness major trends like digitalisation,” said OECD Secretary-General Angel Gurría, launching the report at the annual OECD Forum. “We need a renewed policy and measurement agenda to understand how countries, regions and cities can capitalise on their many diverse small businesses as drivers for inclusive and sustainable growth.”

Bringing together unique data and evidence on SME performance and policies, this first edition of the OECD SME and Entrepreneurship Outlook offers policymakers new benchmarking tools and insights on good practices to help frame national SME and entrepreneurship policies. The report illustrates that SMEs are more dependent on the business ecosystem and the policy environment than large companies, and identifies a number of key challenges:

  • While the wage gap is smaller for exporting SMEs, trade barriers are disproportionately large, and recent trade tensions may further hamper their ability to benefit from globalisation.
  • SMEs struggle to combine different types of innovation, and continue to face size-related barriers in accessing strategic resources, such as skills, finance and knowledge. A quarter of SMEs in the EU reported a lack of skilled staff or experienced managers as their most important problem and, in most OECD countries, less than one-quarter of small firms provided ICT training in 2018.
  • The digital transformation provides scope for productivity growth but large adoption gaps exist compared to larger firms, with half as many small firms in the OECD investing in cloud computing services in 2016, for example.

Governments have been proactive in their efforts to improve framework conditions and address size-related barriers for SMEs. The 36 country profiles in the OECD SME and Entrepreneurship Outlook show that, in the OECD area, governments are focused on accelerating innovation diffusion to SMEs; ensuring SMEs keep pace with the digital transformation; engaging SMEs in upskilling; scaling-up innovation networks and MNE-SME linkages; and levelling the playing field in product markets, public procurement and ‘lead’ innovative markets. Small businesses are also benefiting from the strengthening of e-government services and from reforms undertaken in OECD countries aiming to lower administrative and tax burdens and enforce smart regulation.

Despite these efforts, the complexity of regulatory procedures remains a major obstacle for SMEs and entrepreneurs. Furthermore, the pace of structural reform has slowed in recent years and progress remains uneven in areas that are key for business creation and SME investment, such as insolvency regimes, civil justice and enforcement of competition laws.

The report argues for more efficient governance and more coherent arrangements across national and subnational levels, regions and cities. It also calls for fostering international peer learning and enhanced monitoring and evaluation capacity.

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Coal addiction ‘must be overcome’ to ease climate change, UN chief says in Bangkok

The EU now has rules that say household appliances must be easier to fix

UN mobilizes in Rohingya camps to support babies born of rape; young mothers face stigma

US-China trade war: Washington now wants control of the renminbi-yuan

Larger species are more at risk of extinction than smaller ones – here’s why

Von der Leyen in Ireland: Our mutual solidarity is here to stay

MEPs call for EU rules to better protect minorities’ rights

Responsible Artificial Intelligence

Ukraine: The West and Russia negotiate shares of influence

Commission tries to solidify the EU statistical system

9 climate tipping points pushing Earth to the point of no return

We can make sure Globalization 4.0 leaves no one behind. This is how

Legal Manager – 2050

Taking fast road to ‘e-mobility’ central to a sustainable future: COP24

Why exchange programs are essential for the medical students of the 21st century

GSMA Announces First Keynote Speakers for 2019 “MWC Los Angeles, in Partnership with CTIA”

Is a full course lunch, a new Commissioner and 2 million anti-TTIP citizens what you would call a “Fresh Start”?

Mood changes in Europe in favour of growth and jobs

These deepwater fish farms could help natural stocks recover

Greater investment in family-friendly policies critical to support breastfeeding – UNICEF

What can each individual do to lessen the burden of mental health in times of the pandemic?

Venezuela: UN human rights office calls for ‘maximum restraint’ by authorities in face of new demonstrations

UN police officer recognized for protecting vulnerable Somali women from abuse

Scotland and First Minister Salmond enter the most challenging battlefield for independence: Europe

Team Europe: EU and Germany join forces with the Government of Bangladesh to safeguard the livelihoods of workers in export-oriented industries

The Five Chinese Girls

ECB to support only banks not Peoples

Why is the EU launching a doomed policy in stopping immigrant waves? What are the real targets?

Is the English language too powerful?

State aid: Commission amends Short-term export-credit insurance Communication in light of economic impact of coronavirus outbreak

Who can unlock the stalled Brexit negotiations? UK Premier sticks to her proposal

JADE Spring Meeting 2017 – day 3: JADE Academy trainings, networking session and gala dinner – Excellence Awards winners revealed

Japan must urgently address long-standing concerns over foreign bribery enforcement

3 ways business leaders can build digital trust

This wall of shoes is for the women killed by domestic violence

Here’s how the EU is doing on gender equality

The vegan economy is booming – and Big Food wants a slice of it

Greek-Turkish border: MEPs reject Turkey’s pressure, demand common asylum rules

How can consumers be effectively protected from insurance sellers?

The Changing Scope of International Economic Relations – Chinese Leadership in the 21st Century

‘Mosques should be safe havens, not sites of terror’, says Guterres announcing UN plan to help safeguard religious sites

Gender equality and medicine in the 21st century

Sri Lanka PM: This is how I will make my country rich by 2025

Fairer, simpler, more flexible EU farm policy: MEPs vote on post-2020 reform

Calculators didn’t replace mathematicians, and AI won’t replace humans

At UN, Yemen Foreign Minister demands end to ‘Iranian-Houthi coup d’etat’

Parliament wants to grant EU consumers a “right to repair”

Which countries get the most sleep – and how much do we really need?

Brazilian mountain farmers reap recognition, through UN heritage listing

To what extent can renewable energy empower women in rural communities?

UN forum spotlights cities, where struggle for sustainability ‘will be won or lost’

Britain declares trade war on mainland Europe

Education should be like everything else. An on-demand service

Business can be profitable AND drive progress on societal priorities

Pride in health care during Pride Month: Are we ready for a dignified health care for LGBTQI+ patients?

EP negotiators: recovery plan crucial, but do not trade long-term for short-term

MEPs back EU partnership agreement with Armenia

Gaza probe finds ‘reasonable grounds’ Israeli forces committed international human rights violations

Minding the information gap and why it’s important in tackling COVID-19

Energy Union: deals on efficiency targets and governance

More Stings?

Advertising

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s