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

We know ethics should inform AI. But which ethics?

Can India reduce deaths on one hazardous road to zero? This group is trying

These are the top 10 emerging technologies of 2019

5 facts about the world’s most valuable company, Saudi Aramco

Somalia: UN congratulates Puntland region’s newly-elected President

3 ways to use digital identity systems in global supply chains

5G networks: to slice or not to slice?

Let Nagasaki remain ‘the last city’ to suffer nuclear devastation says museum director, as UN chief arrives

What is the IMF telling Eurozone about fiscal and banking unification?

Knowledge management and entrepreneurship: short term vs. long term perspective

EYE to kick off on Friday: 8000+ young people discussing the future of Europe 1 – 2 June

‘Habitual residence’ rules deprive EU workers from social benefits

Top officials say UN will support Bahamas’ rescue, relief efforts as Hurricane Dorian churns in Atlantic

Here’s how we make the internet safer for children

Monday’s Daily Brief: Nigeria massacre, Libya shelling condemned; recycled plastic used to build classrooms in Côte d’Ivoire

Eurozone guarantees all banks with…taxpayers’ money

Iraq: UN human rights report voices concern over conduct of ISIL fighter trials

‘Protracted crisis’ in Venezuela leads to ‘alarming escalation of tensions’: UN political chief


Re-thinking citizenship education: bringing young people back to the ballot box

Tributes for ‘role model’ former UN refugee agency chief, Sadako Ogata

COP21 Breaking News_04 December: Building a Sustainable Future – speech by UNEP Deputy Executive Director Ibrahim Thiaw at the LPAA Thematic Event on Buildings

Tuberculosis infections declining, but not fast enough among poor, marginalised: UN health agency

EU@UNGA 74: Working towards a more peaceful, secure and prosperous world

EU-US trade agreement talks to be affected by American bugs

European Development Days 2013

We have to fight for a fairer tech industry for women

UN member states express their will to tackle global migration but specific actions are still missing

How Islamic finance can build resilience to climate change

Cameron postpones speech in Holland

Central Africa: Security Council concerned by ‘grave security situation’, calls for better agency cooperation

GSMA Mobile 360 – Africa on 16-18 July 2019, in association with The European Sting

Statement by Executive Vice-President Margrethe Vestager on State aid measures to address the economic impact of COVID-19

Wednesday’s Daily Brief: updates from the Near East and Libya, Ebola in DR Congo, World War remembrance

General Assembly officially adopts roadmap for migrants to improve safety, ease suffering

Commission’s action plan: financial world mandatory links to environmental targets

Preparing medical students being digitally as well as socially responsible

‘Bring to life’ precious moments caught on film or tape, UN agency urges on World Day

London to say hello or goodbye to Brussels this week

Syria: Civilians caught in crossfire, UN refugee chief urges Jordan to open its border

Europe’s forests are booming. Here’s why.

Long-term EU budget: The Union’s ambitions must be matched with sufficient reliable funding

After the George Floyd protests, what next for racial justice in the US?

European Commission and four online marketplaces sign a Product Safety Pledge to remove dangerous products

Rebuilding after COVID-19 shouldn’t mean going back to how things were

Recreational cannabis poses ‘significant’ health challenges to youth: drugs control body

European Semester Spring Package: Recommendations for a coordinated response to the coronavirus pandemic

A Sting Exclusive: the EU referendum is about fighting for an outward-looking Britain

Millions of Bangladeshi children at risk from climate crisis, warns UNICEF

New EU rules to thwart money laundering and terrorist financing

Migration crisis update: The “Habsburg Empire” comes back to life while EU loses control

Spending another 3 billion euros on Turkey feels better than admitting EU’s failure

Migration: Better travel safe than sorry

Erdogan’s electoral win on a ‘me or chaos’ dilemma means trouble for everybody

Massive cholera vaccine campaign planned for cyclone-ravaged Mozambique, as UN calls for ‘urgent’ step-up in support

A call for a new crop of innovators

#Travelgoals: why Instagram is key to understanding millennial tourism

Another 170 migrants disappear in shipwrecks, UN agency reiterates call for an end to Mediterranean tragedy

Bullheaded Madrid authorities confront Catalonia with force

China is now heavily endorsing its big investment flow in the Central Eastern European (CEE) countries

An enlightened response to COVID-19 can avert the climate emergency

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