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Large corporations may have their perks, but a recent study shows the contributions of small and medium-sized businesses (SMEs) should not be ignored when measuring economic growth.
In fact, the Small Business Outlook 2015 found that cities with the highest concentrations of new SMEs are also among the most successful in terms of overall productivity, jobs growth and pay.
It highlighted that SMEs in the creative, professional and digital sectors (also defined as ‘new work’ SMEs) are important drivers of jobs, productivity and wage growth.
From 2008-2014, the number of UK SMEs in the creative sector rose by 25 % and 17% in professional services.
Employment in these sectors also increased over the same period, rising by 22% in creative industries and 11% in professional services.
During the same time-frame, the number of SMEs in manufacturing increased by only 2% while those in construction decreased by 8%.
Alexandra Jones, chief executive of Centre for Cities told the Financial Times that in recent decades, small innovative firms, taking advantage of technological advances, have started to play an increasingly important role in driving jobs growth, wages and productivity in UK cities.
“Helping these firms to grow should also be a top priority for the government in its efforts to rebalance the national economy. Most importantly, the government needs to give cities greater control over skills, infrastructure and spending, to help them become more responsive to the needs of local businesses,” she said.
In Hong Kong, SMEs also play an important role in the city’s economy, as in June 2015, there were about 320 000 SMEs in the city employing nearly 1.3 million people. Following a similar trend in the UK, Hong Kong is experiencing a boom in technology start-ups, giving more opportunities for the the workforce.
ALSO READ: SMEs in Asia confident about hiring in 2015
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