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SMEs driving job growth, but need higher investment: OECD

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May '19
SMEs driving job growth, but need higher investment: OECD
Most job creation in small and medium enterprises (SMEs) has been in sectors with below average productivity levels, with SMEs typically paying employees around 20 per cent less than large firms, according to the first edition of the Organisation for Economic Co-operation and Development (OECD) SME and Entrepreneurship Outlook released recently.

SMEs have been a significant driver of employment growth in recent years, mainly through the creation of new firms, including in high-growth sectors like information and communication technologies (ICT).

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, according to the report.

“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 Gurrí while launching the report at the annual OECD Forum.

Bringing together unique data and evidence on SME performance and policies, the document offers policymakers new benchmarking tools and insights on good practices to help frame national SME and entrepreneurship policies, according to an OECD press release.

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, including disproportionately large trade barriers, recent trade tensions, the struggle to combine different types of innovation, and size-related barriers in accessing strategic resources, such as skills, finance and knowledge.

A quarter of SMEs in the European Union (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 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. (DS)

Fibre2Fashion News Desk – India


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