SMEs' Contribution to Employment

This Document is Archived

SMEs in New Zealand: Structure and Dynamics - 2005

[ Last Updated 3 November 2005 ]

The number of employees in SMEs increased.

SMEs accounted for 29.2% of total employment at February 2004. The number of people employed by SMEs increased between 2003 and 2004 from 468,860 to 479,200.

This figure is based on an EC measure and covers paid employees, but not working proprietors unless they paid themselves a salary or wage. Refer to Appendix 4 for data on the numbers of working proprietor only enterprises from 2000 to 2003.

Figure 3: Total Employment by Enterprise Size, as at February 2004

→ Long Description of Figure 3: Total Employment by Enterprise Size, as at February 2004

Table 2: Annual Percentage Change in Employment by Enterprise Size, as at February 2004
EC Size Group	2001	2002	2003	2004	Average Percentage Change
0) 0	-	-	-	-	-
1) 1-5	1.33%	3.45%	3.99%	1.89%	2.70%
2) 6-9	2.38%	3.34%	8.34%	2.08%	4.00%
3) 10-19	4.02%	3.26%	9.57%	2.58%	4.90%
4) 20-49	1.85%	1.21%	7.63%	3.09%	3.40%
5) 50-99	1.84%	2.74%	6.53%	4.54%	3.90%
6) 100-499	3.66%	-0.18%	1.30%	4.96%	2.40%
7) 500+	5.92%	3.92%	4.32%	3.66%	4.50%
Total	3.56%	2.49%	5.26%	3.46%	3.70%

Businesses with 1-5 employees create the greatest number of new jobs…⁷

Table 3 illustrates the contribution of SMEs to job creation in the economy between 2000 and 2004. The largest single contributing group was new businesses employing 1-5 employees, which created 74,480 new jobs. Of continuing businesses, more new jobs came from firms with 500 or more employees.

…but are also the greatest contributor to employment reduction.

Between February 2000 and 2004, firms with 1-5 employees were the greatest contributor to employment reduction (a reduction of 77,650 jobs) followed by firms with 100-499 employees (a reduction of 65,640 jobs).

Table 3: Employment Creation and Reduction by Enterprise Size, February 2000 to February 2004
	EC Size Group
	0) 0	1) 1-5	2) 6-9	3) 10-19	4) 20-49	5) 50-99	6) 100-499	7) 500+	Total
	EC
Employment Creation
Continuing business	39420	44540	21350	28300	32620	23580	48260	66260	304340
New business	0	74480	44680	57260	52760	28380	38490	30970	327020
Total	39430	119020	66040	85550	85380	51970	86750	97240	631370
Employment Reduction
Ceased business	0	-51180	-29350	-38000	-39460	-21810	-40270	-39650	-259730
Continuing business	0	-26460	-14210	-19180	-26090	-14690	-25360	-25550	-151550
Total	0	-77650	-43570	-57180	-65560	-36500	-65640	-65200	-411290
No Change
Continuing business	0	0	0	12	-90	-75	310	1320	1470
Net Employment Change	39430	41370	22470	28370	19830	15470	21100	32040	220090

The average size of New Zealand firms decreased slightly.

The average number of employees per enterprise as at February 2004 dropped slightly to 5.06. The average number of employees per enterprise from 2000 to 2004 was 5.3 employees. When non-employing firms are removed, the average number of employees per enterprise in 2004 was 14.3.

Figure 4: Average EC per Enterprise, as at February 2004

→ Long Description of Figure 4: Average EC per Enterprise, as at February 2004

Figure 5: Average EC per Enterprise Less Non-Employing Enterprises, as at February 2004

→ Long Description of Figure 5: Average EC per Enterprise Less Non-Employing Enterprises, as at February 2004

Most New Zealanders in the labour force are paid employees.

Data from the 2005 Household Labour Force Survey shows that over 80 percent of people in the workforce are paid employees.

Figure 6: Employed Labour Force by Type of Employment, Year Ended March 2005

→ Long Description of Figure 6: Employed Labour Force by Type of Employment, Year Ended March 2005

SMEs utilise the greatest proportion of part-time employees of all firm types.

In February 2004, 28.7 percent of all employees were engaged in part-time work. Firms with 1-5 employees employed the greatest proportion of part-time staff, accounting for 35.25 percent. However, as Figure 7 indicates, the majority of employees across all firms are employed full-time.⁸

Figure 7: Full/Part-Time Employees by EC Size Group, as at February 2004

→ Long Description of Figure 7: Full/Part-Time Employees by EC Size Group, as at February 2004

⁷Table 3 uses 2000 as the base year for the data. This means that, for example, if an enterprise contributed to the 1-5 EC category in 2000 but subsequently grew to 30 EC, that increase in EC would be attributed to the 1-5 EC category, not to the 20-49 EC category. Enterprises in the "No Change Continuing Business" row are enterprises that experienced only a very small percentage change in their contribution to employment (between -10% and 10%) from 2000 to 2004.

⁸This data is obtained from the Business Demography modelled FTE series, which is an unofficial transitionary series produced by SNZ. Further details can be found in Appendix 2.

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Printed: 25/11/2009