SMEs Contribution to Employment

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SMEs in New Zealand: Structure and Dynamics - 2004

[ Last Updated 4 November 2005 ]

The number of FTEs employed by SMEs increased.

The number of FTEs employed by SMEs increased by 4.7 percent between 2002 and 2003, from 617,300 to 645,700. This followed an increase of 2.0 percent in the previous year.

(FTEs) is calculated as the number of full-time employees and working proprietors plus half the number of part-time employees and working proprietors.

Figure 3: Total Employment (FTEs) by Enterprise Size, as at February 2003

→ Full size version of Figure 3 [36KB GIF file]

Table 2: Annual Percentage Change in Employment (FTEs) by Enterprise Size, as at February 2003
FTEs	1998	1999	2000	2001	2002	2003	Average Percentage Change
0	-	-	-	-	-	-	-
1-5	5.3%	0.2%	4.5%	-1.7%	1.3%	4.0%	2.3%
6-9	0.3%	3.3%	5.8%	1.9%	2.8%	5.6%	3.3%
10-19	3.9%	2.2%	4.9%	1.6%	2.8%	5.2%	3.4%
20-49	-0.4%	4.2%	5.9%	1.2%	1.7%	4.1%	2.8%
50-99	2.1%	-3.1%	4.1%	-1.3%	5.7%	5.2%	2.1%
100-499	-0.7%	2.7%	0.2%	3.3%	2.9%	-0.9%	1.3%
500+	1.2%	-3.2%	-0.7%	1.6%	7.0%	5.8%	2.0%
Total	1.9%	0.4%	2.9%	0.8%	3.5%	4.0%	2.3%

New small businesses create the greatest number of new jobs.

Table 3 illustrates the contribution that SMEs made to job creation in the economy between 1997 and 2003. The largest single contributing group was that of new firms employing 1-5 FTEs, creating 214,280 new jobs. Of continuing businesses, more new jobs also came from small (1-5 FTEs) firms. This was, however, counterbalanced to a large extent, as small (1-5 FTEs) were the greatest contributor to employment reduction between 1997 and 2003 (a reduction of 181,310 jobs).

Table 3: Employment Creation and Reduction by Enterprise Size, February 1997 to February 2003⁶
	FTE Size Group								Total
	0) 0	1) 1-5	2) 6-9	3) 10-19	4) 20-49	5) 50-99	6) 100-499	7) 500+
	Number of FTEs
Employment Creation
Continuing Business	16930	49970	20060	25590	30410	16080	42140	43580	244750
New Business	0	214280	67880	70150	57480	28980	51950	51870	542580
Total	16930	264250	87930	95740	87880	45060	94100	95440	787330
Employment Reduction
Ceased Business	0	-160120	-45900	-47280	-46540	-26920	-55850	-56510	-439130
Continuing Business	0	-21180	-12080	-16130	-20560	-12430	-29010	-42850	-154220
Total	0	-181310	-57990	-63400	-67100	-39360	-84860	-99360	-593350
No Change⁷
Continuing Business	0	-15	-30	-65	-20	6	-12	-1820	-1950
Net Employment Change	16930	82940	29940	32340	20790	5710	9240	-3910	193980

The average size of New Zealand firms decreased slightly in 2003.

The average number of FTEs per enterprise remained relatively steady at 5.18 in 2003, down slightly from 5.22 in 2002. The average firm size decreased from 1998 to 2000, but recorded an increase in 2001 and 2002.

Figure 4: Average FTEs per Enterprise, as at February 2003

→ Full size version of Figure 4 [24KB GIF file]

The majority of New Zealanders in the labour force are paid employees.

Figure 5 illustrates data from the 2004 Household Labour Force Survey,⁸ showing that the largest proportion (81 percent) of the employed New Zealand labour force are paid employees, while 19 percent are self-employed or an employer.

Figure 5: Employed Labour Force by Type of Employment, 2004

→ Full size version of Figure 5 [16KB GIF file]

SMEs utilise the greatest proportion of part-time employees.

In 2003, the average utilisation of part-time staff across all firms was 29.2 percent. Figure 7 shows both 1-5 FTEs and 6-9 FTEs had about a third of persons engaged employed as part-time staff. Whereas all other FTE groupings are below 30 percent utilisation. Firms with 100-499 FTEs had the smallest utilisation of part-time employees, at just above 25 percent.

Figure 6: Full/Part-Time Employees by Enterprise Size, as at February 2003

→ Full size version of Figure 6 [35KB GIF file]

⁶Table 3 uses 1997 as the base year for the data:

This means that, for example, if a firm contributed to the 1-5 FTE category in 1997 but subsequently grew to employ 30 FTEs, that increase in FTEs would be attributed to the 1-5 FTE category - not to the 20-49 FTE category.
It also means that if a firm had 0 FTEs in 1997, but then grew to employ 2 FTEs, that growth would be recorded in the employment creation column for 0 FTEs. New 0 FTE enterprise are treated as making no contribution to employment creation.

⁷Businesses in the "No Change Continuing Business" row are businesses that experienced only a very small percentage change in their contribution to employment (between -10% and +10%) from 1997 to 2003. At the aggregate level, these enterprises only make a very small contribution to employment creation and reduction, as outlined in Table 3.

⁸Year ending March, 2003.

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Printed: 26/11/2009