SMEs Internationally

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SMEs in New Zealand: Structure and Dynamics

[ Last Updated 7 November 2005 ]

SMEs generally account for 95% of enterprises and 60-70% of employment in most economies

SMEs form a significant component of modern economies, both in terms of the number of firms in an economy and their contribution to a country's employment level. While comparable figures are not readily available due to the divergence in definitions for class size and underlying units across countries, generally SMEs constitute around 95 percent of enterprises and account for 60 to 70 percent of employment.¹⁴

The following table gives a comparison between selected countries of the contribution that SMEs make to the overall level of employment.

Table 8. - Distribution of Employment by Firm Size

		Employment Size Class
	Year	1-19	20-99	100+
		Percentages
New Zealand	1998	41.8	18.6	39.6
United States	1993	18.4	18.8	62.7
Canada	1992	25.5	20.8	53.7
France	1992	25.3	21.7	53.0
Germany	1992	31.3	18.2	50.5
Italy	1991	55.6	15.9	28.5
United Kingdom	1991	31.2	15.0	53.8

Note: Statistical unit - establishment except for Canada (average labour unit).

Source: OECD (1997), Small Business, Job Creation and Growth: Facts, Obstacles and Best Practice. From table 1.2 (except New Zealand statistics, supplied by Statistics New Zealand).

SMEs contribute a relatively high proportion of total employment in NZ relative to other countries

To allow for the size of the economies considered in this section, we adjust our definition of an SME to be an enterprise that has less than 100 employees. The highest proportion¹⁵ of total employment generated by SMEs is observed in Italy, followed by New Zealand, with a significantly lower rate observed in the U.S. Although not considered here, SMEs¹⁶ also constitute a large share of total employment in Japan, accounting for 78 percent of all FTEs.¹⁷

Table 9. - Percentage of Employment in SMEs

Country	Percentage of Total Employment in SMEs
Italy	71.5
New Zealand	60.2
Germany	49.5
France	47.0
Canada	46.3
United Kingdom	46.2
United States	37.2

Source: OECD (1997), Small Business, Job Creation and Growth: Facts, Obstacles and Best Practice. From table 1.2 (except New Zealand statistics, supplied by Statistics New Zealand).

	The OECD also collects statistics on the significance of SMEs in the manufacturing sector. This sector comprises 9 percent of all enterprises in New Zealand, accounting for 18.5 percent of all FTEs.
The New Zealand manufacturing sector shows a higher proportion of SMEs than most other countries	As illustrated in table 10, the New Zealand manufacturing sector has a higher proportion of SMEs than most other countries, with 90.6 percent of enterprises employing 1-19 FTEs. This compares with an average of 70.5 percent for the countries considered in table 10. Correspondingly, the percentage of total employment generated by SMEs in New Zealand is significantly higher than average, with New Zealand (27.3 percent) recording the second highest proportion, behind Italy (38.7 percent).
New Zealand manufacturers have the lowest average number of employees	Table 11 shows the average size of establishments/enterprises by employment size class for the manufacturing sector. The average size of a New Zealand manufacturer in the 1-19 size class is the lowest of all countries considered in the table, at only 3.8. For the three larger size groups, New Zealand firms have an average size close to or larger than the average of all countries considered. However, overall, New Zealand manufacturers record the lowest average number of employees, reflecting the predominance of small firms in the industry.

Table 10. - Size Distribution of Manufacturing Industry

		Percentage of Enterprises / Establishments Enterprise Size (FTEs)					Percentage of Employment Enterprise Size (FTEs)
Country	Year		1-19	20-99	100-499	500+	1-19	20-99	100-499	500+
Australia	1994		82.0	14.1	3.4	0.4	22.3	27.5	32.7	17.5
Austria	1993		43.2	41.5	10.0	5.2	4.3	26.9	23.4	45.5
Canada	1994		50.6	37.8	10.2	1.4	7.6	27.8	39.4	25.2
Czech Republic	1995		94.9	2.9	1.6	0.5	18.0	10.3	24.6	47.1
Germany	1993		71.5	19.4	4.1	5.0	19.9	22.1	10.8	47.2
Greece	1992		59.0	34.3	6.0	0.7	20.4	35.0	27.5	17.2
Italy	1992		89.7	9.0	1.2	0.2	38.7	25.0	17.3	19.0
Japan	1994		74.3	21.6	3.6	0.5	22.4	30.9	25.0	21.6
Korea	1994		69.5	26.1	3.0	1.3	20.5	32.0	14.2	33.3
Luxembourg	1992		79.4	15.0	4.7	0.9	13.0	22.1	35.0	29.9
Mexico	1994		80.3	15.1	2.7	2.0	12.2	21.2	15.6	51.0
Netherlands	1993		78.0	17.2	4.3	0.6	15.7	24.8	27.8	31.7
New Zealand	1994		90.6	7.7	1.5	0.3	27.3	24.7	24.0	24.0
Norway	1994		40.2	47.4	7.5	4.9	9.3	34.9	18.2	37.6
Portugal	1994		85.8	11.8	2.2	0.2	23.5	32.3	27.8	16.5
Sweden	1993		44.4	40.8	12.4	2.4	6.9	23.1	35.3	34.7
Switzerland	1991		84.2	12.3	3.1	0.4	20.2	26.9	31.3	21.5
Turkey	1992		36.6	47.1	13.3	3.0	5.5	22.2	32.2	40.1
United Kingdom	1994		82.7	12.9	3.7	0.8	13.2	21.6	28.9	36.3
United States	1993		73.7	19.8	5.1	1.4	7.4	14.6	16.5	61.5
Average			70.5	22.7	5.2	1.6	16.4	25.3	25.4	32.9

Note: Statistical unit - establishment except for the United States, New Zealand, Czech Republic, Italy, Luxembourg, Portugal (enterprises). Size classes differ: Canada, New Zealand: 0-19; Mexico: 1-15, 16-100; Norway: 1-19, 20-99, 100-199, 200+; Czech Republic: 0-24; 25-99.

Source: OECD (1997), Small Business, Job Creation and Growth: Facts, Obstacles and Best Practices. Table 1.1

Table 11. - Average Establishments by Employment Size Class - Manufacturing

		Employment Size Class
Country	Year	1-19	20-99	100-499	500+	Total
Canada	1994	7.6	37.3	196.4	914.8	50.8
France	1992	13.3	42.8	204.7	1069.5	73.4
Germany	1992	6.6	42.7	213.8	2076.7	35.3
Greece	1992	13.5	39.9	177.2	955.2	39.0
Japan	1994	8.2	38.8	190.3	1190.8	27.1
Korea	1994	9.7	40.2	156.3	818.4	32.8
Mexico	1994	4.0	37.3	156.1	693.8	26.6
New Zealand	1994	3.8	40.3	198.2	1130.6	12.5
Netherlands	1993	5.7	40.8	184.3	1438.0	28.2
Portugal	1994	4.0	40.1	184.4	1044.0	14.6
United States	1993	6.3	41.2	182.4	2396.9	60.9
Turkey	1992	13.2	41.4	213.7	1163.8	87.9
Average		8.0	40.2	188.2	1241.0	40.8

Note: Statistical unit - establishment, except United States, Germany, New Zealand, Portugal. Size classes vary across countries: Canada, New Zealand: 0-19; Japan: 4-19; Mexico: 1-19, 20-99, 100-199, 200+; Turkey: 10-19.

Source: OECD (1997), Small Business, Job Creation and Growth: Facts, Obstacles and Best Practices. From table 1.3a.

¹⁴OECD (1997), Small Business, Job Creation and Growth: Facts, Obstacles and Best Practices. SMEs defined as those firms with fewer than 500 employees.

¹⁵Of the countries considered in the OECD publication Small Business, Job Creation and Growth: Facts, Obstacles and Best Practices.

¹⁶Defined in Japan as businesses with fewer than 300 employees (fewer than 100 in wholesale sector, fewer than 50 in retail and service sectors.

¹⁷Japan Small Business Research Institute (1988), White Paper on Small and Medium Enterprises in Japan - The Need for Small and Medium Enterprises to Change and Display Entrepreneurship.

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Printed: 25/11/2009