Shaping Labour Market Trends

The Growth in Small Business

Within the emerging global economy, small- and medium-sized enterprises are proving to be the most innovative and the creators of most new work. Although definitions vary, small business is usually defined as companies with fewer than 100 employees and medium-sized business as those with 100 to 500 employees. In fact, Statistics Canada reports that, in 1996, SMEs accounted for 58% of total employment and, more important, job growth surpassed job losses far more often among small Canadian companies than among companies with considerably more employees.

The growth of SMEs reflects, in part, the transition to a more knowledge-based economy. Knowledge work gives no special advantage to large firms. The use of computers and factory automation makes it possible to produce goods efficiently in smaller volumes. Smaller firms may also enjoy cost advantages. New companies, many of which are small, pay lower wages and offer fewer benefits than larger, established companies. As well, the expansion of small firms is partly a result of larger firms splitting off parts of their operation and contracting them out.

This growth is also a reflection of how SMEs operate and are organized. Globally competitive SMEs use a change-driven style of operation. This requires flexibility and fast responses to keep up with changes in the global marketplace, including faster product development, faster production, faster delivery, faster information processing and faster service. Because SMEs are not usually organized along the lines of the old-style, corporate structure of large companies, they can quickly adapt to the changes and new markets globalization demands.

Implications for Career Decision Making

Since SMEs create most new jobs, any job search strategy should include them as well as the large, established firms and institutions. There are disadvantages to working for small companies, such as lower pay and fewer traditional benefits. However, clients should also consider the very broad learning opportunities and the greater potential for trying out different roles in SMEs.

Guiding clients to explore SME characteristics can emphasize the importance of work environments in a career path. Communication with owners/managers may be more informal, and there may be a more consultative atmosphere. SME benefits can include more flexibility in work hours and creative bonuses, such as vacation in lieu of overtime pay.

Because SMEs are in a growth phase, changes can be many and rapid. Clients need to be prepared. They need to keep track of the skill sets they want to develop next and the ones they will need when they make their move - either voluntarily or involuntarily.

Practitioners may point out to clients that for their core workers, rapidly growing SMEs look for workers with entrepreneurial as well as technical skills. Those who have managerial skills that complement the company's existing skills base may also have an edge.

Most Canadian Businesses Are Very Small Of Canada's one million businesses, 78% employ fewer than five people. Ninety-seven percent have fewer than 50 employees. SMEs accounted for 58% of total employment in 1996. Increasingly, Canadians are creating their own jobs.In 1977 one in eight was self-employed; by 1997 one in six was self-employed. Job satisfaction among SME employees and self-employed individuals is high: employees of very small companies are significantly more likely to rate their workplace as "good" compared to those in large or very large firms. Eighty percent of small business owners never work less than 50 hours a week; 50% work over 60 hours a week. Source: Canadian Federation of Independent Business <www.cfib.ca> July 2000.

"When you look at the small business sector, which is larger, growing faster and creating more jobs than the big companies, that's where you see Canada's entrepreneurial spirit at its best" (FITT, 1999).