Tuesday, March 18, 2014

SMEs and 70 per cent of employment

The relative importance of SMEs to the Irish economy has been touched on during the recent discussion of SME debt.  Sometimes it is stated that SMEs provide 70 percent on employment.  That is not quiet true.  Something along the lines of 70 per cent of people engaged (employee or proprietor) by private sector enterprises are with SMEs is better but it can be seen that this excludes all public sector workers and the self employed.

The 70 per cent figures comes from the CSO’s Business in Ireland 2011 survey which opens chapter one starts with “Six Key Findings from Business in Ireland 2011” of which the first is (emphasis added):

1. Key statistics on small and medium enterprises (SMEs)
In 2011, SMEs (employing less than 250 persons) accounted for 99.8% of active enterprises, 68.6% of persons engaged, 50.1% of turnover and 46.0% of gross value added (GVA). GVA is the gross income from operating activities and is the balance available to enterprises to pay employees and realise a return on investment. It is noticeable that while SMEs employed almost seven in every ten persons in the business economy, they accounted for less than half of GVA.

The seven in ten statistic clear refers to “the business economy”.  As stated this excludes public sector employees and the self-employed.

There are around 1.9 million people working in Ireland.  They can roughly be broken down as:

  • 800,000 in c. 180,000 SMEs (with < 250 employees)
    • 320,000 in c.170,000 micro enterprises (< 10 employees)
    • 260,000 in c.15,000 small enterprises (11 to 49 employees)
    • 220,000 in c.2,500 medium enterprises (50 to 249 employees)
  • 400,000 in c. 500 large enterprises (with > 250 employees)
  • 350,000 in the public sector (excluding semi states)
  • 350,000 self-employed (with and without paid employees)

SMEs count for around 42 per cent of employment in Ireland.  SMEs are the largest source of employment but not 70 per cent of it.

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