It’s a phrase said so often that it’s almost become a cliche for nations around the world: Small businesses are the backbone of their economies.
Indeed, small and medium-sized businesses (SMBs) contribute significantly to the GDPs of their countries. In fact, in the U.S. alone, SMBs account for 46 percent of private, non-farm GDP, according to the U.S. Small Business Administration.
But, there is another measure of how SMBs are making their economic mark: jobs.
The latest data from the International Labor Organization (ILO) estimates SMBs account for more than one-third of employment across the globe. The firm’s latest World Employment Social Outlook report, released this week, examined a steady increase in SMBs’ worldwide share of employment from 2003 through 2016.
Following the financial crisis, small businesses’ share of total employment rose steadily from approximately 30 percent in 2007 to nearly 35 percent in 2016, the ILO’s statistics show.
As reported in Bloomberg, the ILO’s report also reveals small businesses hold an even deeper influence on national employment rates in certain markets. For example, the developing economies in Afghanistan and Ethiopia have seen their small businesses account for more than half of total employment, reports said. In emerging markets like China and Medico, SMBs make up one-third of employment and up to 40 percent in developed economies.
But, overall, the ILO study found stagnant employment growth and disappointing economic growth.
“Global unemployment levels and rates are expected to remain high in the short term as the global labor force continues to grow,” the ILO said in its report.
Global unemployment is expected to tick up to 5.8 percent in 2017, up slightly from 5.7 percent in 2016. According to Bloomberg, the ILO is calling for regulators to take the initiative to address unemployment.
“To reverse the recent trend of employment stagnation in [SMBs], we need policies to better promote [SMBs] and a better business environment for all firms,” said Deborah Greenfield, ILO deputy director-general for policy.