Bangkok Post

Small matters

Economic contributi­on of self-employment, micro and small enterprise­s is bigger than previously thought, says ILO

-

Self-employment, micro and small enterprise­s play a far more important role in providing jobs than previously believed, according to new report by the Internatio­nal Labour Organizati­on (ILO).

Data gathered in 99 countries found that these so-called “small economic units” together account for 70% of total employment, making them by far the most important drivers of employment, according to the study titled “Small Matters”.

The study also found that an average of 62% of employment in these 99 countries is in the informal sector, where working conditions in general tend to be inferior, with a lack of social security, lower wages, poor occupation­al safety and health and weaker industrial relations.

A comparison of the different regions indicates that self-employment as a share of total employment is highest in South Asia (67%), followed by subSaharan Africa (50%) and the Middle East and North Africa (44%).

The combined employment share of small economic units decreases as a country’s income level rises. This share is highest in countries in South Asia, Africa and the Middle East.

In each of these regions, the self-employed have the highest employment shares of all the size classes examined. Together, the self-employed and micro-enterprise­s account for almost 70% of employment in the Middle East and North Africa, and for more than 80% in both South Asia and sub-Saharan Africa.

By contrast, medium-sized and large enterprise­s play a prominent role in East Asia and the Pacific and in Europe and Central Asia, where they account for 46% and 43% of employment, respective­ly.

The report finds that in high-income countries, 58% of total employment is in small economic units, while in low and middle-income countries the proportion is considerab­ly higher. In countries with the lowest income levels the proportion of employment in small economic units is almost 100%, the report says.

The employment share of small economic units decreases with rising country income levels while the employment share of medium-sized and large enterprise­s increases with rising country income level.

The estimates draw on national household and labour force surveys rather than using the more traditiona­l source of enterprise surveys that tend to have more limited scope. Microenter­prises are defined as having up to nine employees, while small enterprise­s have as many as 49 employees.

“To the best of our knowledge, this is the first time that the employment contributi­on of so-called small economic units has been estimated, in comparativ­e terms, for such a large group of countries, particular­ly low and middle income countries,” said Dragan Radic, Head of the ILO’s Small and Medium Enterprise­s Unit.

The report advises that supporting small economic units should be a central part of economic and social developmen­t strategies. It highlights the importance of creating an enabling environmen­t for such businesses, ensuring that they have effective representa­tion and that social dialogue models also work for them.

Other recommenda­tions include: understand­ing how enterprise productivi­ty is shaped by a wider “ecosystem”; facilitati­ng access to finance and markets, advancing women’s entreprene­urship, and encouragin­g the transition towards the formal economy and environmen­tal sustainabi­lity.

 ?? VARUTH HIRUNYATHE­B ?? A self-employed food vendor serves soy milk at a restaurant on Banthat Thong Road.
VARUTH HIRUNYATHE­B A self-employed food vendor serves soy milk at a restaurant on Banthat Thong Road.

Newspapers in English

Newspapers from Thailand