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Business Growth and Job Creation – What a Gig!

Business Growth and Job Creation – What a Gig!. Professor Mark Hart Economics & Strategy Group 16 th November 2011. Who’s Creating the Jobs? – Annual Averages (1998–2010). majority of gross jobs (71%) were being created by start-ups and small firms - a total of 1.63 million jobs.

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Business Growth and Job Creation – What a Gig!

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  1. Business Growth and Job Creation – What a Gig! Professor Mark HartEconomics & Strategy Group 16th November 2011

  2. Who’s Creating the Jobs? – Annual Averages (1998–2010) majority of gross jobs (71%) were being created by start-ups and small firms - a total of 1.63 million jobs.

  3. Birth and Death Rates in the West Midlands

  4. Job Creation and Destruction – West Midlands – 1998-2010

  5. Job Creation and Destruction – West Midlands – 2010

  6. Summary • The ability of the private sector to create jobs is crucial to the economic recovery - we have set out some of the dynamics of that process in some very simplistic metrics on job gains and losses. • The majority of jobs in the UK were created by small firms; they also demonstrated the greatest levels of churn – intensified since 2008. • Smaller firms have been increasing their share of total employment year on year and in 2010 their share was triple that in 1998.

  7. High-Growth Firms – the obvious solution! • High-growth firms are of central importance to economic policy. These ‘exceptional firms’ have the potential to drive UK economic performance through their extreme rates of growth. • ….and they are expected to play a major role in increasing employment as the economy emerges from the current downturn. • But despite the importance of business growth for job creation and productivity growth, we do not really know much about how businesses grow in the UK.

  8. High-Growth Firms and Job Creation - UK • Econometric analysis shows that innovation is driving business growth. The effect is more marked the faster a company is growing. • Faster growing firms are more likely to continue to innovate. Source : NESTA, Measuring Business Growth, The Vital 6%. Contributing author – Prof Mark Hart , Aston Business School

  9. Geography of High-Growth Firms (2007-2010) 302 HGFs in Birmingham PUA

  10. High-Growth Firms: Contribution to Jobs in Birmingham • The ~ 140 high-growth firms responsible for an increase of around 10,000 net jobs • In comparison, the ~ 600 firms (with 10 or more employees) that had average annual growth of 1-19 per cent increased their employment by 20,000 net jobs. • High growth firms had a 2.5 fold increase in employment compared to a rate of increase of just 1.1 for these more modestly growing firms.

  11. Time to get real about HGFs? • HGFs are few in number ...... and very few have been involved with public sector business support • They are in a range of sectors; most are between 10-49 employees and are well established (5+ years trading) • High growth is episodic and a ‘random event’ • Need to move away from a policy fixation with HGFs and focus on businesses with growth potential ....... • Only 3% of start-ups get to £1million TO in 3 years – turning this around is more challenging..... • Trade development and innovative business practices the key

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