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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. - PowerPoint PPT Presentation
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Business Growth and Job Business Growth and Job Creation – What a Gig!Creation – What a Gig!
Professor Mark HartEconomics & Strategy Group 16th November 2011
Who’s Creating the Jobs? – Annual Averages (1998–2010)Who’s Creating the Jobs? – Annual Averages (1998–2010)
-1.5
-1.0
-0.5
0.0
0.5
1.0
Start-ups 1-9 emps. 10-49 emps.
50-249 emps.
250+ emps.
Mill
ions
Existing Businesses
Exits Contractions Gains
majority of gross jobs (71%) were being created by start-ups and small firms - a total of 1.63 million jobs.
Birth and Death Rates in the West Midlands Birth and Death Rates in the West Midlands
579
1113151719
% R
ate
Birth Rate Death Rate
Job Creation and Destruction – West Midlands – 1998-2010Job Creation and Destruction – West Midlands – 1998-2010
Job Creation and Destruction – West Midlands – 2010Job Creation and Destruction – West Midlands – 2010
Summary 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.
High-Growth Firms – the obvious solution!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.
High-Growth Firms and Job Creation - UKHigh-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
Geography of High-Growth Firms (2007-2010)Geography of High-Growth Firms (2007-2010)
302 HGFs in Birmingham PUA
High-Growth Firms: Contribution to Jobs in BirminghamHigh-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.
Time to get real about HGFs?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