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World – SMEs driving job growth but rethinking needed to boost productivity, OECD finds

21 May 2019

Small and medium-sized enterprises (SMEs) are driving job growth, but require higher investment in skills, innovation and technology to raise wages and productivity, according to a new report from the Organisation for Economic Co-operation and Development.

The report, OECD SME and Entrepreneurship Outlook highlights that most SME job creation has been in sectors with below average productivity levels, with SMEs typically paying employees approximately 20% less than large firms.

The OECD states that while SMEs are more engaged in new organisational or marketing practices than large firms, and sometimes more innovative in developing new products and processes, many continue to struggle disproportionately to navigate the increasing complexity in technologies and markets.

“We need a fundamental rethinking of SME and entrepreneurship policies to improve business conditions and access to resources,” OECD Secretary-General Angel Gurría, said. “This will enable workers to have higher wages and greater productivity, as smaller employers harness major trends like digitalisation. We need a renewed policy and measurement agenda to understand how countries, regions and cities can capitalise on their many diverse small businesses as drivers for inclusive and sustainable growth.”

OECD’s report argues for more efficient governance and more coherent arrangements across national and subnational levels, regions and cities for SMEs. It also calls for fostering international peer learning and enhanced monitoring and evaluation capacity.

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