Small companies playing ‘crucial role’ by lowering unemployment

Small companies are essential for strengthening the economy and bringing down the unemployment rate.

That’s the message from a new report released by the Federation of Small Businesses which revealed that firms with less that 250 employees take on around 1.3 million unemployed and disadvantaged people in the UK each year.

That compares to larger firms of 250 employees and above which hire less than 130,000 unemployed people on average.

The report, Back To work: The Role Of Small Businesses In Employment And Enterprise, shows that groups such as long-term sick, disabled and students, among others, are more likely to be employed by a small business.

Almost nine-in-10 (88%) unemployed people who are actively looking for work will find a job in, or start up, a small business.

“Small firms play a unique role in providing the way to employment, especially for disadvantaged groups,” Wilfred Mitchell OBE, Policy Chairman for the Federation of Small Businesses, said.

“They have a greater tendency to take on those that would struggle to find a job.

“They have also shown resilience in the face of recession – still taking on some 1.3 million unemployed people per year.”

Mr Mitchell said this was evidence of the “crucial role small firms are playing the our economic recovery”.

The report also shows that small firms and sole traders can create more jobs, but they need greater support from government policymakers.