Contact and Social

Young Kiwi businesses effective at creating jobs

Photo courtesy of Dean Myers on Fickr

Photo courtesy of Dean Myers on Flickr

New businesses do more than their fair share of job creation in New Zealand, research by the OECD has found.

In fact, their net impact on employment growth is greater than their share of employment overall.

Young firms, those being five years old or less, employed about one in every five employees in 2001-09.

Between them, they generated 53% of the new jobs and accounted for 29% of the jobs lost. However, their net contribution of 24% to job creation was disproportionately positive.

That pattern holds good across the 18 countries and 10 years in the OECD’s study.

It finds that young firms’ contribution to net employment growth remained positive during the Great Recession, even though it affected them more severely than older firms, both in terms of job creation and job destruction.

“The drop in their growth rate did not change the fact that young firms remained net job creators even during the crisis,” says the report. “Most of the job losses during the crisis took place via contractions in surviving mature businesses rather than via exits of older firms, reflecting the greater weight of older businesses in the economy.”

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