Small firms 'can power recovery'

Nov 13 2012

Scotland's smallest businesses could make a "serious dent" in the unemployment figures if given the right support, a new report has suggested.

Micro businesses, which have fewer than 10 employees, make up nearly 94% of all businesses in Scotland and provide more than a quarter of all private-sector jobs.

But a study by the Federation of Small Businesses (FSB) found a "strong amount of evidence that micro businesses are not recruiting as many people as they could".

It said the perceived risks of taking on a new employee, as well as practical obstacles associated with it, could put bosses in these small businesses off recruiting.

To tackle this, FSB Scottish policy convener Andy Willox said such firms needed better support, including practical help with the legal and regulatory issues associated with taking a worker on.

The Micros Untapped report has recommended the Scottish Government create an HR support fund which could "provide a sustained source of HR support for micro-businesses who are planning to recruit". There are 321,000 micro businesses north of the border, according to the FSB.

Mr Willox said: "The potential and sheer number of micro businesses in Scotland means that better support to help them unleash their potential could make a serious dent in the unemployment figures."

He added: "When a very small business expands its workforce by one or two, the character of the business changes in a way that a large organisation doesn't and government support should reflect this.

"The sort of practical help we're suggesting includes putting together an appropriate job description, advertising, advising people of the legal and regulatory issues associated with employment. However, this help should dovetail with support to help with growing the entire business."

A survey carried out as part of the report found that a quarter of micro businesses were thinking about recruiting. But 31% felt their business generated enough work to need extra help. The main motivation for micro businesses to take on a new worker is to grow their businesses, with only 2% wanting staff with different skills so they can diversify.