Small businesses support jobs the best: CFIB

May 13, 2010 – The Canadian Federation of Independent Business has released a report that finds the economic recovery may take a little longer than predicted. The good news is that small businesses are a "stabilizing force in the economy."

The report sheds light on the fact that there is more to Canada’s international reputation for successfully weathering the recessionary storm than meets the eye. Based on data representing recessionary shifts of employment by size of enterprise and industry between the third quarter of 2008 and the fourth quarter of 2009, CFIB’s report reveals that, although the entire economy lost about 360,000 jobs, the private sector loss was closer to 500,000.   

“These numbers show that economic recovery in this country might have a longer way to go than headline stats might otherwise be suggesting,” explained CFIB’s vice-president and chief economist, Ted Mallett, pointing out that “the pain of the recession was partly washed over by public sector employment, the very employment whose sustainability is reliant upon economic performance in the private sector.” 

Among private sector employers, it was the smallest ones who were able to support total employment the best. When compared with the respective percentages of payroll employment lost by large and medium-sized enterprises (5.6 and 5.9), payrolls in enterprises employing fewer than 50 people saw a much more modest decline of two per cent.

“As a group, small firms have always outperformed large and mid-sized enterprises during recessions,” stated Mallett. “Between the adaptability inherent in their firm’s smaller size and the heightened value associated with each employee’s role, most small business owners only turn to layoffs as a last resort. They are a stabilizing force in the economy.” 

During the five quarters of overall private sector employment losses, public sector employment, on the other hand, increased at a torrid 3.7 per cent.

“The increase in public sector employment amounts to another form of borrowing from the future, acting as a brake on future economic expansion,” Mallett concluded.

To view the report in full, visit www.cfib.ca .