Small, Medium Enterprises Continue Strongly

Small and Medium Enterprises Continue to Perform Strongly

"New Zealand's small and medium sized enterprises (SMEs) are punching above their weight", Roger Wigglesworth, Director SMEs in the Ministry of Economic Development said today.

The 2005 edition of SMEs in New Zealand: Structure and Dynamics, the Ministry of Economic Development's annual statistical review of small and medium enterprises (SMEs), shows these businesses are continuing to perform strongly in comparison to their larger counterparts.

Commenting on the sixth annual report on SMEs (businesses employing 19 or fewer employees), Roger Wigglesworth noted that:

- The number of SMEs increased 10% in 2004, more than double the increase in 2003.

- Between 2000 and 2004, 60% of new jobs created were in SMEs.

- SMEs accounted for 37% of the economy’s total output in 2003.

- Firms with 5 or fewer employees have the highest average real profits per employee.

There is a change this year in the way the number of people employed in SMEs is counted. From this year, the data are being sourced primarily from Inland Revenue information, which means working proprietors are only included if they paid themselves a salary or wage. As many do not, it means that a large number currently fall in to the “zero” employee category.

“What this means is that, in future, Statistics New Zealand will be able to accurately identify working proprietors as a specific group in the business population. This will significantly improve the quality of official business statistics”, said Mr Wigglesworth.

When working proprietors are excluded SMEs employ 29.2% of New Zealand workers. In the 2004 report (with working proprietors included), SMEs were said to account for 42.3% of employees. If working proprietors had been included in this year’s employment statistics, the SME contribution to total employment would be similar to last year.

SMEs in New Zealand: Structure and Dynamics has been jointly produced by the Ministry of Economic Development and Statistics New Zealand since 1999. The report provides a statistical summary of SMEs in New Zealand, examining their significance to the economy, their financial performance and the significance of SMEs internationally. New Zealand has a similar proportion of SMEs in the economy as other OECD countries.

Other reports also show that SMEs are making significant contributions to economic growth. The National Bank Small Business Monitor (July 2005) found that SMEs outperformed the rest of the economy in growth stakes from 2002 to 2004.

This year’s report welcomes comment on the usefulness of the report and on the use by the Ministry of the definition of SMEs as having 19 or fewer employees.

The report can viewed on the following link from 10am, Monday 8 August:

http://www.med.govt.nz/irdev/ind_dev/smes/index.html

ENDS

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