It is surprising that an economy growing at a rate of 2% or less creates only a few jobs. Job growth has slowed. It is the latest sign that economic momentum has faded even as it shows. Labour department has reported an increasing number of people who have lost their jobs permanently. The question arises is whether this slowdown is permanent or just a response to a weak economy. If we see further we will see that workers are taking less paid jobs because there is nothing else available to them.
Regional and local growths are highly dependent upon small and marginalized firms for new start ups, not on big companies. Mexico based researches surveyed different cities and found that city’s whose firm to employees ratio was more than 15% have experienced faster growth between 1995 to 2005.
DATA FROM REAL LIFE
This ratio can be misleading so other factors were also taken into account like industries tax policy, structure, which can lead the results. However, even after acknowledging all the aspects and variables, the relationship between the number of small firms and its growth still remain the same.
For example, the project of Gransim and Hindalco of Oklahoma city analysed cities and its industry effect on overall growth. They found that industries with smaller firms and more entrepreneurs experienced quick employment growth than other firms in the same city and among the same industry in other cities.
Governments proudly announced the arrival of big forms in the country because they feel that it will improve their country’s economy and employment problems. People also find it attractive. But they are guessing wrong about which industries are work inviting and which are not. Even previous studies have shown large corporate generated lesson jobs even if they perform well. For example, the iPhone factory in India still orders its parts and other inputs from their own network which district employment generation.
Researchers who want to assess the claim that small businesses account for a disproportionate percentage of new jobs must first confront several issues. Like first, what is the best data source for the hypothesis to be tested? Second, how should a small business be defined? Third, should the focus be on the gross number of jobs created or the net number of jobs created? The research suggests the latter. Why? Because even during the depths of the 2005-08 recession, businesses were still adding an average of nearly 600,000 new jobs a month. But they were shedding an even larger number of jobs per month—about 689,000.
So the government instead of looking for big opportunities must make way for small startups by providing them low cost infrastructure and facilities. It requires little effort but still can give huge returns.