Young businesses and startups create and keep more jobs

Larger and more mature companies may employ more people, but new startups and small businesses are the ones to keep them around.

Glenys Beauchamp from the Federal Department of Industry, Innovation and Science revealed yesterday companies that less than two years old were responsible for creating 1.6 million net new jobs in Australia from 2003-2014.

Speaking at a Committee for Economic Development of Australia lunch, Beauchamp said “net job creation comes from early-stage and start-up businesses”, according to Fairfax.

Larger businesses employ more people, but fail to keep as many employees on board, therefore not contributing to the net total job growth since 2003. This data is consistent with similar US data, and may lend support to the Turnbull Government’s $1.1 billion innovation and science agenda.

“Early-stage and start-up” businesses are defined as being less than two years old, while mature businesses are categorised as being in operation for six years or older.

Beauchamp warned Australia is still lacking when it comes to global innovation surveys, saying the nation has trouble converting basic research into businesses. She also blamed a lack of collaboration with businesses and research agencies like the CSIRO for the nation’s poor innovation levels.

Peter Strong, chief executive of the Council of Small Business Australia, told SmartCompany that while this data shows more jobs will come from innovation and small business, there are still those out there “who just don’t get it”.

Strong believes more focus should be put on workplace awards for businesses just starting out, claiming the industrial relations system creates barriers to businesses wanting to take on employees.

“All you have to do is look at how difficult it is for small businesses to hire that first person to see that we need a small business industrial award,” Strong says.

“We need one so small business owners can easily employ people early on, an award that applies to businesses that only employ 10-20 people.”

Strong also believes further job growth can be achieved by taking super collection out of the hands of business owners, saying business owners “shouldn’t be involved in the collection process”.

“Let the people who own the money manage where it goes,” he says.

That being said, Strong says small businesses’ higher employee retention rate is often due to business owners’ closeness to employees.

“The CEO of a bigger company couldn’t give a damn about their employees generally,” Strong says.

“This is why small business is such a good thing. It’s like family when it works well.”

Greg Hunt, the Minister for Industry, Innovation and Science, recently flagged a change in how the government views innovation, stating that “innovation is not just about tech start-ups or IT. It’s also about established businesses doing things better.”

The government announced it is considering establishing a broader National Innovation Fund, with a focus on businesses valued between $20 and $200 million.

Australian Small Business and Family Enterprise Ombudsman Kate Carnell said it would be a “tragedy” if smaller businesses and start-ups were overlooked when it comes to innovation.

This article was first published on SmartCompany.

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