SMEs employ around 60% of the UK workforce and, with wages stagnating, the government says it wants to know why.
Policymakers are struggling to understand why, if the economy is performing so well, wages and living standards are staying resolutely low. Some feel that small firms must be underachieving when it comes to their actual output, although very little data exists to help ascertain individual performance.
Despite SMEs being heralded by all major political parties as the backbone of the economy, very little research has actually been done into what drives the productivity of smaller businesses – and how these factors differ from their larger counterparts.
To counter this, a group of MPs drawn from across the political spectrum is releasing findings from 10 months’ research into small business productivity. Called the All Party Parliamentary Small Business Group, and supported by the FSB, the organisation says that it focussed on issues and challenges that are specific to this sector.
Ultimately, the group is pushing for a US-style Small Business Association to formally represent and lobby for the interests of small business in the cabinet. Top among its priorities will be securing access to better infrastructure, such as high speed broadband, increasing skills and training, and offering better incentives to those that invest in small companies.
“Small businesses have been responsible for much of our recent economic growth,” commented Brian Binley MP, who chaired the inquiry.
“Addressing the barriers that hold them back and giving them the right support is crucial to closing the productivity gap.”