R189 Job Creation in Small and Medium-Sized Enterprises
Recommendation, 1998
Recommendation concerning General Conditions to stimulate Job
Creation in Small and Medium-Sized Enterprises
Place: Geneva
Session of the Conference:86
Date of adoption:17:06:1998
The General Conference of the International Labour
Organization,
Having been convened at Geneva by the Governing Body of the
International Labour Office, and having met in its Eighty-sixth Session on 2
June 1998, and
Recognizing the need for the pursuit of the economic,
social, and spiritual well-being and development of individuals, families,
communities and nations,
Aware of the importance of job creation in small and
medium-sized enterprises, Recalling the resolution concerning the promotion of
small and medium-sized enterprises adopted by the International Labour
Conference at its 72nd Session, l986, as well as the Conclusions set out in the
resolution concerning employment policies in a global context, adopted by the
Conference at its 83rd Session, 1996,
Noting that small and medium-sized enterprises, as a
critical factor in economic growth and development, are increasingly responsible
for the creation of the majority of jobs throughout the world, and can help
create an environment for innovation and entrepreneurship,
Understanding the special value of productive, sustainable
and quality jobs,
Recognizing that small and medium-sized enterprises provide
the potential for women and other traditionally disadvantaged groups to gain
access under better conditions to productive, sustainable and quality employment
opportunities,
Convinced that promoting respect for the Forced Labour
Convention, 1930, the Freedom of Association and Protection of the Right to
Organise Convention, 1948, the Right to Organise and Collective Bargaining
Convention, 1949, the Equal Remuneration Convention, 1951, the Abolition of
Forced Labour Convention, 1957, and the Discrimination (Employment and
Occupation) Convention, 1958, will enhance the creation of quality employment in
small and medium-sized enterprises and in particular that promoting respect for
the Minimum Age Convention and Recommendation, 1973, will help Members in their
efforts to eliminate child labour,
Also convinced that the adoption of new provisions on job
creation in small and medium-sized enterprises, to be taken into account
together with:
the relevant provisions of other international labour Conventions and
Recommendations as appropriate, such as the Employment Policy Convention and
Recommendation, 1964, and the Employment Policy (Supplementary Provisions)
Recommendation, 1984, the Co-operatives (Developing Countries)
Recommendation, 1966, the Human Resources Development Convention and
Recommendation, 1975, and the Occupational Safety and Health Convention and
Recommendation, 1981; and
other proven ILO initiatives promoting the role of small
and medium-sized enterprises in sustainable job creation and encouraging
adequate and common application of social protection, including Start and
Improve Your Business and other programmes as well as the work of the
International Training Centre of the ILO in training and skills enhancement,
will provide valuable guidance for Members in the design and
implementation of policies on job creation in small and medium-sized
enterprises,
Having decided upon the adoption of certain proposals with
regard to general conditions to stimulate job creation in small and medium-sized
enterprises, which is the fourth item on the agenda of the session, and
Having determined that these proposals shall take the form
of a Recommendation;
adopts this seventeenth day of June of the year one thousand
nine hundred and ninety-eight the following Recommendation which may be cited as
the Job Creation in Small and Medium-Sized Enterprises Recommendation, 1998.
Members should, in consultation with the most
representative organizations of employers and workers, define small and
medium-sized enterprises by reference to such criteria as may be considered
appropriate, taking account of national social and economic conditions, it being
understood that this flexibility should not preclude Members from arriving at
commonly agreed definitions for data collection and analysis purposes.
Members should adopt measures which are appropriate to
national conditions and consistent with national practice in order to recognize
and to promote the fundamental role that small and medium-sized enterprises can
play as regards:
the promotion of full, productive and freely chosen
employment;
greater access to income-earning opportunities and
wealth creation leading to productive and sustainable employment;
sustainable economic growth and the ability to react
with flexibility to changes;
increased economic participation of disadvantaged and
marginalized groups in society;
increased domestic savings and investment;
training and development of human resources;
balanced regional and local development;
provision of goods and services which are better adapted
to local market needs;
access to improved quality of work and working
conditions which may contribute to a better quality of life, as well as allow
large numbers of people to have access to social protection;
stimulating innovation, entrepreneurship, technology
development and research;
access to domestic and international markets; and
the promotion of good relations between employers and
workers.
In order to promote the fundamental role of small and
medium-sized enterprises referred to in Paragraph 2, Members should adopt
appropriate measures and enforcement mechanisms to safeguard the interests of
workers in such enterprises by providing them with the basic protection
available under other relevant instruments.
The provisions of this Recommendation apply to all
branches of economic activity and all types of small and medium-sized
enterprises, irrespective of the form of ownership (for example, private and
public companies, cooperatives, partnerships, family enterprises, and sole
proprietorships).
In order to create an environment conducive to the growth
and development of small and medium-sized enterprises, Members should:
adopt and pursue appropriate fiscal, monetary and
employment policies to promote an optimal economic environment (as regards, in
particular, inflation, interest and exchange rates, taxation, employment and
social stability);
establish and apply appropriate legal provisions as
regards, in particular, property rights, including intellectual property,
location of establishments, enforcement of contracts, fair competition as well
as adequate social and labour legislation;
improve the attractiveness of entrepreneurship by
avoiding policy and legal measures which disadvantage those who wish to become
entrepreneurs.
The measures referred to in Paragraph 5 should be
complemented by policies for the promotion of efficient and competitive small
and medium-sized enterprises able to provide productive and sustainable
employment under adequate social conditions. To this end, Members should
consider policies that:
create conditions which:
provide for all enterprises, whatever their size or
type:
equal opportunity as regards, in particular, access to
credit, foreign exchange and imported inputs; and
fair taxation;
ensure the non-discriminatory application of labour
legislation, in order to raise the quality of employment in small and
medium-sized enterprises;
promote observance by small and medium-sized enterprises
of international labour standards related to child labour;
remove constraints to the development and growth of
small and medium-sized enterprises, arising in particular from:
difficulties of access to credit and capital markets;
low levels of technical and managerial skills;
inadequate information;
low levels of productivity and quality;
insufficient access to markets;
difficulties of access to new technologies;
lack of transport and communications infrastructure;
inappropriate, inadequate or overly burdensome
registration, licensing, reporting and other administrative requirements,
including those which are disincentives to the hiring of personnel, without
prejudicing the level of conditions of employme effectiveness of labour
inspection or the system of supervision of working conditions and related
issues;
insufficient support for research and development;
difficulties in access to public and private procurement
opportunities;
include specific measures and incentives aimed at
assisting and upgrading the informal sector to become part of the organized
sector.
With a view to the formulation of such policies Members
should, where appropriate:
collect national data on the small and medium-sized
enterprise sector, covering inter alia quantitative and qualitative aspects of
employment, while ensuring that this does not result in undue administrative
burdens for small and medium-sized enterprises;
undertake a comprehensive review of the impact of
existing policies and regulations on small and medium-sized enterprises, with
particular attention to the impact of structural adjustment programmes on job
creation;
review labour and social legislation, in consultation
with the most representative organizations of employers and workers, to
determine whether:
such legislation meets the needs of small and
medium-sized enterprises, while ensuring adequate protection and working
conditions for their workers;
there is a need for supplementary measures as regards
social protection, such as voluntary schemes, cooperative initiatives and
others;
such social protection extends to workers in small and
medium-sized enterprises and there are adequate provisions to ensure compliance
with social security regulations in areas such as medical care, sickness,
unemployment, old-age, employment injury, family, maternity, invalidity and
survivors' benefits.
In times of economic difficulties, governments should
seek to provide strong and effective assistance to small and medium-sized
enterprises and their workers.
In formulating these policies, Members:
may consult, in addition to the most representative
organizations of employers and workers, other concerned and competent parties as
they deem appropriate;
should take into account other policies in such areas as
fiscal and monetary matters, trade and industry, employment, labour, social
protection, gender equality, occupational safety and health and
capacity-building through education and training;
should establish mechanisms to review these policies, in
consultation with the most representative organizations of employers and
workers, and to update them.
Members should adopt measures, drawn up in consultation
with the most representative organizations of employers and workers, to create
and strengthen an enterprise culture which favours initiatives, enterprise
creation, productivity, environmental consciousness, quality, good labour and
industrial relations, and adequate social practices which are equitable. To this
end, Members should consider:
pursuing the development of entrepreneurial attitudes,
through the system and programmes of education, entrepreneurship and training
linked to job needs and the attainment of economic growth and development, with
particular emphasis being given to the importance of good labour relations and
the multiple vocational and managerial skills needed by small and medium-sized
enterprises;
seeking, through appropriate means, to encourage a more
positive attitude towards risk-taking and business failure by recognizing their
value as a learning experience while at the same time recognizing their impact
on both entrepreneurs and workers;
encouraging a process of lifelong learning for all
categories of workers and entrepreneurs;
designing and implementing, with full involvement of the
organizations of employers and workers concerned, awareness campaigns to
promote:
respect for the rule of law and workers' rights, better
working conditions, higher productivity and improved quality of goods and
services;
entrepreneurial role models and award schemes, taking
due account of the specific needs of women, and of disadvantaged and
marginalized groups.
In order to enhance the growth, job-creation potential
and competitiveness of small and medium-sized enterprises, consideration should
be given to the availability and accessibility of a range of direct and indirect
support services for them and their workers, to include:
business pre-start-up, start-up and development
assistance;
business plan development and follow-up;
business incubators;
information services, including advice on government
policies;
consultancy and research services;
managerial and vocational skills enhancement;
promotion and development of enterprise-based training;
support for training in occupational safety and health;
assistance in upgrading the literacy, numeracy, computer
competencies and basic education levels of managers and employees;
access to energy, telecommunications and physical
infrastructure such as water, electricity, premises, transportation and roads,
provided directly or through private sector intermediaries;
assistance in understanding and applying labour
legislation, including provisions on workers' rights, as well as in human
resources development and the promotion of gender equality;
legal, accounting and financial services;
support for innovation and modernization;
advice regarding technology;
advice on the effective application of information and
communication technologies to the business process;
access to capital markets, credit and loan guarantees;
advice in finance, credit and debt management;
export promotion and trade opportunities in national and
international markets;
market research and marketing assistance;
assistance in product design, development and
presentation;
quality management, including quality testing and
measurement;
packaging services;
environmental management services.
As far as possible, the support services referred to in
Paragraph 11 should be designed and provided to ensure optimum relevance and
efficiency through such means as:
adapting the services and their delivery to the specific
needs of small and medium-sized enterprises, taking into account prevailing
economic, social and cultural conditions, as well as differences in terms of
size, sector and stage of development;
ensuring active involvement of small and medium-sized
enterprises and the most representative organizations of employers and workers
in the determination of the services to be offered;
involving the public and private sector in the delivery
of such services through, for example, organizations of employers and workers,
semi-public organizations, private consultants, technology parks, business
incubators and small and medium-sized enterprises themselves;
decentralizing the delivery of services, thereby
bringing them as physically close to small and medium-sized enterprises as
possible;
promoting easy access to an integrated range of
effective services through "single window" arrangements or referral
services;
aiming towards self-sustainability for service providers
through a reasonable degree of cost recovery from small and medium-sized
enterprises and other sources, in such a manner as to avoid distorting the
markets for such services and to enhance the employment creation potential of
small and medium-sized enterprises;
ensuring professionalism and accountability in the
management of service delivery;
establishing mechanisms for continuous monitoring,
evaluation and updating of services.
Services should be designed to include
productivity-enhancing and other approaches which promote efficiency and help
small and medium-sized enterprises to sustain competitiveness in domestic and
international markets, while at the same time improving labour practices and
working conditions.
Members should facilitate access of small and
medium-sized enterprises to finance and credit under satisfactory conditions. In
this connection:
credit and other financial services should as far as
possible be provided on commercial terms to ensure their sustainability, except
in the case of particularly vulnerable groups of entrepreneurs;
supplementary measures should be taken to simplify
administrative procedures, reduce transaction costs and overcome problems
related to inadequate collateral by, for example, the creation of
non-governmental financial retail agencies and development finance institutions
addressing poverty alleviation;
small and medium-sized enterprises may be encouraged to
organize in mutual guarantee associations;
the creation of venture capital and other organizations,
specializing in assistance to innovative small and medium-sized enterprises,
should be encouraged.
Members should consider appropriate policies to improve
all aspects of employment in small and medium-sized enterprises by ensuring the
non-discriminatory application of protective labour and social legislation.
Members should, in addition:
facilitate, where appropriate, the development of
organizations and institutions which can effectively support the growth and
competitiveness of small and medium-sized enterprises. In this regard,
consultation with the most representative organizations of employers and workers
should be considered;
consider adequate measures to promote cooperative
linkages between small and medium-sized enterprises and larger enterprises. In
this connection, measures should be taken to safeguard the legitimate interests
of the small and medium-sized enterprises concerned and of their workers;
consider measures to promote linkages between small and
medium-sized enterprises to encourage the exchange of experience as well the
sharing of resources and risks. In this connection, small and medium-sized
enterprises might be encouraged to form structures such as consortia, networks
and production and service cooperatives, taking into account the importance of
the role of organizations of employers and workers;
consider specific measures and incentives for persons
aspiring to become entrepreneurs among selected categories of the population,
such as women, long-term unemployed, persons affected by structural adjustment
or restrictive and discriminatory practices, disabled persons, demobilized
military personnel, young persons including graduates, older workers, ethnic
minorities and indigenous and tribal peoples. The detailed identification of
these categories should be carried out taking into account national
socio-economic priorities and circumstances;
consider special measures to improve communication and
relations between government agencies and small and medium-sized enterprises as
well as the most representative organizations of such enterprises, in order to
improve the effectiveness of government policies aimed at job creation;
encourage support for female entrepreneurship,
recognizing the growing importance of women in the economy, through measures
designed specifically for women who are or wish to become entrepreneurs.
Organizations of employers or workers should consider
contributing to the development of small and medium-sized enterprises in the
following ways:
articulating to governments the concerns of small and
medium-sized enterprises or their workers, as appropriate;
providing direct support services in such areas as
training, consultancy, easier access to credit, marketing, advice on industrial
relations and promoting linkages with larger enterprises;
cooperating with national, regional and local
institutions as well as with intergovernmental regional organizations which
provide support to small and medium-sized enterprises in such areas as training,
consultancy, business start-up and quality control;
participating in councils, task forces and other bodies
at national, regional and local levels established to deal with important
economic and social issues, including policies and programmes, affecting small
and medium-sized enterprises;
promoting and taking part in the development of
economically beneficial and socially progressive restructuring (by such means as
retraining and promotion of self-employment) with appropriate social safety
nets;
participating in the promotion of exchange of experience
and establishment of linkages between small and medium-sized enterprises;
participating in the monitoring and analysis of social
and labour-market issues affecting small and medium-sized enterprises,
concerning such matters as terms of employment, working conditions, social
protection and vocational training, and promoting corrective action as
appropriate;
participating in activities to raise quality and
productivity, as well as to promote ethical standards, gender equality and
non-discrimination;
preparing studies on small and medium-sized enterprises,
collecting statistical and other types of information relevant to the sector,
including statistics disaggregated by gender and age, and sharing this
information, as well as lessons of best practice, with other national and
international organizations of employers and workers;
providing services and advice on workers' rights, labour
legislation and social protection for workers in small and medium-sized
enterprises.
Small and medium-sized enterprises and their workers
should be encouraged to be adequately represented, in full respect for freedom
of association. In this connection, organizations of employers and workers
should consider widening their membership base to include small and medium-sized
enterprises.
Appropriate international cooperation should be
encouraged in the following areas:
establishment of common approaches to the collection of
comparable data, to support policy-making;
exchange of information, disaggregated by gender, age
and other relevant variables, on best practices in terms of policies and
programmes to create jobs and to raise the quality of employment in small and
medium-sized enterprises;
creation of linkages between national and international
bodies and institutions that are involved in the development of small and
medium-sized enterprises, including organizations of employers and workers, in
order to facilitate:
exchange of staff, experiences and ideas;
exchange of training materials, training methodologies
and reference materials;
compilation of research findings and other
quantitative and qualitative data, disaggregated by gender and age, on small and
medium-sized enterprises and their development;
establishment of international partnerships and
alliances of small and medium-sized enterprises, subcontracting arrangements and
other commercial linkages;
development of new mechanisms, utilizing modern
information technology, for the exchange of information among governments,
employers' organizations and workers' organizations on experience gained with
regard to the promotion of small and medium-sized enterprises;
international meetings and discussion groups on
approaches to job creation through the development of small and medium-sized
enterprises, including support for female entrepreneurship. Similar approaches
for job creation and entrepreneurship will be helpful for disadvantaged and
marginalized groups;
systematic research in a variety of contexts and
countries into key success factors for promoting small and medium-sized
enterprises which are both efficient and capable of creating jobs providing good
working conditions and adequate social protection;
promotion of access by small and medium-sized
enterprises and their workers to national and international databases on such
subjects as employment opportunities, market information, laws and regulations,
technology and product standards.
Members should promote the contents of this
Recommendation with other international bodies. Members should also be open to
cooperation with those bodies, where appropriate, when evaluating and
implementing the provisions of this Recommendation, and take into consideration
the prominent role played by the ILO in the promotion of job creation in small
and medium-sized enterprises.
