EMPLOYMENT Small & Medium Sized Enterprises

Many of the changes in the employment scene are being led by transitional corporations which are responsible for global transfers, not just of capital and technology but also of new work practices, through production chains that have a major impact on employment, on skills creation and on gender roles. These transformations in production systems are creating new opportunities. But at the same time, growing competitive pressures foster informalization, and growing numbers of workers are entirely excluded from the process of change.

These developments are crucial for employment policy. Decent jobs will be created when firms and workers are able to adapt and acquire new capabilities, so as to take advantage of new opportunities. Employment policies must anticipate technological and institutional change, so that workers are equipped to move into new jobs, and enterprises have the skills and incentives to create them.

In these changing production systems, small firms are playing an increasingly important role as links in the chain of suppliers, as part of the local network of producers or, less positively, as lower productivity alternatives for these who fail to gain access to formal sector employment. Though large corporations have a major influence on job creation, in fact most new employment is created in small enterprises. These may involve anything from a single self-employed person in the informal sector to complex production units employing dozens of wage workers. Plenty of these jobs provide secure incomes and a decent working environment. But there are many poor jobs as well, low in productivity, dangerous or lacking in basic social protection. Women are particularly over-represented in such categories. The heterogeneity of this sector epitomizes its policy challenge.

Various initiatives have been developed or are under way within ILO to promote employment and productivity in the informal sector and in small enterprises.