40% of new jobs created by small businesses

July 10 2002 - Small businesses hired twice as many people as large companies during the first six months of 2002, according to CIBC. And, over the last twelve months, 40 per cent of all new jobs in Canada were generated by small businesses.

The study released by Benjamin Tal, senior economist of CIBC World Markets, indicated that firms with fewer than 20 employees increased their labour forces by 2.8 per cent compared with the first six months of 2001, This compares with an increase of just 1.2 per cent in employment at companies with more than 500 employees.

Tal's study seems to explain reports of strong growth in the Canadian employment market despite massive layoffs after the bursting of the 'tech bubble.'

"Downsizing in large firms has given small business owners a golden opportunity to tap into a new pool of workers," says Tal. "And small business owners are capitalizing on it, especially in the case of highly skilled workers."

In fact, growth in the number of professional employees in small businesses is dramatic, showing an increase of 9% during the first six months of 2002. This is three times the rate of growth in total small business hiring.

Arguing that small business is often the bellwether of changes in the overall economy, Rob Paterson, a senior vice-president who has worked for six years in CIBC's small business group, notes: "Small business tends to be the first to experience the effect of an economic downturn, and the first to respond positively to a pick-up in economic recovery. Therefore, the fact that small business activity is accelerating is good news for all of us."