Are small businesses the driving force behind private sector employment and total industry value added?

Economic indicators Economic forecasting Small business Labour market Wages Australia
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Executive summary

In June 2016 there were just over 4.7 million people employed by small businesses in Australia.

Employees of small businesses accounted for just over 44 per cent of all employed persons in the private sector. Larger businesses accounted for just under a third (32 per cent) while medium sized businesses accounted for just under a quarter (23 per cent).

Industry value added of the small business sector expanded to $378.4 billion in the 12 months to June 2016 which was equivalent to a 35 per cent share of total industry value added in Australia.

Wages and salaries of small business employees accounted for 28 per cent of total wages and salaries paid in the private sector in the 12 months to the end of June 2016.

The lower share of total wages and salaries recorded by the small business sector relative to their employment share (28 per cent versus 44 per cent) could be due to the greater use by small businesses of casual employees on a part‑time basis

Average wages in the small business sector may also be affected by the presence of working proprietors and partners of unincorporated businesses among small business employee numbers.

In the three years to June 2016, small business employment increased by 160,000. In contrast, employment in medium sized businesses fell by 118,000 and employment in large firms increased by 77,000.

In the 12 months to June 2016, employment in small and medium sized businesses fell marginally by 8,000 and 6,000 respectively while employment in large businesses increased by 80,000.

Employment growth for small businesses in the three years to June 2016 has been strongest in the construction sector (up by 80,000).

New South Wales and Victoria experienced the biggest increases in small business employment in the three years to June 2016 (up 108,000 and 63,000 respectively) while South Australia and Western Australia experienced the biggest falls (down 19,000 and 18,000 respectively).

Small businesses have relatively high shares of total employment in industries such as Agriculture, forestry and fishing (80.0 per cent in June 2016), Rental, hiring and real estate services (77.0 per cent), Construction (68.6 per cent) and Other services (65.5 per cent).

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