New Firms and SMEs fuel the European Union's Job Growth, According to New Report

Between 2002 and 2010, small- and medium-sized enterprises (SMEs) created 85 percent of new jobs in the European Union (EU), according to "Do SMEs Create More and Better Jobs?" — a new report from the European Commission. During this period, SMEs' annual employment growth (1 percent) grew at twice the rate of large enterprise (0.5 percent). Fueled mostly by the birth of new SMEs, net employment in the EU rose by an average of 1.1 million new jobs each year. In 2010, SMEs employ 67 percent of all workers in Europe. The report contends that these results imply that the employment share of the SME size class has increased over time, and indicates the increasing relevance of SMEs to the EU's overall economy. The study also shows that new firms (younger than five years) are responsible for an overwhelming majority of the new jobs. However, only 50 of new firms last past the first five years. The report contends that newly born SMEs more than compensates for job loss caused by the death of enterprises in all size classes.