Latest Research Debunks NZ Firm Size Myths

New research shows that New Zealand does not have a high proportion of small firms compared with Australia and other OECD countries - despite claims to the contrary by business lobby groups, Council of Trade Unions economist Peter Conway said today. The research was released at the recent conference of the NZ Association of Economists by Duncan Mills from Treasury, and Jason Timmins from the economic research agency, Motu.

"This research shows that lobby groups have been using misleading statistics to exaggerate the importance of the small business sector to try to influence Government policy on employment law and other issues," Peter Conway said.

The research shows that:
? 96.1 per cent of NZ firms employ fewer than 20 workers but 59.3 per cent employ no workers at all
? the 96.1 per cent of firms employing fewer than 20 workers account for only 30 per cent of the overall labour force
? 96.5 per cent of Australian firms employ fewer than 20 workers
? NZ does not have proportionately more small firms than other OECD countries on average

The researchers conclude that "policy interventions and/or policy issues that are based on a rationale that New Zealand has an unusually large proportion of small firms are probably not well founded" and that the data "does not support the view that compliance costs are of more concern in New Zealand than other OECD countries due to the high proportion of small firms".

Peter Conway said that small firms are vital to the economy but policy should not be based on a mistaken belief that New Zealand is somehow different in our average firm size from other comparable economies.