Micro and small companies create seven out of every 10 jobs in the country

After spending seven months looking for a job, Rosana Fernandes, 41, got a job with a formal contract. She was recently hired by a small frozen food company in Brasilia. The cook celebrates the new occupation. “It’s my source of income, especially since I’m a father and mother at home. It helps me support my son and my mother, who also lives with me.”

Rosana is part of a statistic that shows the power of micro and small companies (MSE) in generating employment in the country. A study carried out by the Brazilian Micro and Small Business Support Service (Sebrae), obtained exclusively by Brazil Agencyreveals that, this year, seven out of ten job openings with a formal contract were created by micro and small businesses.

The study was carried out with data from the General Register of Employed and Unemployed People (Caged), from the Ministry of Labor and Employment. From January to May, Brazil created 865,360 formal jobs. Of these, 594,213 were by MPE. This represents 69%.

Participation in the economy

According to the president of Sebrae, Décio Lima, most MSEs have up to five employees. “In a context of about 22 million small businesses, MSEs are fundamental to the economy, accounting for about 99% of all companies that exist in the country, 55% of the total set of formal jobs and almost 30% of GDP (sum of all products and services in the country in a year)”, he told Brazil Agency.

In the survey, businesses with up to nine employees (agriculture, commerce and services) or 19 employees (industry and mining) are considered micro-enterprises. Small companies are those with up to 49 workers (agriculture, commerce and services) or 99 employees (industry and mining).

In May alone, small businesses accounted for 70% (108,406 out of 155,270) of new employment contracts. An increase of 2 percentage points compared to the 68% obtained in the same month last year.

This growth in the participation of MSE in the total volume of jobs in the country goes against the grain of the behavior of medium and large companies (MGE). MGE saw their share of total formal jobs fall from 22% in May 2022 to 15% in May 2023.

job maintenance

The president of Sebrae explains that small businesses are the most responsible for creating and maintaining jobs in the economy. “It is natural for medium and large companies to invest heavily in the modernization of their production processes, in search of greater competitiveness for their businesses. Therefore, MGE tend to be labor savers in the long run. Small businesses, on the other hand, are labor-intensive, which is why, in times of crisis, they are the last to lay off staff and, in times of economic recovery, they are the ones that hire the most”, evaluates Lima.

Beatriz Bento, 18 years old, is proof that MSEs are also a gateway to the job market. In June, she got a signed job as a clerk at a bakery in Grajaú, a neighborhood in Rio de Janeiro, which has hired three people this year. “I finished my studies last year and was, since the beginning of this year, looking for a job to be able to help more at home and improve the quality of life”, she told Brazil Agency.

Sectors

Analyzing the sectors that most contributed to job creation in small businesses from January to May, the services sector (balance of 339,127 vacancies), construction (123,937), manufacturing industry (64,754) and commerce (34,127) appear.

Regarding the economic activities responsible for the balance of vacancies created by small businesses in the first five months of 2023, the highlights are building construction (42,849 jobs), road freight transport (27,138), early childhood education/preschool , elementary education, and clerical and administrative support services; all of these last three with more than 17,000 jobs generated each.

The survey also points out that the positive balance of job creation with a formal contract by MPE is widespread throughout the country. All states and the Federal District had positive numbers.

In Sebrae’s evaluation, small businesses will follow as a tow of job creation. “In 2023, the scenario points to a value close to 70% in the participation of MSE in job creation, with increases for the months of October and November. Therefore, there is indeed a tendency for the level of employment to continue to be driven by MSE”, expects Décio Lima.