The vital role of start-ups in job creation
Covid-19 has hit businesses across the world hard. 2020 has undoubtedly been an incredibly challenging year for all and start-ups certainly experienced their share of upheaval. However, many have found ways to pivot in order to survive, using their smaller size as an advantage. Some have even been established during the pandemic, forming businesses in response to the crisis. And these start-ups and small businesses are now driving job creation, helping to boost the economy at a time when redundancies and unemployment are at record levels – and only set to rise.
The Centre for Entrepreneurs released statistics that show year-on-year growth in company formations in September, averaging 29%. This represents a four-month run of growth across the UK, starting in June with an incredible 47% increase in business start-ups compared to June 2019. Ideas seeded and grown over the period of lockdown came to fruition as the UK began to emerge from nationwide restrictions. Redundancies were starting to be made, prompting some to start their own business. Confidence was beginning to return.
“With many businesses set to close and unemployment rising, it is entrepreneurs that will drive Britain’s much-needed economic recovery and create new jobs.”Oliver Pawle, chairman of the Centre for Entrepreneurs.
New business fuels economic growth in general but what of job growth? WaveTrackR data for mid-October has revealed that jobs are 40% above the levels they were in 2020’s pre-Covid months and doubled in just a week. The Office for National Statistics similarly recorded a record quarterly increase in vacancies for July to September and concurrently stated that the increase has been driven by small businesses of 49 or fewer employees.
In a WaveTrackR article back in August, we said that start-ups would be one of the biggest job creators as we fight our way out of recession. What we didn’t predict was that jobseekers would be turning to small businesses as their preferred employer, something that new LinkedIn data has uncovered. Rather than plump for the stability a larger company might possess, jobseekers are realising the benefits of small businesses in a crisis – that ability to quickly pivot to react to market changes is invaluable in a constantly evolving landscape. After all, the past seventh months have taught us that those larger corporations are anything but immune to the effects of a crisis.
LinkedIn might offer another reason for start-ups receiving a high number of applications. Of LinkedIn’s 50 hottest startups for 2020, 90% don’t require employees to possess a degree. They instead look for a strong set of soft skills such as teamwork. In a climate where many people are having to rethink their careers and sidestep into other industries, this could be a real bonus. Small businesses and start-ups also often offer employees challenging work and the opportunity to advance in their careers more quickly, plus a strong sense of purpose and enthusiasm – all attractive elements.
It is clear that start-ups will be of enormous help to the economy as we navigate our way through this crisis. What the government now needs to do is support these businesses to grow so that they can continue to create employment and boost our struggling economy.