Small companies now providing fewer new jobs
Majority of new jobs over past years created by small and medium-sized firms
The year 2003 was a difficult time for small and medium-sized Finnish companies. According to Statistics Finland, the total net sales of SMEs grew by 2.4 percent from the previous year.
This growth rate was clearly lower than that of large corporations, as the turnover of all Finnish companies grew by 3.8 percent last year. During the economic boom of 1995-2000, the average annual turnover growth rate in small and medium-sized companies was 10.4 percent.
The state has hoped that SMEs would alleviate Finland's problems of weak economic growth and persistent unemployment. In fact, in the past, up to 80 percent of new jobs have been created by small and medium-sized firms. Their recruitment activity has slowed down only during the past couple of years.
According to Pasi Holm, the Managing Director of the Pellervo Economic Research Institute, the profitability of SMEs has remained relatively good during the past few years despite the economic slump. The equity ratios of Finland's smaller firms are also strong.
One reason for the stable level of profitability can be found in the low level of interest rates, which has guaranteed cheap loans.
Small and medium-sized firms were slightly less profitable in 2003 than large corporations. The net earnings of SMEs totalled 5.1 percent of net sales in 2003, the same level as in the previous year.
However, the return on capital employed is much better in SMEs than in all firms on average.
In the figures of Statistics Finland, the group of SMEs includes all those firms that have less than 250 employees. Of Finland's 225,000 operating companies, 98.7 percent belong to this category.
SMEs generate 52 percent of the net sales of all Finnish corporations, and 61.5 percent of working Finns are employed by a small or medium-sized firm. SMEs are on average more labour-intensive than large Finnish corporations.