Job Creation
| Pages | 25-27 |
| Date | 01 July 1982 |
| Published date | 01 July 1982 |
| DOI | https://doi.org/10.1108/eb057271 |
| Author | Bob Crew |
| Subject Matter | Economics,Information & knowledge management,Management science & operations |
Job Creation
by Bob Crew
Introduction
No one will argue that one of the most distressing pro-
blems in Western Europe today
—
indeed throughout most
of the industrialised world — is unemployment. Few
families remain untouched by it and each succeeding
government fails to come anywhere near an early promise
to curtail the spreading misery.
Most people now accept that the roots lie not in any
political initiative but in the massive swing from old
labour-intensive activities into new capital-investment pro-
duction units. Yet, as long as excessive numbers of
employees remain "on the books" firms are unable to
become competitive in world markets and the subsequent
lost business compounds the rising unemployment pro-
blem.
A second contribution, and one which takes the problem
into the management strata, comes by the change from the
old style class orientated industrial leadership to a modern
classless meritocracy, a system which now prevails in all
save the most insulated of family companies. Finally
comes world recession on top of closing credit lines which
opened the floodgates to redundancies and plant closures.
While responsible trade unionism will, hopefully, prevent
the worst excesses of an over-reacting management, at best
it can only delay the inevitable erosion of jobs.
"Entrepreneur" is a loose term covering
anyone from an independent tradesman to
an "impresario" planning to develop
a business employing thousands
So what will the future bring? Will improving trade con-
ditions merely see a return to overmanning? Or are we on
the verge of an industrial breakthrough? Can the
unemployed look forward to some dignified and profitable
use of their skills or are there just too many of us?
Perhaps we should be teaching our children to be non-
workers. Perhaps we are too concerned about education
means and not enough about the ends. If one thinks at all
about these problems one cannot but raise a whole series of
questions. Questions that go to the very root of our
culture, which touch industry, society, education and
politics. In this article, we look at one of the fundamentals
of a solution — job creation.
Entrepreneurs and New Companies
For most people, the concept of job creation is somehow
related to being entrepreneurial, but asked to elaborate,
no-one is quite so
sure!
Take this word "entrepreneur" for
a start. The dictionary defines it as "the undertaker of an
enterprise". A recent BBC Nationwide award scheme seek-
ing applications from self-styled "entrepreneurs" drew the
unexpected response of just under 4,000. A few days later
the Evening Standard reported that "Venture Founders
Capital", a new £2 million risk fund managed by Brian
Haslett, had, after 12 months, funded their first "en-
trepreneur".
All of which suggests, according to the Eurosurvey
Group in London in a new booklet on the subject, that no-
one can possibly estimate how many entrepreneurs there
are and "even if we were to hazard a guess, it wouldn't
greatly help since 'entrepreneur' is such a loose term
because it covers anyone from the independent tradesman .
to the budding 'impresario' who plans to develop a
business employing thousands. However, if we can learn
nothing about job creation from the 'undertaker' can we
from studying the 'enterprise' he sets up instead? Sadly
that too is misleading. Too many new companies are
off-
shoots of existing 'parents', many of whom have no effect
on total job numbers and are created solely to take advan-
tage of a marketing change or to adjust to some legal or tax
variation."
In the hundreds of companies set up each year it is hard
to spot any growth prospect purely from the registration
details. Even later, during trading, it can still be difficult to
isolate the company that will provide a large number of
jobs so that it and it alone benefits from any financial car-
rots offered by the clearing banks or the Government. The
inability to distinguish "growers" from "statics" or
"shrinkers" in companies, stems, according to
Eurosurvey, from the difficulty in "setting meaningful
performance criteria for a small company." However, if
we are to encourage job creation, presumably, we must try
and find some pointers to a possible specification for the
type of company we wish to promote.
The Numbers Grow Larger
First let us consider the size of our universe. In the UK,
over that last 20 years the number of new companies has
increased annually. Eurosurvey tells us: "During
1976/1980 there were over 305,000 new registrations com-
pared with 247,000 in the previous five years
—
an increase
of 25 per cent. With the exception of the mid-1970s when
there was first an unexpected peak and then two flat years,
the last ten years has produced a steep increase. This
should be no surprise. If one recalls the 1930s — the
previous era of industrial depression
—
the number of new
company registrations then also shot up as more people
became unemployed. Sadly, these same people all too
often become the first victims of the increase in bankrupcy
and business failure. Indeed, figures for company liquida-
tions show an accelerating trend upwards from the early
1970s onwards. In this case the last five years has produced
a failure rate over 60 per cent higher than in the previous
five years. However, it must be noted that the number of
liquidations has not yet exceeded 10 per cent of the figure
for new company registrations. So, although, in net terms,
we know the number of businesses is still growing,
statistics tell us little about the number of actual businesses
that are succeeding."
Statistics will also not tell use whether, for whatever
reason — be it lack of incentive or finance — future job-
providing businesses are not being created. Put another
way, are suitably qualified people encouraged to start, or
JULY/AUGUST 1982 25
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