Small Businesses in Brazil Ensure a Positive Balance of Job Creation

RIO DE JANEIRO, BRAZIL – The positive balance in job creation in May was only made possible by the performance of micro and small businesses.

The sector was responsible for generating 38,000 formal jobs (with signed employment contracts) in Brazil last month, while medium-sized and large corporations registered a negative balance, losing 7,200 workers, according to a survey by the Brazilian Micro and Small Business Support Service (Sebrae) conducted based on figures from the Ministry of Economy’s General Registry of Employees and Unemployed (Caged).

In total, considering the difference between hiring and layoffs, the May Caged closed with a positive balance of 32.1 thousand jobs generated.

“During a recession, losing people in micro and small companies is worse than in medium and large companies, in particular. So, small businesses have this feature; they hire when they need and virtually never dismiss. Especially because a dismissal in a big company is just one more, but in a small company the dismissal generates impoverishment”, says Carlos Melles, national president of Sebrae.

The small businesses in the agricultural sector led the generation of jobs in May, due to coffee plantations, mainly in the states of Minas Gerais, Espírito Santo, São Paulo, and orange groves, also in the states of São Paulo and Minas Gerais.

The services sector, which employed 16,700 people during this period, is in second place in the ranking of new job offers. Trade and the processing industry registered negative balances of 9,400 and 3,100 jobs, respectively.

In the first five months of 2019, small businesses were the source of 326,600 new jobs, 35 times more than the jobs generated by medium-sized and large companies. However, this balance was 9.6 percent lower than that recorded by the sector over the same period in 2018.

More than 12 Million Micro and Small Businesses in Brazil

Micro and small businesses represent 99,1 percent of the total companies registered in Brazil, according to Sebrae. There are more than 12 million businesses, of which 8.3 million are individual micro-entrepreneurs (MEIs). Small businesses also account for 52.2 percent of the jobs generated by companies in the country.

Despite this, the sector still has a somewhat timid stake in the Gross Domestic Product (GDP) of the business sector, generating 25 percent of the total. In countries such as the United Kingdom, Germany, Italy, and the Netherlands, their share in GDP is above 50 percent.

Sebrae also intends to invert Brazilian micro and small companies’ low participation in exports. “Around the world, small businesses are very active in exports, exceeding 40 percent of the total in countries such as Germany, France, and Portugal, and even more than 50 percent of total exports in Italy, Spain, and the United Kingdom. In Brazil, small businesses only account for 4.2 percent of exports. We need to increase the productivity of small businesses to expand the competitiveness of this sector,” says Melles.