{"id":1664,"date":"2025-12-22T13:44:35","date_gmt":"2025-12-22T13:44:35","guid":{"rendered":"http:\/\/www.ayercut.com\/index.php\/2025\/12\/22\/young-businesses-create-6-in-10-new-jobs-in-australia-far-more-than-established-firms\/"},"modified":"2025-12-22T13:44:35","modified_gmt":"2025-12-22T13:44:35","slug":"young-businesses-create-6-in-10-new-jobs-in-australia-far-more-than-established-firms","status":"publish","type":"post","link":"http:\/\/www.ayercut.com\/index.php\/2025\/12\/22\/young-businesses-create-6-in-10-new-jobs-in-australia-far-more-than-established-firms\/","title":{"rendered":"Young businesses create 6 in 10 new jobs in Australia \u2013 far more than established firms"},"content":{"rendered":"
<\/span> Chris Putnam\/Future Publishing via Getty Images<\/a><\/span><\/figcaption><\/figure>\n

Governments of all stripes provide support to small businesses in the form of tax concessions, lighter-touch regulation or government grants. They\u2019re called the \u201cengine room<\/a>\u201d of the economy. But is small really best?<\/p>\n

In recent research<\/a>, my co-authors and I explored this question by looking at the contributions that firms of different ages and size make to the economy.<\/p>\n

We found new and young businesses, rather than small, old businesses, are the drivers of economic growth. This matters, as the economic dynamism these young firms drive boosts productivity \u2013 the major determinant of incomes<\/a> in the long run. But government policy is focused on size, which may be holding us back.<\/p>\n

Using de-identified data from the Australian Bureau of Statistics<\/a> that tracks all businesses in Australia, we analysed the economic performance of each individual business in the market sector from 2003 onward \u2013 from pubs and cafes to manufacturing. <\/p>\n

This includes all business types and sizes, from the corner store to the major corporates. We analysed how many people they employed, their economic value-add (think of it as their contribution to the economy), and their labour productivity (how much stuff they produce for a given amount of workers and hours). <\/p>\n

Australia has some 2.7 million small businesses<\/a>, with 440,000 new businesses started in 2024-25. But our study finds it\u2019s young firms (those aged five years or less) that punch above their weight and have an outsized positive contribution to the economy, while small, old firms (aged over five, and with fewer than 15 employees) have a net negative impact. <\/p>\n

Engines of job creation<\/h2>\n

Our research found young businesses contribute six percentage points to overall annual headcount growth. This compares to small, old firms, which actually reduce overall annual headcount growth by 4.5 percentage points, due to these firms stagnating, shrinking and closing down.<\/p>\n

This difference is underlined when we look separately at job creation and job destruction. Young firms contribute 59% of new jobs, while small old firms account for just 16%. <\/p>\n

This is even more stark when comparing job losses: small old businesses account for 41% of all job destruction. Large old businesses \u2013 often the focus of announced corporate layoffs \u2013 account for 18% of job destruction.<\/p>\n