The Potential of Small Business to Improve the Qualitative Characteristics of Employment: Problems of Estimation and Realization in Ukraine

Abstract

This main objective of this article is defining capacity of small business to act as compensator of negative trends, emerging in sphere of employment in large and medium sized business of Ukrainian economy. Authors are focused not only on the availability of working places created in small business for persons, vacated from large and medium sized enterprises, but on the small business capacity to create economic preconditions for improving qualitative characteristics of employment in this sector and in whole economy.
 Authors have built the multiplicative term, which expresses impact, caused by different characteristics of economic activity in small and large and medium sized business on the payroll dynamics as main indicator of economic potential for improvement characteristics of employment in appropriate economy’s sector.
 The first factor — is the total number of enterprises, as the expression of entrepreneurs’ economic activity and their preference to working in the official (registered) sector of the national economy.
 Second factor — is the average number of employees in enterprise of certain sector, as the expression of scale of resources, accumulated by average entity for economic activity.
 Third, the scale of output, created by unit employee in certain sector, as the expression of productivity level of labor resource, involved in this sector.
 Fourth, the volume of payroll is affected by the distribution of total output (which was used for estimation of labor productivity) between different directions of productive consumption, i.e. the share of payroll in the total revenue of small enterprises.
 The results obtained by factors analysis didn’t prove the thesis about small business capacity to compensate the negative trends, observed concerning employment in sectors of large and middle business of Ukrainian economy. The trends prevailing in creation and distribution of added value in small business does not contribute to improvement of quantitative and qualitative characteristics of employment in small business and whole Ukrainian economy.
 This situation indicates that small businesses in the face of negative macroeconomic dynamics have been unable to accumulate resources (at least by concentrating resources on fewer businesses that will be able to ensure higher efficiency) needed to improve the impact of the small business sector on the reproduction of employment in the economy of Ukraine. In addition, the significant lag in the level of wages in small business from large and medium and from the average level of the economy remains an important element of the mechanism for reproducing the low level of wages in Ukraine.