Liz McAreavey: SMEs need the right tools to deliver inclusive economy

So we are at a point in time where change is the norm. And the changing face of our workforce and future work places will be a considerable challenge to the business community due to the shape of the business landscape.

Scotland’s challenge is that 99 per cent of our businesses are SMEs. Of these 363,235 businesses, two per cent are medium (50-249 employees); 16 per cent are small (ten-49 employees); and 82 per cent are microbusinesses (one-nine employees), yet they collectively they account for 1.2 million jobs (46 per cent of employment in Scotland). With 2.6 million employed in Scotland and 540,000 (21 per cent) employed by the public sector that means large corporates at just one per cent account for 870,000 jobs – some 33 per cent of the working population. That is a wide range of employment practices creating significant inequalities across the spectrum.

And these jobs are fast changing. Automation, artificial intelligence, data driven innovation and the digital revolution will change the face of the workplace more poignantly than when foragers became farmers, and the agricultural revolution met the industrial revolution. Not since the invention of the printing press 500 years ago, which enabled mass education, have we envisioned such fundamental change in the labour force. We have made a significant shift from brawn to brains which will only increase as the digital skills required of the new future workforce drives greater change in the workplace.

More importantly, we need to ensure that we tap into the potential of our citizens, to ensure that all our young people have equality of opportunity, access to education, health and wellbeing and a fulfilling job. So how is business facing into this? And with this diversity, who is driving the changes in the workplace and work practices and how does this support an inclusive economy?

Technological change drives long-term economic growth, productivity, and improvement in living standards. It has led to net job creation, as new industries replace old ones and workers adapt their skills to changing and expanding demand. ICT is not only one of the fastest growing industries— directly creating millions of jobs—but it is also an important enabler of innovation and development.

For sure large corporate organisations invest significantly in future-proofing. Their search for the best talent drives new work practices which filter through, creating an expectation that many small businesses struggle to deliver. With almost 300,000 businesses employing less than ten people, their drivers are very different to large corporates. How many of these micro and small businesses are scalable and how many are lifestyle? What difference will technology mean for small business owners and how do they access and adopt it to drive growth and productivity in an affordable and beneficial way

Many are marginal businesses, driven by redundancy and unemployment, many will work longer hours and take less pay, fewer holidays and lack the benefits of employment. Yet they pay tax and NI contributions. The gig economy, zero hour contracts and in-work poverty are well established and whilst not ethically desirable or acceptable, help sustain these businesses. There is an uncomfortable tension between being a responsible business with ethical values and transparency, and often survival. But exploitation isn’t an option we can accept.

With the Scottish Government launching its new Performance Framework and re-invigorating the Business Pledge, SMEs are a significant element of the business landscape and significant employers. We need to look at the support and guidance available to SMEs to ensure they are aware of the direction of travel and equipped with the tools to deliver the growth and the inclusive economy that is at the root of the Government’s economic strategy.

Liz McAreavey is chief executive of Edinburgh Chamber of Commerce