Ever since my days in the Civil Service, I have often heard leaders of government state that small businesses are the engines of growth within the economy.” They have usually backed up such talk with data on the numbers of new small businesses that have been established as a result of their leadership and the vibrancy that the leadership has injected into the economy. Even international institutions recognize the importance of the small sector and develop strategies to assist them. At Social Security, we are no less cognizant of the importance of small business and report quarterly, not so much on the rate of establishment of small business, but on the registration of all business.” This article, then, attempts to establish the extent to which small business has become big business for Social Security in particular, and for the Federation in general. In the article entitled “We Told You So”, we reported that there were 157 new business starts as well as 28 restarts for the period January to June of 2008.” Indeed, in our data base, we recorded that, up to that point ” and excluding the self-employed, there were 1,553 businesses operating in the Federation, 930 in St. Kitts and 623 in Nevis. (1697 when the self-employeds are included). How many are small businesses and what is their impact? Eighty percent (80%) of our businesses employ 10 or less persons. Another 9% employ up to 19 staff, 4% provide work for up to 29 persons and it tapers off considerably after that. There are 5.8% of all business operations that employ 40 to 99 persons; and 1.6% that employ from 100 to 499 persons. Businesses with over 500 employees account for 0.24%.” Lest we mislead anyone though, there are 457 businesses (26.9%) that only employ one person.” The important statistic here is that 92% of our workplaces employ less than 30 persons, and provide 8,051 jobs or 32.5% of all recorded jobs! To those to whom these things matter, Nevis” business sector was 95.6% small business, while that for St. Kitts was 90.1%. In terms of contributions to the Social Security Fund – and again for 2007, these businesses of less than 30 employees contributed EC$15.3million to the EC$64million in contributions. This represents 24.2% of all contributions collected.” By island, small business contributed EC$6.7million or (26%) of Nevis” EC$16.4million and EC$8.6million (or 18.33%) of St Kitts” EC$46.9million.” Remember, Social Security contributions are 11% of wages (up to $6,500.00 per month).” So assuming that only a few of these firms” employees are above the ceiling, then the wage bill of these companies would amount to at least EC$139million.” And if we acknowledge that some of these ‘small” businesses are within the high paying Financial Offshore sector, we can be confident that the payday of these companies approached EC$150 million for 2007 Again” this is roughly 23% of the Federation’s payday of EC$648million for 2007.” To ignore small business, therefore, is to ignore at least one quarter of the economy by whichever yardstick is used for measurement. The difficulty that we face at Social Security as we relate to and interact with small business owners is the fact that they are the ones who often have to prioritise on their cash flows and often times fall delinquent.” (We have given tips to them as to how they can avoid delinquency).”” Those who are sole traders can often hide; and those who are mobile, while they may not be deliberately hiding, can easily escape us in the short term. If this article achieves anything, we would be pleased if it makes these businesses understand how important they are in the scheme of things, and have them step and take their rightful place in the economy. Does a 25% impact qualify this section to be labeled as an “engine” of growth? You will have to decide and we hope you will debate it over drinks at your favourite watering spot.” Suffice it to say that for Social Security, and dare I say for Government, serious attention must be paid to small business.” Small is indeed big! (Special thanks to Ms. Paulette Eddy for the preparation of the data).
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