Article by Caroline Hong, which appeared in the Oct 2012 issue of the My Business magazine and also on MSME news network.

SMEs key to solving unemployment problem

In August 2012 the Reserve Bank of Australia reported that the forecast pace of growth in the Australian economy for 2012 is better than previously expected. But threats and problems in the Eurozone can change that scenario for Australia.

The media has been reporting recently about companies slashing jobs. Telstra announced cuts of 651 jobs, with some ending up offshore. Rio Tinto is closing its Sydney office, with more job cuts in its Melbourne office.

State governments in Queensland, Victoria and NSW are also shedding thousands of public service jobs, offering redundancies or not renewing contracts. They claim that they have to clean up the mess left by previous governments in order to bring their state to a surplus budget. Part of that cleaning up process includes a leaner public service structure with less layers of middle management.

The reasons for slashing jobs are often not obvious to the people and the communities affected by those cuts. In challenging economic times, companies shed jobs to reduce costs, meet budgetary targets and to increase profits for their shareholders. To save costs, some companies have to close offices and even outsource the jobs offshore.

Often it is the shedding of jobs that saves the remaining jobs, which then also saves the companies from further decline. On the other hand, the shedding of jobs can also result in a brain drain, when the best employees take voluntary redundancies to move on to more lucrative opportunities.

The job shedding continues across numerous sectors. There is always pain attached to losing a job, whether by redundancy , termination of a contract or a dismissal. A person losing a job may go through a cycle that includes denial, anger, frustration, and eventually adaptation. Advisers would say first deal with the emotional and practical stuff, and then prepare to move on.

It is this “moving on” bit, when the emotional and practical pain is over, that individuals can move into employment opportunities within the SME sector. For some, this is the time to even consider starting their own business and being their own boss.

There are more than 2.7 million small businesses in Australia. Even if only one per cent of these businesses become successful enough to be able to employ at least one more person, imagine how many jobs that would create.

SMEs really are more than the economic drivers of the country – they’re the key to absorbing the people whose jobs have been shed by the big corporate bodies; the key to solving the unemployment problem.

99.7 per cent of total businesses in Australia are SMEs. 95.6 per cent are small businesses, and 4.1 per cent are medium sized businesses. SMEs should operate in an environment that makes it easy for them to stay in business and to prosper. Support SMEs and Australia will flourish. If we focus on helping businesses stay in business, SMEs will keep jobs and create new jobs as they grow and prosper.

So, is job shedding, paring for profit or for pain? In an ideal world, one man’s profit is also everyone’s gain and pleasure. But we don’t live in an ideal world; we live in a world where one man’s profit is often another man’s pain.

However, there is a solution, and that solution lies in the SME sector. For the people whose jobs have been shed, either as an employee or as a new business owner, employment can be found in the SME sector. That is why the SME Association of Australia exists. SMEs want us to exist. Corporations who supply to SMEs want us to exist. Government bodies that service the SME sector want us to exist. There is clearly unfinished business and the future lies in supporting SME and recognising the sector

The SME Association of Australia is celebrating its first anniversary at the 2012 My Business Awards, to be held at The Hilton, Sydney on September 28. Our guest of honour will be NSW Deputy Premier Andrew Stoner, also Minister for Trade and Investment and Minister for Regional Infrastructure and Services, all very important for the growth of the SME sector. We hope to see many of you join us to hear the inspiring stories of many successful SMEs.

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With acknowledgement and thanks to MyBusiness http://mybusiness.com.au  You can also subscribe for the digital edition on http://mybusiness.realviewdigital.com/

My Business is the official publication of the SME Association of Australia http://www.smeaustralia.asn.au

Contact Caroline Hong: carolinehong@carolinehong.com.au

Contact Caroline Hong, CEO of SMEAA: caroline.hong@smeaustralia.asn.au

Phone: +61 410474898