Are small businesses an appropriate vehicle through which to tackle unemployment?

Jobs created by small businesses represent the majority of employment opportunities created in the UK. Efforts to reduce long term unemployment might focus on the benefits of working closely with these businesses. The UK Government’s New Deal employment initiative, introduced in 1998, used wage subsidies to encourage the integration of the long term unemployed to the labour market. This might have naturally complemented the recruitment needs of small business, however, such businesses generally seek skills lacking in the long term unemployed. As such, the employment opportunities they create tend not to be accessed by this group. Small business use of employment interventions are undermined by the complex social and economic issues presented by the target group and the deeply rooted causal factors of unemployment that wage subsidies, alone, struggle to influence. Recognising the New Deal as the main labour market intervention of the last 10 years, its relationship with small businesses relied on a series of hopeful and naive assumptions in terms of candidate suitability and employer participation. Only by developing intensive, multidimensional, complementary and long term interventions can long term unemployment be tackled successfully as a partnership effort with small business