Small firms in small states : size and its impact on employment

Employment in small finns has taken on particular importance in Malta, called upon as a new Member State of the European Union to help promote more and better jobs. This thesis examines whether the effects of finn size are also evident in a J?icro-state comprised primarily of small finns, and how the context of a small state in Southern Europe shapesthese effects. Following a brief overview of Malta and its labour market, the literature review is divided into two I?arts. The first looks at job creation and growth in small finns from a small state perspective, focusing in particular on regulation and on how the dynamic of infonnality operates in the principal employment areas of recruitment, family-friendly measures, training and representation. The second part utilises a social capital framework to explore the Maltese context'and how this affects employment in small finns. The fieldwork is presented after an explanation of the methodology. The fieldwork has two main phases. The first quantitative study was conducted among 400 finns stratified by size and sector, and set out to examine whether there exist significant differences' between smaller and larger finns with respect to job creation and the factors that affect it, as well as job quality measures. Significant differences were found, with smaller finns showing less job creation and destruction, more infonnal recruitment, reluctance to recruit women and persons with disability, and lesser degrees of training, representation and participation in social dialogue. The qualitative study was conducted with a sample of twenty eight small finns in different sectors, to better understand the factors in the local context that shape the employment situation in their finns. Analysis of the transcripts suggests that small finns face ten common concerns relating to size, competition, finance, politics, regulation, bureaucracy, association, familism, skills shortage and the work ethic. The fieldwork is followed by a discussion ofhow the quantitative and qualitative findings combine, on the issues of female recruitment, fragmentation, staff shortages, low skill levels, and trust within and between firms. On each issue, a closer analysis is made of current regulation and of changes that may improve the context for small firms. The chapter then examines the issue of targeting and small firms, and the need for evaluation of programmes in the light of policy aims. the concluding chapter reviews the results in the light of the aims, and gives an overview of policy implications. A reflection on the process and outcomes of the thesis is provided, as are the limitations of the thesis and recommendations for further research.