The worrying decline in employment among New Brunswick’s largest employers

One of the things I get accused of the most is being a shill for big business.  A more nuanced understanding of my position would be that I believe a strong economy needs a good mix of large and smaller employers.  Small firms are good at capturing niche local markets, they can spot market gaps and innovate faster than many large firms, they ensure there is competition within industry sectors and they fill valuable roles in the supply chain of larger firms.  Large firms tend to be better in markets with global competition, capital intensive industries as well as many technically sophisticated sectors.

As most readers of this blog know, New Brunswick has been in an GDP and employment growth funk in recent years.  In fact, there hasn’t been a period in recent history where New Brunswick has gone such a long time without an increase in employment.  There are many factors for this, as we have discussed before.

One angle on this is the size of firms or organizations.  In general, the breakdown of employment by organization size in New Brunswick has been pretty similar to the national level. Firms with less than 50 employees make up 31 percent of total employment (among classified businesses), firms with 50-499 employees make up about 20 percent of all employment and organizations with 500 or more employees account for 52 percent of all employment.   So it is somewhat concerning when looking at the trend since 2010 and seeing a steep decline among firms/organizations with at least 500 employees in New Brunswick.  In total large organizations have shed over 12,000 jobs or over eight percent of the total since 2010.  Across Canada, organizations with 500 or more employees have expanded employment by 11 percent over the same period.

Why are we shedding employment among the largest employers?  Some of it is likely due to productivity gains (doing more with less) but that productivity effect would also be impacting the national economy.

As Dr. Herb Emery pointed out in a poignant column recently, it is unlikely we can replace the loss of a large export-focused firm with a number of smaller local entrepreneurs.  The lost export revenue will mean even smaller local markets for small businesses to tap.