UK leading the way in start-up job creation 

Start-up businesses in the UK create more jobs than those in any other major European economy, research finds.

In 2012, well over half a million (553,761) people were employed by businesses launched in the UK that year with 242,400 start-ups created, according to a study by business consultancy Rousseau Associates.

This compares to 398,521 employees in start-ups in France, and just 346,556 in Germany.

Rousseau Associates points out that a comparison of the number of new jobs created by start-ups per head of population emphasises the ambition and scope of new businesses in the UK, with UK start ups creating more than twice as many new jobs per head of population than those in Germany.

UK start-ups created 876 new jobs per 100,000 people, German start-ups 424, and French start-ups 627.

Michael Heath, business development director at Rousseau Associates says, ‘[These figures] show that the current wave of start-ups in the UK is very much more than one-man bands starting up in response to job losses during the recession. They are aiming for much more than simply to replace a lost wage.

‘Our start-ups are being driven by ambitious risk-taking entrepreneurs. The levels of job creation are indicators that many start-ups have a clear strategic vision  and the goal of developing into successful businesses of some size.’

The National Insurance Employment Allowance, introduced last year to enable employers to reduce their NI bills by up to £2,000 per year, has been a particular boon for start-ups, by reducing the cost of taking on a first employee, adds Heath.

The new NI exemption for under 21s which came into force this April will also help start-ups to create more jobs.

However, Rousseau Associates warns that pressure to increase the minimum wage could act as a brake on start-ups and smaller businesses’ ability to create more jobs. 

The minimum wage is currently set at £6.50 per hour, while the so-called ‘living wage’ backed by campaigners is 20 per cent higher outside London at £7.85, and 41 per cent higher in London at £9.15. 

Says Michael Heath, ‘Bigger businesses with wider margins might be able to swallow the costs of increases to the minimum wage, but smaller businesses and start-ups tend have to operate on tight margins in order to gain a foothold in the market.

‘Of course it is important that work is rewarding, but small businesses are often well-placed to offer other benefits that some employees see as a trade-off for lower pay.’

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Ben Lobel

Ben Lobel

Ben Lobel was the editor of from 2010 to 2018. He specialises in writing for start-up and scale-up companies in the areas of finance, marketing and HR.

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