UN labour organization suggests reforms to nurture small businesses

In answer to entrepreneurial complaints that small and micro-enterprises are sometimes stifled by red tape, the United Nations International Labour Organization (ILO) has carried out a new study highlighting steps governments can take to nurture small businesses and help create jobs.

In Viet Nam, a law introduced in 2000 reduced the time and fees needed to start a business to 17 days and $30 from 99 days and $60. With that incentive, the number of enterprises registered annually jumped to 15,000 from 5,000, ILO said.

In Chile, under reforms of 2001 a micro or small enterprise (MSE) with nine or fewer employees that breaks labour laws can opt to take a compulsory training programme instead of paying a fine.

"The number of procedures required to start up an enterprise varies, ranging from two in Canada to 20 in Bolivia, with the world average around 10," it said.

ILO carried out the study, "Policies for Small Enterprises: Creating the Right Environment for Good Jobs," in seven countries -- Chile, Guinea, Pakistan, Peru, South Africa, the United Republic of Tanzania and Viet Nam.

"The findings presented in the book have potential application far beyond the seven countries studied," says Gerhard Reinecke, who co-authored the study with Simon White.

"Besides more communication and transparency in policies for small enterprises, we need national business laws, taxation and labour regulations that are fair and put MSEs on an equal footing with larger enterprises," he added.