SMEs and Their Effect on the Romanian Employment

Abstract This paper examines the relationship between the Small and Medium Enterprise SME sector and employment in Romanian non-financial business economy for the 2000-2010 period. The paper makes a comparative analysis between SMEs and large enterprises to identify whether, in Romania, small businesses contribute more to job creation and whether they are more productive than larger firms are. The empirical results confirm that SMEs represent a source of employment and income, but their labour productivity is more reduced compared to large enterprises. We consider that, in Romania, there is need to increase the innovative and competitive power of SMEs, so that these become the engine not only for more jobs, but also for better jobs.