Small firms and the labour market

This chapter deals with the labour markets of small firms, i.e. the way in which small firms acquire the workers they need, manage their careers and deal with turnover and terminate employment relationships when no longer needed. Hence, the focus of the chapter is on the issues of recruitment and training, internal and external flexibility, retention, conflict and dismissals. Through the analysis of semi-structured face-to-face interviews with the owner–managers of 66 micro- and small enterprises in different economic sectors, the chapter shows that, even though informality constitutes a crucial dimension of how small firms manage their internal and external labour markets, significant sources of variation are sectoral dynamics and institutional resources related to the external environment. Hence, small firms’ labour markets are shaped by the interplay of internal and external dynamics.