Many businesses float on Aim because they want or need to grow, and invariably this means increasing staff numbers. On average, companies which listed a year before the study was conducted added 36 per cent more people in their first 12-months of trading. This coincided with an average 43 per cent hike in revenues, though the LSE found that companies in the £5m-£20m turnover bracket grew staff at a greater rate than revenues in their first year. Of course, the full financial effect of a hiring spree is unlikely to be felt immediately, which is why companies with at least two years of Aim trading are better indicators of the relationship between employment and turnover. Businesses which listed on Aim four years before the study had more than doubled revenue against average employee growth of 75 per cent.
What the report doesn’t mention is the relationship between employment and profitability, though the LSE estimates Aim contributes £2.3bn in taxes. Despite this, the LSE claims Aim is acting as a “spur to both productivity and economic growth”. It’s difficult to substantiate this claim on the chart below, as productivity can only be measured with data for the cost of employment growth and other capital investment, and the issue of these companies’ profitability is conspicuously avoided. But given the flatness of wider UK productivity, it’s a claim which - if true - Aim should do all it can to justify, and publicise.
