The main aim of the research is to investigate whether small- and medium-sized enterprises (SMEs) employment affects total European Union (EU-28) employment using panel data models during the 2005–2016 period. The panel econometric results confirm the significant association between SMEs employment in service sectors and overall economy employment, whereas the effect of SMEs industry sectors employment was found insignificant. The results are robust in a spite of the fact that during the studied period the EU-28 countries experienced economic crisis suggesting the important role that SMEs can play in job creation and in reduction of unemployment even when macro-economic enabling environment might be less favourable.
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