The government’s new indication of granting Permanent Resident Certificates (PRC) to long-term key employees is an excellent economic decision to foster a broader sense of community and encourage a more stable and growing employment base.The big problem, however, is the preliminary scope. From my understanding, it is the intention to grant this to employers of only a certain size - firms with more than 25 employees. This is a fatal error.As way of full disclosure I am considered an expatriate key employee of a small firm which would not qualify under these rules. So take the next little rambling with a grain of salt but please hear me out.What I am about to say may appear to be biased but the economic fundamentals upon what it is based on are very solid and hard to refute.First of all, the key to job growth and economic diversity is not in the promotion and encouragement of employment in large companies.Small, independent businesses are those that create the jobs, not big companies. The small business sector has been proven to be the key to future job growth.In fact in many cases it is the ONLY source of job growth, entrepreneurism and economic diversity. The big boys can take care of themselves. They do not need government support. In fact they are net job killers. Allow me to explain.A recent article written by John Mauldin has sourced a very intensive study conducted by the Kauffman Foundation (http://www.kauffman.org/research-and-policy/the-importance-of-startups-in-job-creation-and-job-desctruction.aspx) and the findings are very interesting.The study conducted in the US basically reveals that “on average and for all but seven years between 1977 and 2005, existing firms are net job destroyers, losing one million jobs net combined per year. By contrast, in their first year, new firms add an average of three million jobs.“Further, the study shows, job growth patterns at both start-ups and existing firms are pro-cyclical, although existing firms have much more cyclical variance.“Most notably, during recessionary years, job creation at start-ups remains stable, while net job losses at existing firms are highly sensitive to the business cycle….And it’s not just net job creation that start-ups dominate. While older firms lose more jobs than they create, those gross flows decline as firms age.“On average, one-year-old firms create nearly one million jobs, while ten-year-old firms generate 300,000. The notion that firms bulk up as they age is, in the aggregate, not supported by data.”This study basically argues that start-ups that develop organically are almost solely the drivers of job growth. Thus any job-creation policy aimed at larger, established employers will inevitably fail on average.So I would argue that we cannot rely on the likes of RenaissanceRe and XL to create more employment; we need entrepreneurs and new businesses. If the government policies offer PRC incentives based on company size, then they are ignoring what actually works.PRC status should not be granted with size-criteria but rather it should be focused on the clear intent of the company to expand employment opportunities for Bermudians as a result of senior key members who are committed to training these future employees.The second factor to consider is discrimination. By introducing size-criteria you disadvantage small business owners. If the size-criteria are imposed, only large businesses may have an opportunity to bring in foreign workers and keep existing skilled workers to develop new products or services.All smaller businesses and potential start-ups would be immediately disadvantaged. What Bermuda needs is more competitive businesses with additional diversity. Any policy that continues to give an advantage to established firms over the smaller entrepreneurial ones offers a negative incentive for a company to start or expand a business in Bermuda.Any policy changes made to establishing some sort of support for long-term investment and employment growth in Bermuda must not discriminate against its potentially biggest job generator small businesses.Nathan Kowlaski is the chief financial officer of Anchor Investment Management.