Overview of CSO Business Demography release

Workshop on Business Demography and Job Churn statistics

Dublin Castle, May 12th 2011Jillian Delaney

What is Business Demography?

• Numbers of active enterprises• Business employment figures• Changes in enterprise population:

– Newly birthed enterprises– Ceased enterprises– Enterprise survivals

• Internationally comparable methodology

Business Demography sources and available time periods

• Business Registers: aim to cover the whole population of enterprises

• Administrative data• Better coverage of very small enterprises than

traditional survey methods• Data is available for the following years:

– 2006– 2007 – 2008

• Data for 2009 will be published in June 2011

Where to find data?

• On the CSO website, http://www.cso.ie/, click Databases on the top menu bar

• Select the first link, StatBank (CSO Main Data Dissemination Service)

• Under the Business Sectors area, choose either Construction, Industry or Services, and click Business Demography

• Under this, the Business Demography NACE Rev 2 link gives you the new release

StatBank link on www.cso.ie

Business Demography tables

NACE Rev 2 Sectors Covered• B - Mining and quarrying• C - Manufacturing• D - Electricity, gas, steam and air conditioning supply• E - Water supply; sewerage, waste management and remediation activities• F - Construction• G - Wholesale and retail trade; repair of motor vehicles and motorcycles• H - Transportation and storage• I - Accommodation and food service activities• J - Information and communication• K* - Financial and insurance activities• L - Real estate activities• M - Professional, scientific and technical activities• N - Administrative and support service activities

*NACE code 64.20 Activities of holding companies is excluded from sector K

NACE Rev 2 Sectors Excluded• Agriculture (sector A)• Public Administration (sector O)• Education (sector P) • Health (sector Q) • Arts, Entertainment, Recreation (sector R)• Other Service Activities (sector S)• Activities of Households (sector T)• Extraterritorial Bodies (sector U)

The CSO Business Register is currently being expanded to include the sectors in bold

The Data

Active Enterprises and Employment

Active Enterprises• How many businesses are there in Ireland?• How many enterprises are there in the “Mining

and Quarrying” sector?• How many advertising agencies are there in

Ireland?• How many real estate enterprises are there in

Ireland?• How many companies are in Ireland?• How many companies are in retail? • How many sole traders are there in retail?

Active enterprises – size and county breakdown

• How many SMEs or small and medium enterprises are there?– Micro enterprises: under 10 persons engaged– Small enterprises: under 50 persons engaged– Medium enterprises: under 250 persons engaged– Large enterprises: 250+ persons engaged

• How many small and medium enterprises are in Cork?• How many real estate enterprises are there in Dublin?• How many construction enterprises are in Donegal?

Active enterprises: employment

• How many persons engaged in Ireland?• How many employees?• How many people work in retail?• How many of these are in companies and how

many sole traders?

Changes in Enterprise Population

Births, Deaths and Survivals

Changes in Enterprise Population

• Numbers of enterprises:– Numbers of newly birthed enterprises– Numbers of ceased enterprises– Numbers of surviving enterprises

• Employment data:– Employment in newly birthed enterprises– Employment in ceased enterprises– Employment in surviving enterprises

Definition of Enterprise BirthsA count of the number of births of enterprises registered to the

population concerned in the business register corrected for errors.

A birth amounts to the creation of a combination of production factors with the restriction that no other enterprises are involved in the event.

Births do not include entries into the population due to: mergers, break-ups, split-off or restructuring of a set of enterprises.

It does not include entries into a sub-population resulting only from a change of activity.

[Commission Regulation (EC) No 2700/98 of 17 December 1998 concerning the definitions of characteristics for structural business statistics)]

Enterprise Birth Rate, 2006NACE Rev 2 Sector

Active Enterprises (Number)

Enterprise Births (Number)

Birth Rate (Percentage)

B-N, -642 201,461 16,696 8.29B-E 13,974 861 6.16B .. ..C 12,765 764 5.99D .. ..E 716 59 8.24F 58,454 5,717 9.78G-N, -642 129,033 10,117 7.84G 42,280 2,553 6.04H 11,095 822 7.41I 15,724 1,060 6.74J 8,958 930 10.38K-642 3,956 390 9.86L 9,030 1,209 13.39M 27,127 2,293 8.45N 10,863 860 7.92

Enterprise Birth Rate, 2007NACE Rev 2 Sector

Active Enterprises (Number)

Enterprise Births (Number)

Birth Rate (Percentage)

B-N, -642 207,736 13,461 6.48B-E 14,354 672 4.68B .. 16C 13,027 576 4.42D .. 26E 772 54 6.99F 59,124 3,824 6.47G-N, -642 134,258 8,964 6.68G 43,205 2,202 5.10H 11,384 658 5.78I 15,794 913 5.78J 9,488 879 9.26K-642 4,554 487 10.69L 9,617 958 9.96M 28,505 1,930 6.77N 11,711 937 8.00

Enterprise Birth Rate, 2008NACE Rev 2 Sector

Active Enterprises (Number)

Enterprise Births (Number)

Birth Rate (Percentage)

B-N, -642 203,083 11,954 5.89B-E 14,265 648 4.54B 385 21 5.45C 12,886 540 4.19D 209 33 15.79E 785 53 6.75F 53,893 2,489 4.62G-N, -642 134,925 8,816 6.53G 43,205 2,298 5.32H 11,069 583 5.27I 15,987 1,115 6.97J 9,682 864 8.92K-642 4,591 325 7.08L 9,274 700 7.55M 29,283 2,133 7.28N 11,834 799 6.75

Enterprise Birth Rate – International Comparison

Eurostat Business Demography page:

http://epp.eurostat.ec.europa.eu/portal/page/portal/european_business/special_sbs_topics/business_demography

Enterprise Birth Rate, EU average, 2006 (%)

FIGURE BD1Enterprise birth rate, EU average, 2006 (%) (1)

Energy (Section E) 12.6Business activities (Section K) (2) 12.0Financial services (Section J ) 11.6Construction (Section F) 11.1BUSINESS ECONOMY (Sections C to K) (2) 9.8Hotels & restaurants (Section H) 9.4Distributive trades (Section G) 8.6Transport & comm. (Section I) 8.2Manufacturing (Section D) 5.9Mining & quarrying (Section C) 5.6

(1) Weighted average based on available data: Estonia, Spain, France, Italy, Latvia, Hungary, Austria, Portugal, Romania, Sweden and United Kingdom, 2006; Bulgaria, Czech Republic, Denmark, Cyprus, Luxembourg, Malta, Netherlands, Slovenia, Slovakia and Finland, 2005; Germany, 2004.

(2) Excluding management activities of holding companies (NACE Class 74.15).

Source: Eurostat (SBS)

0 5 10 15

Energy (Section E)

Business activities (Section K) (2)

Financial services (Section J)

Construction (Section F)

BUSINESS ECONOMY (Sections C to …

Hotels & restaurants (Section H)

Distributive trades (Section G)

Transport & comm. (Section I)

Manufacturing (Section D)

Mining & quarrying (Section C)

Enterprise Birth Rate, business economy, 2006 (%)

FIGURE BD2Enterprise birth rate, business economy, 2006 (%) (1)

EE 15.9RO 14.6PT 14.2DK 13.2UK 12.9BG 11.9LU 11.1ES 10.4DE 10.0LV 9.9NL 9.8EU 9.8FR 9.4SI 8.8CZ 8.7HU 8.7AT 8.4FI 8.3SK 7.3IT 7.1CY 7.1SE 6.7MT 2.2CH 3.6

(1) NACE Sections C to K, excluding management activities of holding companies (NACE Class 74.15); Bulgaria, Czech Republic, Denmark, Cyprus, Luxembourg, Malta, Netherlands, Slovenia, Slovakia and Finland, 2005; Germany and Switzerland, 2004; EU weighted average based on available data.

Source: Eurostat (SBS)

0

5

10

15

20

EE RO PT DK UK BG LU ES DE LV NL EU FR SI CZ HU AT FI SK IT CY SE MT CH

Enterprise DeathsA count of the number of deaths of enterprises registered to the

population concerned in the business register corrected for errors.

A death amounts to the dissolution of a combination of production factors with the restriction that no other enterprises are involved in the event.

Deaths do not include exits from the population due to mergers, take-overs, breakups and restructuring of a set of enterprises.

It does not include exits from a sub-population resulting only from a change of activity.

[Commission Regulation (EC) No 2700/98 of 17 December 1998 concerning the definitions of characteristics for structural business statistics)]

Enterprise Deaths

• How many enterprises ceased activity in 2008?• What sectors had the most ceased enterprises?• What is the death rate in each sector?• How many people were employed in ceased

enterprises?

Enterprise Death Rate, 2008

Active Enterprises (Number)

Enterprise Deaths (Number)

Death Rate (Percentage)

B-N, -642 203,083 14,344 7.06B-E 14,265 715 5.01B 385 ..C 12,886 649 5.04D 209 ..E 785 38 4.84F 53,893 6,613 12.27G-N, -642 134,925 7,016 5.20G 43,205 2,008 4.65H 11,069 620 5.60I 15,987 865 5.41J 9,682 590 6.09K-642 4,591 188 4.09L 9,274 570 6.15M 29,283 1,445 4.93N 11,834 731 6.18

Enterprise survivalsThe survival of an enterprise is defined in the following way:

• An enterprise born in year xx or having survived to year xx from a previous year is considered to have survived in year xx+1 if it is active in terms of turnover and/or employment in any part of year xx+1 (= survival without changes).

• An enterprise is also considered to have survived if the linked legal unit(s) have ceased to be active, but their activity has been taken over by a new legal unit set up specifically to take over the factors of production of that enterprise (= survival by take-over).

[Eurostat-OECD Manual on Business Demography Statistics]

Enterprise survival rate, business economy, 2006

(% of enterprises born two years before who survived)

FIGURE BD3Enterprise survival rate, business economy, 2006 (% of enterprises born two years before who survived) (1)

SE 87.3SI 82.5UK 79.2RO 77.6FR 76.6ES 75.2IT 74.7LU 73.9EU 73.7NL 73.1LV 73.0SK 72.8FI 66.7EE 64.6HU 63.1CZ 61.1PT 59.5CH 70.7

(1) NACE Sections C to K, excluding management activities of holding companies (NACE Class 74.15); Czech Republic, Luxembourg, Netherlands, Slovenia, Slovakia, Finland and Switzerland, 2005; EU weighted average based on available data.

Source: Eurostat (SBS)

0

25

50

75

100

SE SI UK RO FR ES IT LU EU NL LV SK FI EE HU CZ PT CH

Enterprise Survival in Ireland

• One and two year survival rates available for 2008– Of the new births in 2006, how many were still active in

2008? – Of the new births in 2007, how many were still active in

2008? • Two year survival rate for business economy in 2008

was approximately 80% • Data on employment in year of birth and employment

in survival year also available• New births will be followed over 5 years after starting

up

One year survival, 2008

Enterprise Survival NACE Rev 2 by Year, Employment Size, Activity andstatistical indicator

Enterprises Birthed in 2007 and Survived to 2008 (Number)

Persons Engaged in 2007 in Enterprises Birthed in 2007 that Survived to 2008 (Number)

Persons Engaged in 2008 in Enterprises Birthed in 2007 that Survived to 2008 (Number)

2008 Business economy excluding activities of holding companies (B to N,-642) 11579 12792 22321Industry (B to E) 576 555 1011Mining and quarrying (B) 13 10 29Manufacturing (C) 495 504 867Electricity, gas, steam and air conditioning supply (D) 20 3 5Water supply; sewerage, waste management and remediation activities (E) 48 38 109Construction (F) 3215 3442 5007Business economy services excluding activities of holding companies (G to N,-642) 7788 8794 16303Wholesale and retail trade; repair of motor vehicles and motorcycles (G) 1930 2137 4310Transportation and storage (H) 560 672 998Accommodation and food service activities (I) 787 1883 4066Information and communication (J) 785 721 1504Financial and insurance activities excluding activities of holding companies (K-642) 413 249 587Real estate activities (L) 767 728 901Professional, scientific and technical activities (M) 1722 1619 2584Administrative and support service activities (N) 824 785 1354

Two year survival, 2008Enterprise Survival NACE Rev 2 by Year, Employment Size, Activity andstatistical indicator

Enterprises Birthed in 2006 and Survived to 2008 (Number)

Persons Engaged in 2006 in Enterprises Birthed in 2006 that Survived to 2008 (Number)

Persons Engaged in 2008 in Enterprises Birthed in 2006 that Survived to 2008 (Number)

2008 Business economy excluding activities of holding companies (B to N,-642) 13524 14391 32006Industry (B to E) 723 671 1729Mining and quarrying (B) 21 15 67Manufacturing (C) 639 609 1478Electricity, gas, steam and air conditioning supply (D) 13 4 14Water supply; sewerage, waste management and remediation activities (E) 50 43 171Construction (F) 4501 4525 8495Business economy services excluding activities of holding companies (G to N,-642) 8300 9195 21781Wholesale and retail trade; repair of motor vehicles and motorcycles (G) 2124 2460 6150Transportation and storage (H) 653 669 1229Accommodation and food service activities (I) 851 1779 5278Information and communication (J) 759 660 1573Financial and insurance activities excluding activities of holding companies (K-642) 313 300 977Real estate activities (L) 927 877 1332Professional, scientific and technical activities (M) 1951 1633 3356Administrative and support service activities (N) 722 817 1885

Business Demography Methodology

Overview of some issues

Use of administrative data

• The CSO’s Business Register is constructed from data provided by the Revenue Commissioners and the Companies Registrations Office

• Enterprises that have either employment or turnover from Revenue sources during the reference year are included

• This results in increased coverage of very small enterprises compared to survey based releases

• Active Revenue registrations are counted as active enterprises

Counting active enterprises

• An enterprise does not always refer to the same type of unit

• E.g. if a business has one legal unit (Revenue registration), but several local units (branches) there will be one enterprise

• But if one local unit is owned by one legal unit, there is one enterprise

Counting active enterprises - example

• Schools that employ staff in their own right are counted as separate enterprises, but those that employ staff through a governing body are counted as local units

• So numbers of enterprises extracted using business demography method doesn’t correspond to actual number of schools

Births, deaths and survivals

• Difficult to exclude “births” that are only due to enterprise registering new employer registration with Revenue due to administrative changes

• Use data matching, manual checking of samples

• Can be difficult to find information, especially for very small potential births

• Similar issues with “deaths”

Enterprise groups

• Enterprise groups are formed by separate enterprises linked by share ownership

• Often all employees of group will be registered against one PREM number

• This PREM number will be linked to one enterprise, with one NACE code, so all group employment is counted against this activity

• If the enterprise group conducts different activities, an adjustments needs to be made to spread the employment across the activities

Timeliness

Data for the year 2010 will be available in mid 2012• 2010 data depends on employer P35 and tax returns

(VAT, Corporation Tax and Income Tax)• These are filed during 2011, and are not all fully

available to the CSO until the spring of 2012• The first Revenue data available to the CSO is for

2005, so first full set of data is available for 2006

Future plans

• Early estimates• Employer Business Demography• High Growth Enterprises• Gazelles• Employment data by county • Regional breakdown for births, deaths and

survivals• Entrepreneurs breakdown by gender, age,

nationality

Conclusion

• Business Demography provides a large amount of detailed data due to the use of administrative sources

• Quality issues exist with using this data to report on what is happening in the real business population

• Enormous potential exists for analysing the structure and dynamics of the enterprise population