Business demography statistics
From Statistics Explained
This article presents statistical data on business demography in the European Union (EU), treating aspects such as the total number of active enterprises in the business economy, their birth and death rates, and the survival rate.
The 2009 data show that the business economy of the 24 Member States for which information was available consisted of some 23.8 million active enterprises and that the services sector was dominant in every country, with the highest proportion of enterprises.
The proportion of newborn enterprises compared to 2008 went up slightly, by 3.4 %. Both birth and death rates of enterprises tend to be around 10 % of the total number. In 2008 there were more enterprise births than deaths both at EU level and in the majority of Member States for which final data were available. In 2009 the opposite seems to be the case, when preliminary death data are compared with final birth data. The one-year survival rate for enterprises created in 2008 was 81 %; the five-year survival rate of enterprises born in 2004 and still active in 2009 was 47.5 %.
Main statistical findings
- About 23.8 million active enterprises made up the business economy of the 24 Member States for which information was available in 2009.
- In each of the countries the services sector was dominant, with the highest proportion of active enterprises in the business economy.
- The proportion of newborn enterprises in the total number of active enterprises increased slightly by 3.4 % from 2008 to 2009.
- For any given year the birth and death rates of enterprises tend to be around 10 % of the number of active enterprises.
- There were more enterprise births than deaths in 2008 at EU level and also in the majority of the Member States for which final data were available; 2009 shows the opposite, more deaths than births, when comparing preliminary death data with final birth data.
- The one-year survival rate for enterprises created in 2008 was 81 %; the five-year survival rate of enterprises born in 2004 and still active in 2009 was 47.5 %.
Active enterprises in the business economy
This section provides a general overview of the business enterprise population. It concentrates on aggregated data for industry (Sections B to E), construction (Section F) and services (Sections G to N, excluding activities of holding companies – K64.2), according to NACE Rev 2. The data presented for the EU aggregate were created from the 24 Member States which sent the data for 2009 (data are not currently available for DK, EL and MT). On average, more than three quarters (76.4 %) of all business economy enterprises (NACE Rev. 2 Sections B to N, excluding K64.2) were active within the services sector in 2009, providing work for 64.3 % of the total number of persons employed (see Figures 1 and 2). Services accounted for between 63.1 % of all enterprises in the business economy in Slovakia and 85.0 % of the total in Luxembourg. In terms of its contribution to employment, the services sector accounted for between 53 and 54 % of the workforce in Romania and Czech Republic, while Luxembourg and the Netherlands had the highest shares, at 71.9% and 75.7 % respectively.
By contrast, only 10.2 % of active enterprises were found in industry for the EU aggregate, even though these enterprises provided work for 24.9 % of the total number of persons employed. The difference between these shares provides evidence that the average size of industrial enterprises (as measured in terms of the number of persons employed) was considerably higher than for services. Indeed, industrial enterprises employed 14 persons on average across the 24 Member States that compile the EU aggregate, compared to an average of five persons for services. The average number of persons employed in construction was similar to that in services, at four persons per enterprise.
The birth of new enterprises is often seen as one of the key determinants of job creation and economic growth. Enterprise births are thought to increase the competitiveness of enterprises, by obliging them to become more efficient. As such, they stimulate innovation and facilitate the adoption of new technologies, while helping to increase overall productivity within an economy.
Looking at birth rates in the EU (based on the data available for 24 Member States), the number of newly born enterprises as a proportion of the total number of active enterprises slightly increased by 3.4% in 2009 compared with 2008. In 2009, birth rates range from 3% in Cyprus and around 7 % in Austria, Sweden, Spain and Italy to 16 % or more in Slovakia, Latvia and Bulgaria. Estonia and the United Kingdom were close to the EU average for 2009, as were France and Germany in 2008. The birth rate was consistently lowest in Cyprus and Belgium for both years. At the other end of the scale, Bulgaria and Latvia recorded the highest birth rates in 2009 and Lithuania and Estonia the highest birth rates in 2008.
The comparison of the two years reveals, a steep decrease of 45% in Estonia, while the Czech Republic posted the opposite trend, recording the biggest increase of all, at 187 %.( Figure 3) While the study of enterprise birth rates provides useful information on the dynamism in the economy, the effect on the labour market is an important aspect too.
Figure 4 shows the share of newly born enterprises in total employment of active enterprises, in terms of number of persons employed. In the total business economy, the employment share ranges from 0.9 % to 5.5 %.The EU average employment birth rate remained stable between the two years in question. The highest share in 2008 and 2009 was above 5 % in Bulgaria and Slovakia, whereas the lowest share was below 1% for Finland and Ireland.
Considering the similarity between the birth rates of enterprises and their employment share, those countries with relatively low/high birth rates also tended to report relatively low/high employment share. In contrast, the birth rate of new enterprises in Finland was considerably close the EU average, whereas employment share was significantly below the average.
From a theoretical point of view, enterprise birth is related to the expectation of making a profit. If the main objective of newly born enterprises is to make a profit, enterprise births are most likely to occur where profits are consistently high, whereas among loss making activities enterprise deaths will be relatively more frequent.
Figure 5 shows that there were slightly more enterprise births than deaths looking at the EU average, and also in majority of the Member States for which final data were available in 2008. The average enterprise death rate for the business economy in 2008 was 9.4 % (0.2 percentage points lower than the birth rate). This situation was completely reverse in Lithuania, Portugal, Ireland, Italy, Spain, Hungary and Germany. The most dramatic negative change was reported in Czech Republic, where death rates were 163% higher than birth rates respectively.
Looking at the preliminary result showing the trend of death rates in 2009 compared to the final numbers in 2008 (although in many countries - provisional, due to an impossible check of reactivation, at the time of reporting the data), an average increase of 11 % was expected (Figure 6). Enterprise death rate was expected to have risen in a majority of the Member States; this rise was most significant in Belgium, Lithuania and Romania. Although the situation was set to remain fairly stable in Spain, the Netherlands, Italy and Hungary, the enterprise death rate was likely to decrease in Austria, Slovenia, France, and Czech Republic, with the biggest falls in Bulgaria.
Enterprise survival rate
The focus is to present information about the life cycle of newly born enterprises and their ability to survive up to five years after their creation. The collection of data for the 2009 reference year has, for the first time, enabled the tracking of newly born enterprises over a five-year period, tracing how many of them have survived during that period. Figure 7 shows the one- to five-year survival rates of enterprises born in 2004 only for those Member States for which the information was available for the whole five-year life cycle.
Looking at the data it appears that, for the business economy, roughly 82% of the enterprises born in 2004 survived in 2005. Subsequently, year-on-year survival rates posted a gradual fall in the majority of the countries, and less than half of the enterprises actually survive their first 5 years.
The highest one-year survival rates – 96.5 % – were recorded for the Swedish business economy and were also above 90 % for France and Slovenia. It would appear that newly born enterprises in Portugal, Slovakia and Hungary generally are less likely to survive one year than newly born enterprises in other countries, although the lowest rates were reported in Lithuania.
Enterprises in Sweden, Slovenia and Austria were most likely to survive up to the fifth year after their birth, while Hungary, Portugal and Lithuania ran the greatest risk of non-survival. Non-survivals may be due to actual deaths, but also to mergers and take-overs.
Data sources and availability
Business demography data has been collected on a voluntary basis since 2002. Currently 27 countries participate in the data collection exercise.
After the recently adopted amendment of the SBS Regulation, the business demography data collection has become part of the regular annual collection of structural business statistics.
Annex IX of the recast structural business statistics Regulation provides for a detailed module for the collection of statistics on business demography. It requires the national statistical institutes (NSIs) to produce statistics on enterprise births, deaths and survival rates using common definitions and methodology, which should ensure greater comparability in this field of statistics from the reference year 2008 onwards. Note that up to 2007, the statistics presented for this subject have been produced and provided by most of the NSIs on the basis of informal, gentlemen’s agreements.
Some 15 countries participated in the factors of business success development project, when enterprises that were born in 2002 and survived to 2005 were surveyed to obtain more information on the factors supporting or hampering the successful start-up of an enterprise.
Business demography is an important subject for policymaker's discussion about increasing the level of employment, since it is one of the main priorities of the EU growth strategy.
Enterprise demography reflects, to some degree, the dynamism of the EU economy through the adaptation of economic structures to changing market conditions. The potential contribution that enterprise creation can make to employment is also one of the most important aspects drawing the attention of policy makers to the subject of enterprise demography. In this context, enterprise creation can be seen as an indicator of competitiveness, as a factor of economic growth and as a vital means of creating jobs.
Business demography provides information for births, deaths and survival rates of enterprises, as well as information on related employment data. The demography of the business population is represented by data on:
- the active population of enterprises;
- their birth;
- their survival (followed up to five years after birth);
- their death.
Particular attention is paid to the impact that these demographic events have on employment levels. Business demography data can be used to analyse the dynamics and innovation of different markets, such as:
in terms of the propensity to start a new business;
- entrepreneurship in terms of the propensity to start a new business, such as analysed in the joint OECD/Eurostat Entrepreneurship Indicators Programme;
- how newly-born enterprises can contribute to the creation of jobs.
Further Eurostat information
- Business Demography: employment and survival - Statistics in focus 70/2009
- Business demography in Europe: employers and job creation - Statistics in focus 100/2008
- Business demography: the impact on employment - Statistics in focus 49/2007
- Business demography: growth in the population of enterprises - Statistics in focus 48/2007
- Business demography in Europe - results from 1997 to 2002 - Statistics in focus 36/2005
- Business demography (1997-2001) - Detailed Tables - 09/2004
- Business demography statistics - all activities (t_bd)
- Business demography (tsier150)
- Business demography statistics - all activities (bd)
Methodology / Metadata
- Business demography statistics - all activities (ESMS metadata file)
- Eurostat-OECD Manual on Business Demography Statistics
Source data for tables and figures (MS Excel)
- European Commission - Enterprise and industry
- European Commission - Enterprise and Industry - Small and medium-sized enterprises (SMEs) - Promoting Entrepreneurship
- Business economy - enterprise demography and inward FATS
- Structural business statistics - theme navigation page
- Structural business statistics introduced - background article