Structural business statistics overview
From Statistics Explained
- Data from October 2012. Most recent data: Further Eurostat information, Main tables and Database.
This article presents structural business statistics (SBS); these data describe the structure, main characteristics and performance of economic activities across the European Union (EU). While the statistics presented in this article are generally analysed at the level of NACE sections readers should note that structural business statistics are available at a much more detailed level (several hundred sectors).
Structural business statistics can provide answers to questions on the wealth creation (value added), investment and labour input of different economic activities. The data can be used to analyse structural shifts, for example from industry to services, country specialisations, sectoral productivity and profitability, as well as a range of other topics. Because they are available broken down by enterprise size class, structural business statistics also permit a detailed analysis of small and medium-sized enterprises (SMEs), which is of particular use to EU policymakers and analysts wishing to focus on entrepreneurship and the role of SMEs. Furthermore, structural business statistics provide useful background information on which to base an interpretation of short-term statistics and the business cycle.
Main statistical findings
Services activities accounted for the two largest shares of the enterprise population within the EU-27’s non-financial business economy (industry, construction, distributive trades and non-financial services) when analysed at the NACE section level: slightly fewer than three in every ten (29.1 %) of the 20.8 million enterprises in the EU’s non-financial business economy were classified to distributive trades, while just under one in six (16.5 %) were in professional, scientific or technical activities – see Figure 1. Many of these business services have benefitted from the outsourcing phenomenon, which may explain, in part, the structural shift towards services.
In 2009 a total of EUR 5 585 800 million of gross value added at factor cost was generated in the EU-27’s non-financial business economy; the non-financial business economy accounted for 69.6 % of the whole economy’s value added at basic prices in 2009. The non-financial business economy workforce reached 134.3 million persons employed, around three fifths (63.1 %) of those employed in the EU-27.
Among the NACE Rev. 2 sections in the non-financial business economy, manufacturing was the largest in terms of value added: 2.0 million manufacturing enterprises generated EUR 1 400 000 million of value added in 2009, while providing employment for about 31 million persons. Distributive trades enterprises (motor trades, wholesale trade and retail trade) had the largest share of employment: these enterprises provided employment to 33 million persons and generated EUR 1 109 600 million of value added. Construction had the third largest workforce and the fourth highest level of value added, just behind professional, scientific and technical activities.
Figure 2 contrasts the value added and employment contributions of the various sectors to the non-financial business economy. The industrial activities of mining and quarrying; manufacturing; electricity, gas, steam and air conditioning supply; water supply, waste and remediation contributed more in terms of value added than employment to the overall non-financial business economy, indicating an above average apparent labour productivity. This was also the case in some of the service activities, namely information and communication services, real estate activities, as well as professional, scientific and technical activities. By contrast, the construction sector and a number of services, notably distributive trades activities, accommodation and food services, and administrative and support services (which includes cleaning and security services, as well as employment services such as the provision of temporary personnel) reported relatively low levels of apparent labour productivity. It should be noted that the employment data presented are in terms of head counts and not, for example, full-time equivalents, and there may be a significant proportion of persons working part-time in some of the activities covered; this may explain, at least to some degree, the relatively low levels of apparent labour productivity for some activities.
Varying rates of part-time work also help explain, in part, the considerable differences in average personnel costs within the non-financial business economy of the EU-27, as shown in Table 3. Average personnel costs in the EU-27’s information and communication sector and the electricity, gas steam and air conditioning supply sector were around EUR 50 000 per employee in 2009, a level that was around three times that for accommodation and food services, two and a half times that for administrative and support services and twice that for distributive trades. The variation in average personnel costs was even more marked between EU Member States. For example, within the manufacturing sector average personnel costs ranged (among those EU Member States for which data are available) by a factor of 15, from a high of EUR 58 400 per employee in Denmark to a low of EUR 3 800 per employee in Bulgaria.
The influence of part-time employment is largely removed in the wage adjusted labour productivity ratio, which shows the relation between average value added per person employed and average personnel costs per employee (see Figure 3). This ratio was particularly high for the EU-27 for electricity, gas, steam and air conditioning supply as well as for mining and quarrying activities (mainly due to a very high ratio for the extraction of crude petroleum and natural gas); it was also high for the capital-intensive sector of real estate activities. The wage adjusted labour productivity ratio fell below 100 % in the small activity of the repair of computers, personal and household goods, indicating that average personnel costs per employee were higher than average value added per person employed.
The gross operating rate shown in Figure 4 relates the gross operating surplus (value added less personnel costs) to the level of turnover and in this way indicates the extent to which sales are converted into gross operating profit (operating profit before accounting for depreciation or taxes). Due to the very high level of sales inherent in wholesaling and retailing, the EU-27 distributive trades sector displayed the lowest gross operating rate. Capital-intensive activities (such as real estate activities) tend to have a high gross operating rate as the gross operating surplus by definition does not take account of financial or extraordinary costs related to capital expenditure.
Size class analysis
Structural business statistics can be analysed by enterprise size class (defined in terms of the number of persons employed). The overwhelming majority (99.8 %) of enterprises active within the EU-27’s non-financial business economy in 2009 were micro, small and medium-sized enterprises (SMEs) – some 20.7 million – together they contributed 58.7 % of the value added generated within the EU’s non-financial business economy. More than nine out of ten (92.2 %) enterprises in the EU-27 were micro enterprises (employing less than ten persons) and their share of value added within the non-financial business economy (excluding mining and quarrying) was considerably lower at 21.3 %. The relative importance of SMEs was particularly high in the southern Member States of Italy, Portugal and Spain (incomplete data for Greece). Some of these differences may be explained by the relative importance of particular sectors in each national economy or by cultural and institutional preferences for self-employment and/or family-run businesses.
Perhaps the most striking phenomenon of SMEs is their contribution to employment. No less than two thirds (66.7 %) of the EU’s non-financial business economy workforce was active in an SME in 2008. Some 23.3 million persons worked in SMEs in the distributive trades sector, 19.5 million in manufacturing and 13.2 million in construction; together, these three activities provided work to 61.9 % of the non-financial business economy workforce in SMEs. Micro enterprises employed more people than any other size class in a number of service sectors. This pattern was particularly pronounced for the repair of computers, personal and household goods where an absolute majority of the workforce worked in micro enterprises. By contrast, a range of activities characterised by network supply and minimum efficient scales of production (such as mining, air or rail transport, postal and courier services) reported a considerably higher proportion of their respective workforces occupied within large enterprises.
The contribution of SMEs to non-financial business economy value added was lower than their contribution to employment, resulting in a lower level of apparent labour productivity. This pattern was particularly prevalent among activities such as manufacturing or information and communication services. However, it was also observed across most other activities and across most EU Member States. As a result, large enterprises tended to record higher apparent labour productivity ratios than SMEs.
In general, foreign-controlled enterprises are few in number, but have a significant economic impact due to their larger than average size. Foreign-controlled enterprises generated substantial shares of value added in the non-financial business economy in many EU Member States – see Figure 7. The highest percentage contributions of foreign-controlled enterprises to non-financial business economy value added in 2009 were registered in Ireland and Hungary (almost 50 %), while shares in excess of 40 % were also recorded for Malta (2008 data), Luxembourg, Slovakia, the Czech Republic, Estonia and Romania. Employment shares of foreign-controlled enterprises were generally lower than their value added shares, but nevertheless exceeded one quarter in the Czech Republic, one third in Slovakia and Estonia and reached as high as two fifths in Luxembourg (39.4 %).
Business demography statistics are presented in Table 4, which shows enterprise birth and death rates as well as the average size of newly born enterprises in terms of their employment. There are significant changes in the stock of enterprises within the business economy from one year to the next, reflecting the level of competition, entrepreneurial spirit and the business environment. Among the countries providing data to Eurostat, enterprise birth rates in 2009 ranged from 3.0 % in Cyprus to 15 % or more in Bulgaria, Latvia, Slovakia and France. Since most new enterprises are small, the share of newly born enterprises among the whole business enterprise population is much higher than the corresponding proportion of the workforce accounted for by these enterprises. The average employment size ranged from 2.6 persons in the United Kingdom to 0.9 in Ireland, with Finland below this range at 0.5. In 2008, enterprise death rates were also lowest in Cyprus (2.4 %) and generally ranged between 4 % and 15 %, with Portugal (17.0 %) just above this range and Lithuania (32.1 %) far above it.
Data sources and availability
Eurostat’s structural business statistics describe the structure, conduct and performance of economic activities, down to the most detailed activity level (several hundred sectors). Without this structural information, short-term data on the economic cycle would lack background and be hard to interpret.
Coverage, units and classifications
Structural business statistics cover the ‘business economy’, which includes industry, construction and many services (NACE Rev. 2 Sections B to N and Division 95); financial and insurance activities (NACE Section K) are treated separately within structural business statistics because of their specific nature and the limited availability of most types of standard business statistics in this area. As such, the term ‘non-financial business economy’ is generally used in business statistics to refer to those economic activities covered by NACE Rev. 2 Sections B to J and L to N and Division 95 and the units that carry out those activities. Structural business statistics do not cover agriculture, forestry and fishing, nor public administration and (largely) non-market services, such as education or health.
Structural business statistics describe the business economy through the observation of units engaged in an economic activity; the unit in structural business statistics is generally the enterprise. An enterprise carries out one or more activities, at one or more locations, and it may comprise one or more legal units. Enterprises that are active in more than one economic activity (plus the value added and turnover they generate, the people they employ, and so on) are classified under the NACE heading according to their principal activity. This is normally the one which generates the largest amount of value added.
NACE Rev. 2 was adopted at the end of 2006, and implemented in structural business statistics from the 2008 reference year. This allows a broader and more detailed collection of information to be compiled on services, while also updating the classification to identify new areas of activity better.
Structural business statistics are compiled under the legal basis provided by Parliament and Council Regulation 295/2008 on structural business statistics, and in accordance with the definitions, breakdowns, deadlines for data delivery, and various quality aspects specified in the regulations implementing it.
The structural business statistics data collection consists of a common module (Annex 1), including a set of basic statistics for all activities, as well as six sector-specific annexes covering a more extensive list of characteristics. The sector-specific annexes are: industry, trade, construction, insurance services, credit institutions, and pension funds. There were two further annexes added in 2008 covering business services and business demography.
Size class and regional analysis
Structural business statistics are also available with an analysis by region or by enterprise size class. In structural business statistics, size classes are defined by the number of persons employed, except for specific data series within retail trade activities where turnover size classes are also used. A limited set of the standard structural business statistics variables (for example, the number of enterprises, turnover, persons employed and value added) is analysed by size class, mostly down to the three-digit (group) level of NACE. For statistical purposes, SMEs are generally defined as those enterprises employing fewer than 250 persons. The number of size classes available varies according to the activity under consideration. However, the main groups used in this publication for presenting the results are:
- small and medium-sized enterprises (SMEs): with 1 to 249 persons employed, further divided into;
- micro enterprises: with less than 10 persons employed;
- small enterprises: with 10 to 49 persons employed;
- medium-sized enterprises: with 50 to 249 persons employed;
- large enterprises: with 250 or more persons employed.
Structural business statistics contain a comprehensive set of basic variables describing business demographics and employment characteristics, as well as monetary variables (mainly concerning operating income and expenditure, or investment). In addition, a set of derived indicators has been compiled: for example, ratios of monetary characteristics or per head values.
Statistics that relate to the birth, survival (followed up to five years after birth) and death of enterprises within the business population are referred to as business demography statistics. Within this context the following definitions apply.
- An enterprise 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 business population due to mergers, break-ups, split-offs or restructuring of a set of enterprises, nor do the statistics include entries into a sub-population that only result from a change of activity. The birth rate is the number of births relative to the stock of active enterprises.
- An enterprise death amounts to the dissolution of a combination of production factors, with the restriction that no other enterprises are involved in the event. An enterprise is only included in the count of deaths if it is not reactivated within two years. Equally, a reactivation within two years is not counted as a birth.
Statistics on foreign affiliates (FATS) provide information that can be used to assess the impact of foreign-controlled enterprises on the European business economy. The data may also be used to monitor the effectiveness of the internal market and the integration of economies within the context of globalisation. A foreign affiliate, as defined in inward FATS statistics, is an enterprise resident in a country which is under the control of an institutional unit not resident in the same country. Control is determined according to the concept of the ‘ultimate controlling institutional unit’ which is the institutional unit, proceeding up a foreign affiliate’s chain of control, which is not controlled by another institutional unit.
In October 2010, the European Commission presented a Communication on a renewed industrial policy. ‘An industrial policy for the globalisation era’ provides a blueprint that puts industrial competitiveness and sustainability centre stage. It is a flagship initiative that forms part of the Europe 2020 strategy, and sets out a strategy that aims to boost growth and jobs by maintaining and supporting a strong, diversified and competitive industrial base in Europe offering well-paid jobs while becoming less carbon intensive. The initiative establishes a strategic agenda and proposes some broad cross-sectoral measures, as well as tailor-made actions for specific industries, mainly targeting the so-called ‘green innovation’ performance of these sectors.
The internal market remains one of the EU’s most important priorities. The central principles governing the internal market for services were set out in the EC Treaty. This guarantees EU enterprises the freedom to establish themselves in other Member States and the freedom to provide services on the territory of another Member State other than the one in which they are established. The objective of the Services Directive 2006/123/EC of 12 December 2006, on services in the internal market, is to eliminate obstacles to trade in services, thus allowing the development of cross-border operations. It is intended to improve competitiveness, not just of service enterprises but also of European industry as a whole. In December 2006, this Directive was adopted by the European Parliament and the Council with transposition by the Member States required by the end of 2009. It is hoped that the Directive will help achieve potential economic growth and job creation. By providing for administrative simplification, it also supports the better regulation agenda.
In April 2011, leading up to the twentieth anniversary of the beginning of the single market, the European Commission released a Communication titled ‘Single Market Act – twelve levers to boost growth and strengthen confidence’ (COM(2011) 206 final), aimed at improving the single market for businesses, workers and consumers – see the introductory article for industry, trade and services for more information.
SMEs are often referred to as the backbone of the European economy, providing a potential source for both jobs and economic growth. In June 2008, the European Commission adopted a Communication on SMEs referred to as the ‘Small business act for Europe’ (SBA). This aims to improve the overall approach to entrepreneurship, to irreversibly anchor the ‘think small first’ principle in policymaking from regulation to public service, and to promote SMEs’ growth by helping them tackle problems which hamper their development. The Communication sets out ten principles which should guide the conception and implementation of policies both at EU and national level to create a level playing field for SMEs throughout the EU and improve the administrative and legal environment to allow these enterprises to release their full potential to create jobs and growth. It also put forward a specific and far reaching package of new measures including four legislative proposals which translate these principles into action both at EU and Member State level.
A review of the SBA was released in February 2011: it highlighted the progress made and set out a range of new actions to respond to challenges resulting from the financial and economic crisis. In doing so, it is hoped that the updated SBA will contribute towards delivering the key objectives of the Europe 2020 strategy – namely, smart, sustainable and inclusive growth.
Further Eurostat information
- Key figures on European Business - with a special feature section on SMEs - 2011 edition
- European Business: Facts and figures – 2009 edition
- Specialisations within EU manufacturing - Statistics in focus 62/2009
- Specialisations within the EU's non-financial services sector - Statistics in focus 61/2009
- SBS - main indicators (t_sbs_na)
- SBS - industry and construction (t_sbs_ind_co)
- SBS - trade (t_sbs_dt)
- SBS - services (t_serv)
- Business demography statistics - all activities (t_bd)
- SBS - main indicators (sbs_na)
- SBS - industry and construction (sbs_ind_co)
- SBS - trade (sbs_dt)
- SBS - services (serv)
- SBS - regional data - all activities (sbs_r)
- Business demography statistics - all activities (bd)
Methodology / Metadata
- Business demography statistics - all activities (ESMS metadata file - bd_esms)
- Business registers - Recommendations Manual
- Glossary of business statistics
- Handbook on the design and implementation of business surveys
- Structural business statistics (ESMS metadata file - sbs_esms)
- Use of administrative sources for business statistics purposes