Overview of CSO Business Demography release Workshop on

Overview of CSO Business Demography release Workshop on Business Demography and Job Churn statistics Dublin Castle, May 12 th 2011 Jillian 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, Stat. Bank (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

Stat. Bank 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 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 Births A 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, 2006

Enterprise Birth Rate, 2007

Enterprise Birth Rate, 2008

Enterprise Birth Rate – International Comparison Eurostat Business Demography page: http: //epp. eurostat. ec. europa. eu/portal/page/portal/european_business/sp ecial_sbs_topics/business_demography

Enterprise Birth Rate, EU average, 2006 (%)

Enterprise Birth Rate, business economy, 2006 (%)

Enterprise Deaths A 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

Enterprise survivals The 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)

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

Two year survival, 2008

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 P 35 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