Business demography statistics

Data from November 2016. Most recent data: Further Eurostat information, Main tables and Database. Planned update: January 2018.

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 rates, death rates, and the survival rate. In the business demography domain, the business economy covers sections B to N, excluding activities of holding companies – K64.2 (NACE Rev.2).

In 2014, the EU-28’s business economy was made up of around 26 million active enterprises (based on 27 Member States and estimates of missing Greece data) with some 143 million persons employed. The largest active enterprise population was registered in Italy (3.9 million), followed by France (3.4 million), Spain (2.9 million), Germany (2.8 million) and the United Kingdom (2.2 million). The services sector was dominant in every country, as measured by the highest proportion of active enterprises.

There were about 4 million jobs created from 2.6 million newly born enterprises, based on the final 2014 data, while the preliminary results show 3.5 job losses as a consequence of 2.3 million death businesses. The proportion of newly-born enterprises in 2014 compared to 2013 increased by 1.8 %. Birth and death rates of enterprises tend to be around 9 % of the total number, however in 2013, there were more enterprise births than deaths, both at EU level and in the majority of Member States. The one-year survival rate for enterprises created in 2013 was about 80 %; the five-year survival rate of enterprises born in 2009 and still active in 2014 was nearly 44 %. The highest shares of high-growth enterprises in 2014 were reported in Malta, the United Kingdom and Latvia.

Figure 1: Structure of active enterprises by sector, business economy, 2014 (%)
Source: Eurostat (bd_9b_sz_cl_r2)
Figure 2: Structure of employment by sector, business economy, 2014 (%)
Source: Eurostat (bd_9b_sz_cl_r2)
Figure 3: Enterprise birth rates, business economy, 2013 - 2014 (%)
Source: Eurostat (bd_9b_sz_cl_r2)
Figure 4: Employment share of enterprise births, business economy, 2013-2014 (%)
Source: Eurostat (bd_9b_sz_cl_r2)
Figure 5: Enterprise birth and death rates, business economy, 2013 (%)
Source: Eurostat (bd_9b_sz_cl_r2)
Figure 6: Trend of enterprise death rates, business economy, 2013-2014 (%)
Source: Eurostat (bd_9b_sz_cl_r2)
Figure 7: One, three and five-year survival rates of enterprises, business economy, 2014 (%)
Source: Eurostat (bd_9b_sz_cl_r2)
Figure 8: Enterprises surviving a five-year period, business economy, 2014 (%)
Source: Eurostat (bd_9b_sz_cl_r2)
Figure 9:High-growth enterprise shares in EU Member States, 2014 (%)
Source: Eurostat (bd_9pm_r2)
Figure 10: High-growth enterprise shares by economic sectors in the EU, 2014 (%)
Source: Eurostat (bd_9pm_r2)

Main statistical findings

Active enterprises in the business economy

This section provides a general overview of the business enterprise population. It is based 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 EU aggregates were calculated from 27 Member States for which 2014 data were delivered to Eurostat plus estimates of missing data for Greece. In 2014, looking at the EU level, three quarters (75.5 %) of all active in the business economy enterprises (NACE Rev. 2 Sections B to N, excluding K64.2) were within the services sector, providing work for 67.1 % of the total number of persons employed (see Figures 1 and 2). Services accounted for between 63.8 % of the number of all enterprises in the business economy in Slovakia and 85.7 % of the total in Luxembourg. In terms of its contribution to employment, the services sector accounted for 53.7 % of the workforce in Czech Republic, while the United Kingdom had the highest share - 78.8 %.

By contrast, only 9.9 % of active enterprises in the EU were found in industry, even though these enterprises provided work for 23.6 % 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 13 persons on average across the 27 Member States, compared to an average of five persons for services. The average number of persons employed in construction was the lowest - three persons per enterprise.

Birth rate

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 a country's enterprise population, by obliging them to become more efficient in view of newly emerging competition. 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 data available for 27 Member States), the number of newly born enterprises as a proportion of the total number of active enterprises increased by 1.8 % in 2014 compared with 2013. The birth rates ranged from 4.4 % in Belgium to 24.5 % in Lithuania and close to the EU average in 2014 stayed Hungary, France and Spain.

The birth rate was lowest in Cyprus and Belgium for both years. At the other end of the scale, the highest birth rates for both years were recorded in Latvia and Lithuania. The comparison of the two years reveals a steep decrease of 54,1 % in Romania, whereas Slovakia posted the opposite trend, recording the highest increase out of all countries, at 98.9 % (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, as an indicator of the potential job creations. 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 in 2014, the employment share ranges from 0.6 % (Finland) to 6.7 % (Slovakia). Portugal and Lithuania had a share above 5 % in 2014 and 2013, whereas the lowest share was below 1 % for both years in Finland. Although the EU average employment birth rates seemed rather similar between the two years in question, an increase of 1.7 % was recorded in 2014.

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 to the EU average, whereas the employment share was the lowest one.

Death rate

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 in 2013 there were more enterprise births than deaths looking at the EU average, and also in fifteen Member States for which final data were available. The average enterprise birth rate for the business economy in 2013 amounted to 9.6 % and was 6.8 % higher than the death rate. The highest difference was reported in France (80 %), where the birth rates were significantly greater than death rates, followed by the United Kingdom and Slovenia. This situation was, however, reverse in Slovakia and Malta, where in 2013 the death rates were more than 30 % higher than the birth rates.

Looking at the trend of preliminary death rates in 2014 compared to the final ones in 2013, (although in many countries only provisional, due to impossible checks of reactivations at the time of reporting the data), an average decrease of 2.8 % was to be expected (Figure 6). Enterprise death rate was likely to decline in half of the Member States; this fall was most significant in Latvia, Romania Slovakia and Malta. Although the situation was set to remain fairly stable in Cyprus, Finland, Poland and Luxembourg, the enterprise death rate was expected to increase with more than 8 % in Denmark, Croatia and the Czech Republic, with the biggest rise in Bulgaria and Lithuania.

Enterprise survival rate

The focus is to present information about the life cycle of newly born enterprises and the ability to survive up to five years after their creation. Business demography 2009 data collection had, 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 rates of one, three and five-year survival enterprises in 2014.

Looking at the enterprises' one-year survival rate it appears that, for the business economy, about 80 % of the enterprises born in 2013 had survived in 2014. The highest one-year survival rates were recorded for the Swedish business economy – 96.5 % and were also above 90 % in the Netherlands, the United Kingdom, Romania and Luxembourg. The lowest rate was reported in Belgium at 31.1 % and it would appear as well that newly born enterprises in Lithuania are less likely to survive one year after their creation.

Subsequently, year-on-year survival rates posted a gradual fall in the majority of the countries. Actually, the five-year survival rate of enterprises born in 2009 and still active in 2014 shows that less than half (44 %) of them survive for a five - year period. Enterprises born in 2009 in Romania, Latvia, Austria and the Netherlands were most likely to survive up to the fifth year after their birth, while Belgium ran the greatest risk of non-survival. In principal, non-survivals may be due to actual deaths, indicating the deterioration of business environment, but also due to the break-ups or mergers.

Given that the survival rates logically decrease over 5 years in all countries for which data were available, it is still interesting to look at the employment changes in a five-year time frame. For each country in Figure 8, the second bar shows the change in employment. Only in nine countries (Belgium, Lithuania, Estonia, Romania, Luxembourg, Denmark, the Netherlands, Finland and Norway) employment in those enterprises that survived for five years increased. The largest decrease was noted in Spain followed by Italy, Austria and Czech Republic.

High growth enterprises

High growth enterprises (growth by 10% or more) play an important role in contribution to the economic growth and the creation of jobs. In 2014, around 145 000 companies, or almost a tenth (9.2 %) of all active enterprises with at least ten employees in the EU-28’s business economy were recognized as high-growth enterprises, providing work for over 12 million employees.

In 2014, considerable variations were observed across EU Member States in the distribution of high-growth enterprises (Figure 9). The shares ranging from more than 12 % in Malta, the United Kingdom, Latvia, Ireland, Sweden and Hungary, to less than 3 % in Romania and Cyprus.

High-growing enterprises have a noteworthy impact on employment. In 2014, the highest contributions to the total number of employees with more than 17 % were recorded in the United Kingdom, Ireland, Bulgaria, Hungary, Malta and Latvia. In contrast, the lowest share was registered in Cyprus (3.6 %), followed at a distance by Romania (6.7 %) and Slovenia (8.2 %).

Although high-growth enterprises operate in all sectors of the business economy across the EU, their share in the services is higher in the majority of Member States. Looking at a breakdown by economic activity in Figure 10, high-growth enterprises in 2014 were more predominant in the service sectors, with highest proportion in the “Information and communication“ (15.0 %), followed by “Administrative and support service activities” (12.7 %), "Transportation and storage" and "Professional, scientific and technical activities" (both 11.0 %). The first industrial sector in terms of proportions of high-growth enterprises was "Water supply; sewerage, waste management and remediation activities" and the last with the lowest overall figures was "Mining and quarrying".

Data sources and availability

Business demography data has been collected on a voluntary basis since 2002. Currently 30 countries participate in the data collection exercise.

With the adoption of the recast SBS Regulation, business demography data collection has become part of the regular annual collection of structural business statistics. After the recently adopted amendments, employer business demography and high growth enterprises (growth by 10% or more) are as well compiled regularly each year.

Annex IX of the recast structural business statistics Regulation provides 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, 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.

Context

Business demography is an important subject for policy-maker'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 two main measures used for employment are the number of persons employed and the number of employees.

The demography of the business population is represented by data on:

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:

  • 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.

See also

Further Eurostat information

Publications

Main tables

Business demography statistics - all activities (t_bd)
Business demography (tsier150)

Database

Business demography statistics - all activities (bd)

Dedicated section

Methodology / Metadata

External links