Structural business statistics overview


Data extracted in April 2018.

Planned article update: April 2019.

Highlights

More than half of the total value added generated in the non-financial business economies of Ireland and Hungary could be attributed to foreign-controlled enterprises.

Across the EU, average personnel costs for electricity, gas steam and air conditioning supply activities were more than three times as high as for accommodation and food services.

Share of value added accounted for by foreign-controlled enterprises, non-financial business economy, 2015

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 are generally analysed at the level of NACE sections readers should note that structural business statistics are available at a much more detailed level (for several hundred activities).

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 between industry and services, country specialisations in particular activities, sectoral productivity and profitability, as well as a range of other topics. Because they are available with an analysis by enterprise size class, structural business statistics also illustrate the relative role of large enterprises and 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 and large enterprises in stimulating economic performance and job creation. Furthermore, structural business statistics provide useful background information on which to base an interpretation of short-term statistics and the business cycle.

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Sectoral analysis

Services activities accounted for the two largest shares of the enterprise population within the EU-28’s non-financial business economy (industry, construction, distributive trades and non-financial services) when analysed at the NACE Rev. 2 section level for 2015: more than one quarter (26.4 %) of the 23.5 million enterprises in the EU’s non-financial business economy were classified to distributive trades (motor trades, wholesale trade and retail trade), while close to one in five (18.6 %) were in professional, scientific and technical activities — see Figure 1. Many business services have benefitted from outsourcing, which may explain, in part, the structural shift towards services.

Figure 1: Sectoral share of the number of enterprises within the non-financial business economy, EU-28, 2015
(%)
Source: Eurostat (sbs_na_ind_r2), (sbs_na_con_r2), (sbs_na_dt_r2) and (sbs_na_1a_se_r2)

In 2015, a total of EUR 7 033 billion of gross value added at factor cost was generated in the EU-28’s non-financial business economy. The non-financial business economy workforce reached 137.4 million persons employed, approaching two fifths (59.9 %) of the total number of persons employed across all NACE activities within the EU-28.

Among the NACE Rev. 2 sections in the non-financial business economy, manufacturing was the largest in terms of value added: almost 2.1 million manufacturing enterprises in the EU-28 generated approximately EUR 1 900 billion of value added in 2015, while providing employment to 30.0 million persons. Distributive trades enterprises had the largest share of employment: these enterprises provided employment to 33.0 million persons and generated EUR 1 315 billion of value added. Professional, scientific and technical activities had the third highest value added (EUR 717 billion) but only the fourth largest workforce (12.6 million persons), behind administrative and support services (14.7 million persons).

Table 1: Value added, 2015
(billion EUR)
Source: Eurostat (sbs_na_sca_r2)
Table 2: Number of persons employed, 2015
(thousands)
Source: Eurostat (sbs_na_sca_r2)

Figure 2 contrasts the value added and employment contributions of the various sectors to the non-financial business economy totals. 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 real estate activities, information and communication services, as well as professional, scientific and technical activities. By contrast, the construction sector and a number of services — notably administrative and support services (which includes cleaning and security services, as well as employment services such as the provision of temporary personnel); accommodation and food services; and distributive trades — 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 these service activities, which may explain, at least to some degree, their relatively low levels of apparent labour productivity.

Figure 2: Analysis of non-financial business economy value added and employment, EU-28, 2015
(% of non-financial business economy value added and employment)
Source: Eurostat (sbs_na_sca_r2)

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-28, as shown in Table 3. Average personnel costs in the EU-28 peaked in the electricity, gas steam and air conditioning supply sector at EUR 57 400 per employee in 2015 and were only slightly lower for the information and communication sector (EUR 54 900 per employee). Average personnel costs for the electricity, gas steam and air conditioning supply sector were more than three times those recorded for accommodation and food services and at least twice those recorded for administrative and support services and 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 11, from a high of EUR 63 600 per employee in Belgium to a low of EUR 5 700 per employee in Bulgaria.

Table 3: Average personnel costs, 2015
(thousand EUR per employee)
Source: Eurostat (sbs_na_sca_r2)

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 (308 %) in the EU-28 for electricity, gas, steam and air conditioning supply in 2015; it was also high for the capital-intensive sectors of real estate activities (290 %) and mining and quarrying (242 %). 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.

Figure 3: Wage adjusted labour productivity within the non-financial business economy, EU-28, 2015
(%)
Source: Eurostat (sbs_na_sca_r2)

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 (before accounting for depreciation or taxes). Due at least in part to the very high level of sales inherent in wholesaling and retailing, the EU-28 distributive trades sector displayed the lowest gross operating rate across NACE sections, at 5.1 % in 2015. Capital-intensive activities (such as real estate activities; 42.8 % in 2015) tended to have high gross operating rates as the gross operating surplus by definition does not take account of financial or extraordinary costs related to capital expenditure.

Figure 4: Gross operating rate within the non-financial business economy, EU-28, 2015
(%)
Source: Eurostat (sbs_na_sca_r2)

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-28’s non-financial business economy in 2015 were micro, small and medium-sized enterprises (SMEs) — some 23.5 million — together they contributed 56.5 % of the value added generated within the EU’s non-financial business economy. More than 9 out of 10 (92.8 %) enterprises in the EU-28 were micro enterprises (employing less than 10 persons) and their share of value added within the non-financial business economy was considerably lower, around one fifth (19.9 %).

Figure 5: Enterprise size class analysis of value added, EU-28, 2015
(% of sectoral total)
Source: Eurostat (sbs_sc_ind_r2), (sbs_sc_con_r2), (sbs_sc_dt_r2) and (sbs_sc_1b_se_r2)

Perhaps the most striking phenomenon of SMEs is their contribution to employment. No less than two thirds (66.8 %) of the EU’s non-financial business economy workforce was active in an SME in 2014 (no information is available for 2015). Some 22.9 million persons worked in SMEs in the distributive trades sector, 17.4 million in manufacturing and 10.9 million in construction; together, these three activities provided work to around 58 % of the non-financial business economy workforce in SMEs.

In 2014, micro enterprises in the EU-28 employed more people than any other enterprise size class in most service sectors (at the section level of detail), with the exceptions of transport and storage, information and communication services, and administrative and support service activities. This pattern was particularly pronounced for real estate activities and the repair of computers, personal and household goods where an absolute majority of the workforce worked in micro enterprises. By contrast, for mining and quarrying as well as electricity, gas, steam and air conditioning supply, large enterprises employed more than half of the workforce, as they also did in administrative and support service activities.

Figure 6: Enterprise size class analysis of employment, EU-28, 2014
(% of sectoral total)
Source: Eurostat (sbs_sc_ind_r2), (sbs_sc_con_r2), (sbs_sc_dt_r2) and (sbs_sc_1b_se_r2)

The contribution of SMEs to total value added within the EU-28’s non-financial business economy was lower than their contribution to total employment, resulting in a lower level of apparent labour productivity; this situation was particularly clear in manufacturing and information and communication services. However, it was also observed across most other activities, the exceptions were administrative and support service activities, as well as electricity, gas, steam and air conditioning.

Foreign-controlled enterprises

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 total value added in the non-financial business economies of many EU Member States — see Figure 7. The highest percentage contributions of foreign-controlled enterprises to non-financial business economy value added in 2015 were registered in Ireland and Hungary (in excess of 50 %), while shares in excess of 40 % were also recorded for Luxembourg, Slovakia, Romania, the Czech Republic and Estonia. Employment shares of foreign-controlled enterprises were generally lower than their value added shares, but nevertheless exceeded one quarter in Slovakia, Hungary, the Czech Republic, Romania and Poland, reaching almost two fifths in Estonia (38.1 %) and Luxembourg (39.0 %).

Figure 7: Share of value added and employment accounted for by foreign-controlled enterprises, non-financial business economy, 2015
(%)
Source: Eurostat (fats_g1a_08)

Business demography

Business demography statistics are presented in Table 4, which shows enterprise birth and enterprise 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 among other things the level of competition, entrepreneurial spirit and the business environment.

Enterprise birth rates in 2015 ranged among the EU Member States from 5.1 % in Greece and 6.0-7.0 % in Belgium, Finland, Austria and Cyprus (2014 data) to 14.8 % in the United Kingdom, 15.9 % in Portugal, 17.2 % in Latvia and 18.6 % in Lithuania. 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 of newly born enterprises in 2015 ranged from 0.8 persons in the Netherlands to 2.2 persons in Croatia and 2.3 persons in the United Kingdom. In 2014, enterprise death rates were particularly low in Ireland (2.0 %), Malta (2.6 %) and Belgium (3.0 %), ranging elsewhere between 5.3 % and 11.9 %, with Portugal (15.1 %) and Bulgaria (16.2 %) above this range.

Table 4: Enterprise demography, business economy, 2015
Source: Eurostat (bd_9b_sz_cl_r2)

Source data for tables and figures (MS Excel)

Data sources

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 context and would be more difficult 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 Rev. 2 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 these 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 corresponding 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. Compared with NACE Rev. 1.1, this has enabled a broader and more detailed set 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 European 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.

Several factors, such as a wish to reduce respondent burden and respond to users’ needs for new data, have led to an amendment of the legal basis. Commission Regulation (EU) No 446/2014 of 2 May 2014 amended Regulation (EC) No 295/2008 of the European Parliament and of the Council and also two implementing Commission Regulations ((EC) No 251/2009 and (EU) No 275/2010) which concern the series of data to be produced and the criteria for the evaluation of the quality of structural business statistics.

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, distributive trades, 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, value added and persons employed) 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 article are:

  • small and medium-sized enterprises (SMEs): with less than 250 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.

Business demography

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.

Foreign-controlled enterprises

Foreign affiliates statistics (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.

Context

In October 2010, the European Commission presented a Communication on a renewed industrial policy. An industrial policy for the globalisation era (COM(2010) 614 final) provided a blueprint that aimed to put industrial competitiveness and sustainability centre stage. It is a flagship initiative that forms part of the Europe 2020 strategy, and set 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 put forward a strategic agenda and proposed 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.

In January 2014, the European Commission adopted a further Communication titled For a European Industrial Renaissance. This set out key priorities for industrial policy, provided an overview of actions already undertaken within the context of the existing policy and put forward some new actions to speed up the attainment of objectives. This was followed in September 2017 by a consolidation of horizontal and sector-specific initiatives into the Communication Investing in a smart, innovative and sustainable industry — A renewed EU industrial policy strategy (COM(2017) 479 final), which aims to empower citizens, revitalise regions and encourage the adoption of new technologies to deliver the smart, clean and innovative industry of the future.

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 EU 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. 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 20th 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. In October 2012, the European Commission proposed a second set of actions through the Communication titled Single Market Act II — Together for new growth (COM(2012) 573 final) to further develop the single market and utilise its untapped potential as an engine for growth. In October 2015, the European Commission presented a new single market strategy with the goal of delivering a deeper and fairer single market, Upgrading the Single Market: more opportunities for people and business (COM(2015) 550 final).

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 10 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. With this in mind, the European Commission launched a public consultation on the SBA to gather feedback and ideas on how the SBA could be revised in order to promote European policy support for SMEs and entrepreneurs during the period 2015-2020. This area of work is also supported by:

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SBS - main indicators (t_sbs_na)
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 (bd)
Foreign controlled EU enterprises - inward FATS (fats)