Archive:Business services statistics - NACE Rev. 1.1
This Statistics Explained article is outdated and has been archived - for recent articles on structural business statistics see here.
- Data from January 2009. Most recent data: Further Eurostat information, Main tables and Database.
This article presents an overview of European Union structural business statistics for business services. Business services consist of many different activities, treated more in depth in specific articles:
- Advertising services
- Architectural, engineering and technical services
- Computer and information services
- Legal, accounting, market research and consultancy services
- Recruitment and personnel selection services
- Security, cleaning, translation services
Business services are the aggregate of NACE Divisions 72, 'Computer and related activities', and 74, 'Other business activities'.
Main statistical findings
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_Structural_profile_ranking_of_top_five_Member_States,_2006.PNG)
_Persons_employed_in_business_services_(NACE_Divisions_72_and_74)_as_a_proportion_of_those_employed_in_the_non-fi_nancial_business_economy_(NACE_Sections_C_to_I_and_K)_(%25).PNG)
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_Share_of_value_added_and_persons_employed_by_enterprise_size_class,_EU-27,_2006_(%25).PNG)
Structural profile
In 2006, the EU’s business services (NACE Divisions 72 and 74) sector comprised 4.4 million enterprises, more than one in every five enterprises in the whole of the non-financial business economy (NACE Sections C to I and K). The sector’s workforce included 22.2 million persons, making it the largest workforce in the non-financial business economy, with a 17.1 % share of the non-financial business economy workforce. This workforce generated EUR 1 763.3 billion of turnover in 2006 leading to EUR 892.1 billion of value added. As such, the business services sector accounted for 7.9 % of the turnover in the non-financial business economy, while accounting for twice as much of value added, a 15.8 % share. In turnover terms business services was the third biggest sector within the EU’s non-financial business economy, smaller only than wholesale trade and retail trade and repair, whereas in value added terms it was the largest sector. In 15 of the 26 Member States with recent value added data available (no Malta) business services was the largest sector, while it was second largest in three more: seven of the eight Member States where business services was not one of the two largest sectors were Member States that joined the EU in 2004 or 2007, the one exception being Greece.
Among the two NACE divisions that make up the business services sector, computer and related activities (NACE Division 72) accounted for about one fifth of sectoral value added in 2006. Other business activities (NACE Division 74) accounted for the remainder of the output. Of these activities, the largest was professional business services (NACE Group 74.1) which alone provided 31.3 % of all business services value added but just 23.1 % of the workforce. The other business services (NACE Groups 74.6 to 74.8), together contributed 18.8 % of business services value added. However, in employment terms, this subsector was the largest, providing employment for 31.0 % of the business services workforce. Looking at the employment and value added contributions of each subsector, by both of these measures advertising (NACE Group 74.4) was the smallest subsector. Personnel services (NACE Group 74.5) made a considerably greater contribution in employment rather than in value added terms, unsurprising given that one part of this activity involves providing workers through employment agencies.
In value added terms, the United Kingdom was by far the largest contributor to the EU’s business services sector in 2006, and in fact was the largest contributor to each and every one of the subsectors. With EUR 203.5 billion of value added in the business services sector in 2006 the United Kingdom generated 27.0 % of the EU’s business services value added, and also 22.5 % of all value added in the non-financial business economy in the United Kingdom, making it also the most specialised Member State in business services. Germany contributed 17.4 % of the EU’s value added and employment in business services, making it the second largest Member State according to both of these measures. France, Italy and Spain were the only other Member States that recorded more than EUR 50 billion of value added in 2006 in this sector as well as workforces in excess of 2 million persons.
The regional specialization in business services is shown in the map which is based on the non-financial business economy employment share of this sector. The region with the highest specialization in business services in 2006 was Inner London where more than two fifths (43.2 %) of non-financial business economy employment was within this sector. As well as parts of the United Kingdom, several other countries had many regions specialised in these services, notably in the Netherlands and Germany. In a number of countries one region was particularly specialized in these services, typically around the capital city. The regions least specialized in business services (in employment terms) were mainly in Slovakia, Romania and Greece, along with Åland (Finland) and Ciudad Autónoma de Ceuta (Spain).
Data availability for the development of business services based on annual short-term statistics starts in 1998 for computer and related activities and 2000 for other business activities, with the turnover index recording uninterrupted year on year growth (in current prices) for both of these activities. Combined, their growth rate exceeded the average for non-financial services (NACE Sections G to I and Divisions 72 and 74) every year except for 2004. Both of these activities recorded double digit annual growth in 2001, and also in the latest year available, 2007. Between 2000 and 2007, other business activities averaged growth of 6.9 % per annum, and computer and related activities averaged 6.5 % per annum: for comparison the non-financial services average was 5.3 %. The employment index also followed an upward development. Business services as a whole averaged growth of 4.6 % per annum between 1998 and 2007, double the non-financial services average. Employment growth for computer and related activities averaged 5.5 % per annum, despite a fall of 0.8 % in 2003. This one negative rate of change and the relatively low growth of 1.1 % in 2004 were the only years where the rate of change in the employment index for computer and related activities was below the average rate for non-financial services. In contrast, the growth in the employment index for other business activities outstripped the non-financial services average each and every year from 1999 to 2007.
In 2006, a size class breakdown of the EU’s business services value added showed that large enterprises (with more than 250 persons employed) generated about one third (33.4 %) of the total, a somewhat lower share than the non-financial business economy average (42.1 %). However, micro enterprises (with less than 10 persons employed) brought some 29.1 % of value added to the sector in 2006, around 8 percentage points above the non-financial business economy average in 2005. A more detailed analysis, comparing computer and related activities with other business activities, shows that these activities had quite different size structures. Large enterprises played a greater role in computer and related activities, providing 44.6 % of value added in 2006, slightly above the non-financial business economy average.
In contrast, in other business activities, large enterprises generated just three tenths (30.5 %) of value added, while micro enterprises dominated in this activity with a 32.1 % share of value added in 2006, far higher than the equivalent 21.0 % (in 2005) for the non-financial business economy. However, an analysis based on employment gives a different picture. Large enterprises classified to the business services sector employed over one third of the sector’s workforce, slightly above the non-financial business economy average. In total 7.9 million persons worked for large enterprises in the EU’s business services sector in 2006, nearly one in five (18.6 %) of all persons working for large enterprises in the non-financial business economy. This high incidence of employment in large enterprises was due in large part to the importance of labour-intensive activities among several of the other business activities, for example industrial cleaning and personnel services.
Employment characteristics
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According to Labour force survey data, male employment represented 55.3 % of the total number of persons employed in the EU’s business services sector in 2007; a share that was 9.6 percentage points lower than that for the non-financial business economy as a whole, but in line with the non-financial services (NACE Sections C to I and K) average. However, among the two NACE divisions that compose the business services sector, male employment was considerably higher (77.3 %) for computer and related activities, but much lower (51.0 %) for other business activities. The share of the workforce that was male was as low as 39.8 % for other business activities in Cyprus, and was below 50 % in around half of the Member States. In contrast, in computer and related activities, the lowest share of male employment was 67.8 % in Luxembourg, and this share reached as high as 84.8 % in the Netherlands.
Close to four fifths (78.8 %) of those employed in the EU’s business services sector worked on a full-time basis, again very similar to the non-financial services average. Once more this average disguised very different characteristics between the two NACE divisions that compose the sector: nine tenths (90.5 %) of the computer and related activities’ workforce worked full-time, compared with three quarters (76.4 %) for other business activities.
The age structure of the EU’s business services workforce was quite similar to that of the non-financial business economy as a whole in 2007, although the proportions of young persons (aged less than 30) and older persons (aged 50 or more) were both somewhat lower in business services, balanced by a slightly higher proportion of those aged between 30 and 49. In the computer and related activities’ workforce this age class was signifi cantly more represented, 61.4 % compared with 53.7 % on average in the non-financial business economy, while the proportion of older persons (12.8 %) was considerably below the nonfinancial business economy (21.9 %) average.
Expenditure, productivity and profitability
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Gross tangible investment by the EU’s business services sector was valued at EUR 66.6 billion in 2006, around 6.4 % of all investment in the nonfinancial business economy. Professional business services accounted for two fifths (40.9 %) of this total, and computer and related activities a further one fifth (20.1 %). Overall the business services sector recorded an investment rate (investment as a percentage of value added) of 7.5 % in the EU, less than half the non-financial business economy average. The EU recorded investment rates for most of the subsectors within a narrow range, from 6.8 % for advertising to 9.7 % for professional business services: the one exception was personnel services that had a very low investment rate, just 1.2 %, that was in fact the lowest investment rate of all NACE groups within the EU’s non-financial business economy in 2005 or 2006. A very low investment rate was recorded for business services in Luxembourg (1.5 %), while none of the Member States recorded an investment rate higher in business services than in the non-financial business economy as a whole.
An analysis of operating expenditure for the EU’s business services sector shows that close to two fifths (39.5 %) was dedicated to personnel costs in 2006, around two and a half times the average share within the non-financial business economy. This share was particularly high for the personnel services subsector, where the share reached 72.6 %, while the lowest share was 17.1 % for advertising. Average personnel costs were EUR 31.1 thousand per employee for business services in the EU in 2006, but this average varied greatly between the subsectors. The lowest average was EUR 19.3 thousand per employee for other business services, while for personnel services the average was only slightly higher, EUR 21.6 thousand per employee. All other subsectors recorded average personnel costs above the non-financial business economy average, reaching their highest level at EUR 51.1 thousand per employee for computer and related activities. A similar pattern could be seen for apparent labour productivity with the same two subsectors recording the lowest averages and all other subsectors above the non-financial business economy average with computer and related activities at the top of the ranking. However, the overall average for the business services sector was EUR 40.2 thousand of value added per person employed, below the non-financial business economy average of EUR 43.5 thousand per person employed.
The combination of below average apparent labour productivity and above average personnel costs per employee led to a wage adjusted labour productivity ratio of 129.4 % for the EU’s business services sector in 2006, some 21.8 percentage points below the non-financial business economy average. In fact none of the subsectors recorded a wage adjusted labour productivity ratio above the non-financial business economy in 2006, the highest being 141.5 % for advertising, and the lowest being 117.5 % for personnel services and 118.2 % for technical services. Despite these low ratios, the business services sector recorded a relatively high gross operating rate (ratio of gross operating surplus to turnover) of 17.6 % in 2006, significantly higher than the non-financial business economy average of 10.8 %. Furthermore, all of the subsectors recorded a rate above the non-financial business economy average, ranging from 11.5 % for advertising and 12.2 % for personnel services, up to 22.5 % for professional business services.
Data sources and availability
The main part of the analysis in this article is derived from structural business statistics (SBS), including core, business statistics which are disseminated regularly, as well as information compiled on a multi-yearly basis, and the latest results from development projects.
Other possible data sources include short-term statistics and the Labour force survey. In addition, use has also been made of specialist sources for particular areas, notably transport, energy, research and development, environment, tourism and information society statistics.
Context
The freedom to provide services and the freedom of establishment are central principles to the internal market for services and are set out in the EC Treaty. They guarantee EU enterprises the freedom to establish themselves in other Member States, and the freedom to provide services on the territory of another EU Member State. The Directive on services in the internal market (COM (2006) 123) aims to achieve a genuine internal market in services, removing legal and administrative barriers to the development of services activities between Member States. The Directive was to be implemented by Member States by the end of 2009 at the latest. As well as covering most business services (with the notable exception of services of temporary work agencies), the Directive applies to a wide variety of services including industrial and construction activities, as well as distributive trades, hotels and restaurants, travel agents, real estate and renting services.
Many of these services could be performed in-house by enterprises themselves, but purchasing (outsourcing) them from service providers enables them to focus on their core activities, taking advantage of the specialization offered by service providers. As such, an efficient and successful business services sector can contribute top the overall competitiveness of the economy.
Further Eurostat information
Publications
- European Business: Facts and figures - 2009 edition
Dedicated section
Methodology / Metadata
- Business services statistics (ESMS metadata file - bs_esms)
Other information
- Directive 2006/123 of 12 December 2006 on services in the internal market