Statistics Explained

Business demography statistics


Data from December 2022

Planned update: 27 October 2023

Highlights

In 2020, the EU’s business economy was made up of 26.3 million active enterprises with more than 131 million persons employed.

In 2020, almost 2.9 million jobs were created from 2.3 million newly born enterprises in the EU.
[[File:Business demography statistics 14-12-2022.xlsx]]

Enterprise birth rates, business economy, 2019 - 2020 (%)

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, 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).

Full article

General overview

In 2020, the COVID-19 pandemic disrupted the business environment tremendously, including the temporary shutdown of some business sectors, making many reluctant to start new businesses as the existing ones struggled to keep afloat. In 2020, the EU’s business economy was made up of 26.3 million active enterprises with around 131 million persons employed, a decrease in number of persons employed of almost 2.4 million, which represents 1.8 % compared to 2019. The largest active enterprise population was registered in France (4.5 million) and Italy (3.8 million), followed by Spain (3.1 million) and Germany (2.6 million). As in previous years, the services sector was dominant in every country, as measured by the highest proportion of active enterprises.

There were about 2.9 million jobs created from more than 2.3 million newly born enterprises, based on the final 2020 data. As a consequence of the Covid-19 pandemic, the number of newly-born enterprises in 2020 decreased by around 265 800 enterprises compared with 2019. The one-year survival rate for enterprises created in 2020 was around 82 %. The highest shares of high-growth enterprises in 2020 were reported in Sweden, Finland and the Netherlands.

Active enterprises in the business economy

This section provides an 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. In 2020, looking at EU level, almost three quarters (66 %) of all enterprises active in the business economy (NACE Rev. 2 Sections B to N, excluding K64.2) were within the services sector, providing work for about two thirds of the total number of persons employed (see Figures 1 and 2). Services accounted for between 63.2 % of the number of all enterprises in the business economy in Slovakia and 85.3 % of the total in Luxembourg. In terms of its contribution to employment, the services sector accounted for 53.2 % of the workforce in Czechia, while the Netherlands had the highest share at 78.6 %.

Figure 1: Structure of active enterprises by sector, business economy, 2020 (%)
Source: Eurostat (bd_9bd_sz_cl_r2)


Figure 2: Structure of employment by sector, business economy, 2020 (%)
Source: Eurostat (bd_9bd_sz_cl_r2)

By contrast, only 9.9 % of active enterprises in the EU were found in industry, even though these enterprises provided work for more than 32 million persons. The average size of industrial enterprises (as measured in terms of the number of persons employed) was considerably higher in industry than for services. Indeed, industrial enterprises employed 13 persons on average across the 27 Member States, compared to an average of four persons for services. The average number of persons employed in construction was the lowest, with 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, the number of newly born enterprises as a proportion of the total number of active enterprises decreased in 2020 compared with 2019. The birth rates ranged from 4.6 % in Greece to 18.1 % in Lithuania. For both years, 2019 and 2020, the birth rate was low in Greece, Austria, Italy, Sweden and Belgium. At the other end of the scale, high birth rates for both years were recorded in Lithuania, Malta and Portugal. The comparison of the two years reveals that the birth rate has increased only in 6 of the Member States and decreased in 20 Member States (data for Ireland is missing for 2019 - see Figure 3.

Figure 3: Enterprise birth rates, business economy, 2019 - 2020 (%)
Source: Eurostat (bd_9bd_sz_cl_r2)

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 2020, the employment share ranges from 1.1 % (Austria) to 4.4 % (Malta). Relatively low shares were recorded for both years in Austria, Germany, Luxembourg, the Netherlands and Denmark.

Figure 4: Employment share of enterprise births, business economy, 2019-2020 (%)
Source: Eurostat (bd_9bd_sz_cl_r2)

The data show that those countries with relatively low/high birth rates also tended to report relatively low/high employment shares.


Enterprise survival rate

The aim here is to present information about the life cycle of newly born enterprises and the ability to survive up to five years after their creation. The 2012 business demography data collection enabled the tracking of newly born enterprises over a five-year period, tracing how many of them have survived during that period. Figure 5 shows the one, three and five-year survival rates of enterprises in 2020.

Figure 5: One, three and five-year survival rates of enterprises, business economy, 2020 (%)
Source: Eurostat (bd_9bd_sz_cl_r2)

Looking at the one-year survival rate, it appears that, for the business economy, around 82 % of the enterprises born in 2019 had survived in 2020. The highest one-year survival rates were recorded for the business economy in Sweden (97.1 %) and the Netherlands (95.7 %), with rates also above 90 % in the Hungary, Belgium and Greece. The lowest rates were reported in Lithuania (63.2 %) and Denmark (71.3 %).

Subsequently, year-on-year survival rates posted a gradual fall in all of the countries which have available data. The five-year survival rate of enterprises born in 2015 and still active in 2020 shows that typically less than half of them survive for a five-year period. Enterprises born in 2015 in Ireland, Sweden, Belgium and the Netherlands were most likely to survive up to the fifth year after their birth, while those in Lithuania 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 break-ups or mergers.

Given that the survival rates logically decrease over 5 years in all the 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 6, the second bar shows the change in employment. In only nine EU Member States (Finland, Cyprus, Denmark, the Netherlands, Italy, Bulgaria, Malta, Latvia, Luxembourg), along with Iceland and Norway, did employment increase in those enterprises that survived for five years. The largest decreases were noted in Sweden, Belgium and France.

Figure 6: Enterprises surviving a five-year period, business economy, 2020 (%)
Source: Eurostat (bd_9bd_sz_cl_r2)

High growth enterprises

High growth enterprises (growth in employment by 10% or more) play an important role in the contribution to economic growth and the creation of jobs. In 2020, around 135 000 companies, or almost a tenth (9.4 %) of all active enterprises with at least ten employees in the EU business economy were recognized as high-growth enterprises, providing work for 10.9 million employees.

In 2020, considerable variations were observed across EU Member States in the distribution of high-growth enterprises (see Figure 7). The shares ranged from over 15.7 % in Sweden to less than 2 % in Romania.

Figure 7: High-growth enterprise shares in EU Member States, 2020 (%)
Source: Eurostat (bd_9pm_r2)

High-growth enterprises have a noteworthy impact on employment. In 2020, the highest contributions to the total number of employees with more than 19 % were recorded in Malta and Sweden. By contrast, the lowest shares in 2020 were registered by Cyprus (2.9 %), Romania (5.2 %) and Belgium (5.8 %).

Although high-growth enterprises operate in all sectors of the business economy across the EU, their share in services is higher in the majority of Member States. Looking at a breakdown by economic activity (see Figure 8), high-growth enterprises in 2020 were more predominant in the service sectors, with the highest proportion in “Information and communication“ (17.0 %), followed by “Administrative and support service activities” (11.9 %), "Transportation and storage” (11.6 %) and "Professional, scientific and technical activities" (11.5 %). The first industrial sector in terms of proportions of high-growth enterprises was "Water supply; sewerage, waste management and remediation activities" (9.9 %) and the last with the lowest overall figures were "Accommodation and food services" (6.1 %), a sector hardly hit by the Covid-19 pandemic.

Figure 8: High-growth enterprise shares by economic sectors in the EU, 2020 (%)
Source: Eurostat (bd_9pm_r2)

Source data for tables and graphs

Data sources

Business demography data has been collected on a voluntary basis since 2002.

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 also 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.

Context

Business demography is an important subject for policy-maker discussions 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.

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