Employers, Founders and Gazelles: Developments in Business Demography in Europe Since 2005 20th International Roundtable on Business Survey Frames - Wiesbaden Group on Business Registers Session 5c, 24/10/2007 Hartmut Schrör, Eurostat hartmut.schroer@ec.europa.eu

Business demography: current status Business Demography at EU level since reference year 1997 Annex IX of recast Parliament and Council Regulation on SBS Coverage of employers and non-employers, no threshold Continued demand for data covering the whole business population

New elements in business demography Business demography based on employers only Better comparability across countries Better focus on units that are economically significant 1/3 to 2/3 of business population excluded High growth enterprises and gazelles New elements not covered by SBS Regulation => voluntary at EU level OECD-Eurostat Entrepreneurship Indicators Programme Eurostat-OECD Manual on Business Demography Statistics

Employer enterprises Three concepts of birth and death Enterprise birth / death: all enterprises, i.e. employers and non-employers. No size thresholds. Current practice. Employer enterprise birth /death: enterprises with at least one employee. Economic enterprise birth / death: enterprises with at least two employees.

Employers: just drop “0 employees” size class? Birth rates Birth rate = newly born employer enterprises / all employer enterprises Problem: What if an existing non-employer enterprise becomes an employer? Now it would in the denominator but not in the enumerator => birth rate too low. Solution: “entry by growth” Death rates Same problem: What if an employer becomes a non-employer but continues business? Same solution: “exit by decline”

Employer enterprises How to distinguish between employers and non-employers in practice? One employee on annual average? At least half an employee on average? Any other fraction of 1? At least one employee at the end of the reference period? Problem: different administrative sources in EU Member States Annual averages (rational numbers, integers) Quarterly, monthly data

Employer enterprises Definition of an employer enterprise An enterprise should be considered an employer enterprise in a given year if it has at least one employee at any time during the reference period from 01.01 to 31.12. Its operating period as an employer within a calendar year is the time during which it has at least one employee. Size classes: “up to 4 employees” 5-9 10 or more

Employer enterprises Remaining issue Way forward How to set a two employee threshold consistently for economic enterprise births and deaths? At least 2 on average? … at any time of the year? … > 1 on average? Way forward 16 countries to deliver results to Eurostat in January 2008 Release expected in first half of 2008

High growth enterprises Provisional definition 20% average annualised growth over a three year period Measured in employment or turnover Gazelles: up to 5 years old Exclusions Growth by take-over Enterprises born in xx-3 (because of low turnover) Tentative threshold of 10 employees at xx-3

High growth enterprises Way forward OECD: Sensitivity testing with volunteer NSIs Threshold Growth factor OECD workshop on high growth 19 November EU: 16 countries to deliver results to Eurostat in January

Factors of Business Success - background Business Demography: births, survivals, deaths, and related employment Further questions What are the factors determining the success / survival of newly born enterprises? What obstacles do newly born enterprises face? What support to them is most useful? What is the profile of the successful entrepreneur? => FOBS project

FOBS - Methodology Target population Enterprises that were born in 2002 and survived for 3 years, i.e. until the time of the survey in 2005. Sub-population of enterprises that are still managed by the founder => profile of the successful entrepreneur Samples drawn from populations of newly born enterprises identified in business registers using the business demography methodology

FOBS Questionnaire (1/2) Start-up conditions Motivation for start-up Financing Difficulties at start-up Support and advice Entrepreneur’s characteristics Education Experience managing an enterprise Branch experience Gender Age Citizenship

FOBS Questionnaire (2/2) Present situation Employment, turnover Co-operation, networking Difficulties developing the enterprise Future plans and expectations Future of the enterprise (continuing, selling, closing down) Development of employment, turnover, investments

Experience managing an enterprise Start-up difficulties

Gender Labour Force Survey vs. FOBS

Gender Previous occupation

FOBS - Conclusions Successful project Efficient combination of register based data (3 year-old enterprises as subframe) for targeted business survey What next? Focus on access to finance