Small and medium enterprises (SMEs) have received much attention recently due to the large employment in this sector and its potential to support a recovery in the Irish economy. This chapter outlines some of the main CSO statistics available for SMEs. Chapter 5, which deals with Business Performance in Ireland, also contains data on these enterprises.
SMEs are defined as enterprises with less than 250 persons engaged. In this chapter SMEs are further split into micro enterprises with less than 10 persons engaged, other small enterprises with between 10 and 49 persons engaged and medium sized enterprises with between 50 and 249 persons engaged. See Appendix 3.
See Tables 3.1, 3.2 and 3.3 in this chapter for more detail on the data used in graphs.
SMEs account for 99.7% of active enterprises, 68.0% of persons engaged, 50.3% of turnover and 46.2% of gross value added (GVA). It is noticeable that while SMEs employ almost seven in every ten persons in the business economy, they account for less than half of GVA. See Figure 3.1.
| SMEs (<250) | Large (250+) | |
| Active enterprises | 99.7 | 0.3 |
| Persons engaged | 68 | 32 |
| Turnover | 50.3 | 49.7 |
| GVA | 46.2 | 53.8 |
Business Demography - Active Enterprises and Persons Engaged
Looking at the CSO Business Demography data in more detail, SMEs can be broken down into micro, other small and medium sized enterprises.
The majority of enterprises in the business economy at 90.7% were micro-enterprises. A further 7.7% were other small enterprises while 1.3% were classified as medium sized enterprises. Only 0.3% of enterprises were large with greater than 250 persons engaged. See Figure 3.2.
| Active enterprises | |
| Micro (<10) | 90.7 |
| Small (10-49) | 7.7 |
| Medium (50-249) | 1.3 |
| Large (250+) | 0.3 |
Micro-enterprises employed 26.5% of persons engaged in the business economy while other small enterprises accounted for a further 22.5%. Medium sized enterprises accounted for 18.9% of total persons engaged.
Large enterprises accounted for only 0.3% of all enterprises but employed 32.0% of total persons engaged. See Figures 3.2 and 3.3.
| For long labels below use to display on multiple lines | Persons engaged |
|---|---|
| Micro (<10) | 26.5 |
| Small (10-49) | 22.5 |
| Medium (50-249) | 18.9 |
| Large (250+) | 32 |
Business Operations[1] - Turnover and GVA
The structural business surveys were used to analyse the financial variables of turnover and GVA by employment size class. Enterprises were classified by employment size classes based on the number of persons engaged provided on the business survey forms. This is in contrast to the Business Demography data provided in Figures 3.1 to 3.3 where the number of persons engaged was taken from administrative sources.
As seen previously in Figure 3.1, SMEs accounted for just over half of total turnover in the business economy. This amounted to just over €168 billion for SMEs compared to almost €166.3 billion for large enterprises. Micro enterprises accounted for 11.3% of total turnover, other small enterprises accounted for 18.0% and medium sized enterprises accounted for 20.9%. See Figure 3.4.
[1] In contrast to the Business Demography statistics, the Financial & Insurance Activities sector (NACE Rev. 2 Section K) was not included in the Business Operations data due to the unavailability of persons engaged data on the relevant survey forms. The Services sectors of R92, R93, S95 and S96 were included in the analysis.
| For long labels below use to display on multiple lines | Turnover |
|---|---|
| Micro (<10) | 11.3 |
| Small (10-49) | 18 |
| Medium (50-249) | 20.9 |
| Large (250+) | 49.7 |
SMEs accounted for almost €42.2 billion or 46.2% of total GVA in the business economy in 2012. Micro enterprises accounted for 14.1% of total GVA, other small enterprises accounted for 14.7% and medium sized enterprises accounted for 17.3%. See Figure 3.5.
| For long labels below use to display on multiple lines | GVA |
|---|---|
| Micro (<10) | 14.1 |
| Small (10-49) | 14.7 |
| Medium (50-249) | 17.3 |
| Large (250+) | 53.8 |
Using the structural business surveys, it is possible to categorise SMEs into foreign versus Irish-owned enterprises, and also those SMEs that engage in international trade versus those that do not. If an enterprise exported or imported goods/services then that enterprise is categorised as engaged in international trade.
In relation to the €42.2 billion in GVA generated by SMEs in 2012, 37.9% was accounted for by Irish SMEs that were solely engaged with the domestic economy. This type of SME accounted for 63.3% of the employment in all SMEs. Irish SMEs that engaged in international trade in 2012 accounted for a further 27.7% of GVA while their SME employment share was 25.4%.
Foreign-owned SMEs that engaged in international trade accounted for just less than a quarter of GVA while foreign-owned SMEs solely engaged with the domestic economy accounted for the remaining 10.3% of GVA. While foreign-owned SMEs accounted for just over a third of GVA in all SMEs, they only accounted for 11.2% of total SME employment. See Figure 3.6 and Table 3.1.
Foreign-owned SMEs generated significant amounts of GVA given the number of persons engaged in these enterprises. GVA per person engaged in foreign-owned SMEs which were engaged in international trade was under €169,100. The figure for foreign-owned SMEs that were solely engaged in the domestic economy was over €131,400. The equivalent figures for Irish-owned SMEs were much lower compared to foreign-owned SMEs at over €55,300 (engaged in international trade) and almost €30,500 (engaged solely with the domestic economy). See Figure 3.7 and Table 3.1.
| For long labels below use to display on multiple lines | GVA |
|---|---|
| Irish trader | 27.7 |
| Irish non-trader | 37.9 |
| Foreign trader | 24.2 |
| Foreign non-trader | 10.3 |
| GVA per person engaged | |
| Irish trader | 55308 |
| Irish non-trader | 30451 |
| Foreign trader | 169062 |
| Foreign non-trader | 131413 |
| Table 3.1 GVA and persons engaged in SMEs by type of enterprise, 2012 | |||
| GVA | Persons engaged1 | GVA per person engaged | |
| €m | No | € | |
| Irish trader | 11,669 | 210,982 | 55,308 |
| Irish non-trader | 15,989 | 525,077 | 30,451 |
| Foreign trader | 10,187 | 60,256 | 169,062 |
| Foreign non-trader | 4,334 | 32,980 | 131,413 |
| All SMEs | 42,179 | 829,295 | 50,861 |
| Source: CSO structural business surveys | |||
| 1 The persons engaged in this table were taken from the CSO business surveys rather than the CSO Business Demography statistics. | |||
Business Demography – SME shares within sectors
There were large variations across sectors when looking at the SME share of employment. In Construction, 96.0% of persons engaged worked in SMEs while the equivalent figures for Industry and Financial & Insurance activities were 55.0% and 30.3% respectively. See Figure 3.8.
| SMEs (<250) | Large (250+) | |
| Construction | 96 | 4 |
| Services | 73.1 | 26.9 |
| Distribution | 72.2 | 27.8 |
| Industry | 55 | 45 |
| Financial and Insurance | 30.3 | 69.7 |
Business Operations - SME shares within sectors
The SME share of employment was significantly higher than the SME share of turnover across the broad sectors. This implies a lower turnover per person engaged for SMEs compared to large enterprises. For example, in Industry the SME share of employment was 55.0% while the SME share of turnover was 30.7%. In Services, the SME share of employment was 73.1% while the SME share of turnover was 43.3%. The exception to this was in Distribution where SMEs had a slightly higher share of turnover when compared to employment. See Figures 3.8 and 3.9.
| SMEs (<250) | Large (250+) | |
| Construction | 86.4 | 13.6 |
| Distribution | 75.6 | 24.4 |
| Services | 43.3 | 56.7 |
| Industry | 30.7 | 69.3 |
The SME share of GVA within the broad sectors shows a similar picture to turnover. See Figure 3.10
| SMEs (<250) | Large (250+) | |
| Construction | 89.2 | 10.8 |
| Distribution | 71.2 | 28.8 |
| Services | 53.8 | 46.2 |
| Industry | 24.7 | 75.3 |
Business Demography – Sectoral breakdown of SME totals
The sectoral breakdown of SMEs shows that almost half or 48.7% of active enterprises were in Services. This was followed by 22.8% in Distribution and 18.3% in Construction. The remaining SMEs were either in Industry with 7.2% or Financial & Insurance activities with 3.0%. See Figure 3.11.
| Financial and Insurance | Services | Distribution | Construction | Industry | |
| Active enterprises | 3 | 48.7 | 22.8 | 18.3 | 7.2 |
The sectoral profile of employment in SMEs shows some differences compared to the sectoral profile of active enterprises. For example, Construction only accounted for 8.9% of SME employment while it accounted for double that percentage in active enterprises. Industry accounted for 13.1% of SME employment while it only accounted for about half that percentage in active enterprises. See Figures 3.11 and 3.12.
| Financial and Insurance | Services | Distribution | Construction | Industry | |
| Persons engaged | 3.5 | 46.2 | 28.3 | 8.9 | 13.1 |
Business Operations – Sectoral breakdown of SME totals
The sector that made the largest contribution to turnover in SMEs at 46.7% was Distribution. This was followed by Services and Industry with 28.2% and 20.5% respectively. Construction contributed far less at 4.6%. See Figure 3.13.
| Industry | Construction | Distribution | Services | |
| Turnover | 20.5 | 4.6 | 46.7 | 28.2 |
The sector that made the largest contribution to SME gross value added at 42.8% was Services. Distribution contributed the next largest share at 26.6%. Industry, which is a high value added sector, contributed 22.4% of total SME gross value added, while Construction contributed 8.2%. See Figure 3.14.
| Industry | Construction | Distribution | Services | |
| GVA | 22.4 | 8.2 | 26.6 | 42.8 |
Impact of the downturn on SME employment
Employment in SMEs for the total business economy fell from almost 1,093,000 in 2007 to just over 829,000 in 2012 or to 75.9% of the 2007 level. The sector that was impacted the most was Construction where SME employment in 2012 was only 34.4% of the 2007 level with over 140,300 job losses. Industry was also impacted quite heavily with SME employment in the sector falling to 74.1% of the 2007 level, which corresponds to over almost 38,100 job losses. The only sector where SME employment increased over this period was in Financial & Insurance activities. See Figure 3.15.
| Industry | Construction | Distribution | Services | Financial and Insurance | Total business economy | |
| 2007 | 100 | 100 | 100 | 100 | 100 | 100 |
| 2008 | 97.7 | 82.9 | 100.3 | 100.8 | 103.5 | 96.8 |
| 2009 | 82.8 | 55.4 | 91.5 | 90.6 | 97.5 | 83.1 |
| 2010 | 78.3 | 43.9 | 88 | 87.8 | 96.7 | 78.2 |
| 2011 | 76.6 | 38.1 | 86.8 | 88 | 101.6 | 76.8 |
| 2012 | 74.1 | 34.4 | 85.4 | 89.3 | 101.5 | 75.9 |
Data for large enterprises has also been included for comparison purposes. Employment in large enterprises was near 391,000 in 2012 or 89.7% of the 2007 level for the total business economy. In contrast to the SMEs, there was a recovery in the numbers employed by large enterprises in 2012 rising marginally from 384,200 in 2011 to 390,800. This rise was driven by the Distribution, Services and Financial & Insurance sectors while employment in the sectors of Industry and Construction showed a decline. See Figure 3.16.
| Industry | Construction | Distribution | Services | Financial and Insurance | Total business economy | |
| 2007 | 100 | 100 | 100 | 100 | 100 | 100 |
| 2008 | 96.1 | 83.9 | 104.2 | 106.4 | 104.4 | 102.2 |
| 2009 | 88.1 | 48.9 | 93.8 | 95.5 | 98.9 | 92.1 |
| 2010 | 81.8 | 29.3 | 92.1 | 90.3 | 100.4 | 87.9 |
| 2011 | 83.1 | 24.5 | 91.5 | 92.1 | 98.3 | 88.2 |
| 2012 | 82.1 | 19.7 | 93.4 | 94.8 | 102 | 89.7 |
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