Business in Ireland Abridged 2012

Births and deaths - employment effects

An important aspect of enterprise births and deaths is the impact on employment in the business economy.  The number of persons engaged by newly birthed enterprises in 2007 was over 14,900 and, in line with the decline in the number of new enterprises, this figure had dropped to 10,700 by 2011.  The small improvement in the number of enterprise births between 2011 and 2012 had a minimal impact on the number of new jobs created.

Employment losses as a result of enterprise deaths increased dramatically from 2007 to 2009, rising from almost 26,700 in 2007 to just over 34,700 in 2009.  By 2010, there was a significant improvement in this figure and the trend continued in 2011, as the employment losses associated with enterprise deaths fell to just under 23,600.  See Figure 4.2.

Births by sector – enterprise numbers

Over the period 2007 to 2012, the Services[1] sector had the highest number of enterprise births each year.  The proportion of new births accounted for by Services also consistently increased over this period from 46.6% of new births in 2007 to 54.5% in 2012.  This is evidence of the increased importance of Services enterprises in the overall stock of enterprises in the business economy.

Construction largely drove the overall fall in enterprise births in the business economy as the number of births in Construction fell from just over 3,800 (28.4% of all births) in 2007 to almost 2,000 (15.8% of all births) in 2012.

The proportion of total new births from the Distribution sector increased from 16.4% in 2007 to 20.0% in 2012.

The Industry and Financial & Insurance Activities sectors combined, consistently had fewer than 10% of new enterprise births during the period 2007 to 2012.  See Figure 4.3.

Births by sector – employment effects

The number of persons engaged in newly birthed enterprises largely reflects the trends already seen in Figure 4.3.

Although the Services sector has seen a decline in the number of new jobs in enterprise births over the period 2007 to 2012, the proportion of total new jobs accounted for by newly birthed Services enterprises has risen from 50.1% in 2007 to 55.9% in 2012.

The Construction sector created over 4,000 new jobs in enterprise births in 2007 but this number had dropped by 57.3% to just over 1,700 in 2012.  Although all sectors except Financial and Insurance activities saw employment fall between 2007 and 2012, the reductions were not as dramatic as those seen in the Construction sector. See Figure 4.4.

Deaths by sector – enterprise numbers

Overall the business economy saw a reduction in enterprise deaths between 2010 and 2011 which is indicative of an improvement in the business environment in Ireland at that time.

The Construction and Services sectors reported the highest numbers of enterprise deaths in each year between 2007 and 2011.  These two sectors combined accounted for 75.5% of all enterprise deaths over the period. 

By contrast the Distribution sector accounted for 17.0% of all enterprise deaths over this five year period while Industry accounted for 5.4% and Financial & Insurance Activities accounted for only 2.2%.  See Figure 4.5.

Deaths by sector – employment effects

For Construction, the number of job losses associated with enterprise deaths fell every year between 2008 and 2011.  In the Services sector, the associated decrease in employment peaked in 2009 with 15,100 job losses but this figure was in the region of 11,000 for both 2010 and 2011.

The Services sector recorded the most job losses in enterprises that ceased activity over the five year period up to 2011 at over 57,900.  This was followed by the Construction sector with over 45,000 job losses.  Note that these figures do not include job losses from enterprises that were still active in the business economy over this period.  See Figure 4.6.

Survivals – enterprise numbers

A particularly useful feature of the Business Demography data is the ability to track new enterprise births from year to year to monitor their survival rates. 

There were almost 13,500 new enterprises birthed in 2007.  Of these, nearly 11,600 enterprises (86.0%) survived one year in business; almost 10,200 (75.7%) survived two years in business; over 8,500 (63.4%) survived three years in business; just over 7,100 (52.9%) survived four years in business and around 6,500 (48.4%) survived at least five years in business.

Over this period, the survival rates have declined somewhat.  For example, the one-year survival rate declined from 86.0% in 2008 (for 2007 births) to 83.8% in 2012 (for 2011 births).  The two-year survival rate declined from 75.7% in 2009 (for 2007 births) to 72.1% in 2012 (for 2010 births).  See Figure 4.7

Survivals – employment effects

The survival data provides an overview of how the employment created by newly birthed enterprises evolved over a number of years following the year of birth.

Enterprises that were birthed in 2007 and survived to 2012 initially created almost 15,000 jobs in 2007.  By 2012, these enterprises employed nearly 18,200 persons. 

Enterprises that were birthed in 2008 and survived to 2012 initially created just under 13,600 jobs.  By 2012, these enterprises employed almost 21,900.

Enterprises that were birthed in 2011 followed a similar pattern to 2010 and initially created fewer jobs than in the years prior to 2010 at under 10,700.  However, by 2012, the number of jobs in these enterprises had increased to almost 23,300.

Between 2007 and 2009 the rate of growth in employment in enterprises that survived the first year slowed significantly.  Enterprises born in 2007 showed an increase in employment of 49.6% in the first year whereas enterprises born in 2008 experienced an employment growth rate of 40.7%.  

However, this situation has reversed in more recent years with enterprises born in 2009, 2010 and 2011 showing employment growth of 63.7%, 111.5% and 117.4% respectively over the first year.  It should be noted however that the initial employment in new births was much lower in the latter three years compared to 2007 and 2008.  See Figure 4.8