Background Notes

This release covers the reference year 2014, however data on enterprise deaths relates to 2013. Statistics are also provided on enterprise births since 2008 that were still active during 2013 and 2014. All 2014 enterprise births will be followed for 5 years to assess their survival rate and the resulting effect on employment.

Detailed data tables are available on CSO’s data dissemination service at:

http://www.cso.ie/px/pxeirestat/database/eirestat/Business%20Demography/Business%20Demography_statbank.asp?sp=Business Demography&Planguage=0

The Background Notes at the link below provide more details on the release:

http://www.cso.ie/en/surveysandmethodology/multisectoral/businessdemography/backgroundnotes/

For further information on the NACE Rev. 2 classification of economic activity, see this link:

http://www.cso.ie/en/surveysandmethodology/classifications/classificationofindustrialactivity/

Footnotes:

¹The Business Demography series 2008 - 2012 has been revised due to active enterprise definition changes. The starting point for all CSO enterprise surveys is the CSO's Central Business Register.  This register contains the active population of enterprises and is updated principally using administrative data as received by CSO from the Revenue Commissioners.   The various Revenue Income Tax, Corporation Tax, VAT and PREM (P35) datasets as received at varying points over a calendar year provide the essential update information for the creation of the active population of enterprises which need to be measured for economic activity.  This information is, in turn, supplemented by information received from the Companies Registration Office (for example on the legal form of the enterprise) and from updates received as part of the surveying of enterprises.

The historic definition of what constitutes an active enterprise outlines that an enterprise is active if it meets any one of the following criteria:

- Paid VAT during the reference year

- Have employees during the reference year

- File a Corporation Tax return for the reference year

- File an Income Tax return for the reference year with turnover of over €50,000.

Furthermore, Eurostat rules allow some flexibility to interpret the above and outline that

“If there is insufficient information on turnover or employment to determine whether or not an enterprise is active, then national methods leading to this aim will be accepted”. 

A new EU definition of what constitutes an active enterprise has recently been agreed at EU level and will likely achieve full legislative effect (FRIBS package, see footnote²) within a few years.  This definition is a much clearer outline of what constitutes an active enterprise.  An enterprise is considered to be active if:

"in a certain period it generates turnover, employs staff or makes investments in the period"

² The Framework Regulation Integrating Business Statistics:

 http://ec.europa.eu/eurostat/about/opportunities/consultations/fribs

³The private business economy covers the NACE Rev 2 sectors B - N (excluding K64.20 Activities of holding companies). For comparison with previous Business Demography releases only sectors B – N (excluding K64.20, activities of holding companies) figures are included in the release text. Sectors P & R are an extension of the coverage in recent years.

The full list of Rev 2 sectors covered is:

B – Mining and Quarrying

C – Manufacturing

D – Electricity, Gas, Steam and Air Conditioning Supply

E – Water Supply; Sewerage, Waste management and Remediation Activities

F – Construction

G – Wholesale and Retail Trade; Repair of Motor Vehicles and Motorcycles

H – Transportation and Storage

I – Accommodation and Food Service Activities

J – Information and Communication

K – Financial and Insurance Activities (excludes NACE code 64.20 Activities of holding companies)

L – Real Estate Activities

M – Professional, Scientific and Technical Activities

N – Administrative and Support Service Activities

P – Education

R – Arts, Entertainment and Recreation

The number of active enterprises in year t (reference year) cannot be calculated from previous active enterprise figures and births and deaths figures. e.g. the number of active enterprises in year t does not equal the number of active enterprises in year t-1, minus deaths in t-1 plus births in year t. Birth calculations involve profiling work where real births are checked and weights applied based on checks conducted (a similar process is conducted for death calculations). In addition, final enterprise deaths take two years to be finalised, therefore enterprises may not be in enterprise totals in one year but could be in the next year and may still not be considered an enterprise birth or death. 

⁴Persons engaged include employees, proprietors and family members. Persons engaged are the sum of Employees plus Working Proprietors.

Employees are persons who are paid a fixed wage or salary. Employees are calculated using an annual employment return received from Revenue. This return contains all registered employers and the number of employees they have paid a wage or salary for a reference year. The file can contain individuals paid a wage by an employer as well as self-employed individuals who pay themselves a working wage. An individual may be counted more than once for a reference year if they work multiple jobs in that reference year. The annual employment return from Revenue contains persons at work or temporarily absent because of illness, holidays, strike etc. If an individual is paid a wage for any segment of a reference year they are included in the overall figures.

Working Proprietors (Proprietors and family members); included here are those proprietors, partners, etc and members of their families who work regularly in the firm and are not paid a definite wage or salary. Working Propreitors is not a full count of self-employed individuals as some self-employed receive a wage and are returned via annual employment returns and are included in the Employees calculation.  

Comparison of Business Demography and Quarterly National Household Survey employment levels:
The primary classification used for the Quarterly National Household Survey (QNHS) results is the International Labour Office (ILO) labour force classification. Labour Force Survey data on this basis have been published since 1988. The ILO classification distinguishes the following main subgroups of the population aged 15 or over

In Employment: Persons who worked in the week before the survey for one hour or more for payment or profit, including work on the family farm or business and all persons who had a job but were not at work because of illness, holidays etc. in the week.

Unemployed: Persons who, in the week before the survey, were without work and available for work within the next two weeks, and had taken specific steps, in the preceding four weeks, to find work. It should be noted that as per Eurostat’s operational implementation, the upper age limit for classifying a person as unemployed is 74 years.

Inactive Population (not in labour force): All other persons.

The labour force comprises persons employed plus unemployed. Persons in employment classify their employment status as being self-employed, employee, assisting relative/family worker or on a state sponsored employment scheme. Employees are defined as persons who work for a public or private employer and who receive compensation in the form of wages, salaries, fees, gratuities, payment by results or payment in kind. Self-employed persons who pay themselves a working wage are classified as self-employed in the QNHS.

Key Differences between QNHS and Business Demography figures include:
- Business Demography is based purely on administrative data received from Revenue on an annual basis.
- QNHS is based on survey data which is collected every quarter from the household.
- Business Demography does not cap employment at 1 or at any value for an individual. Business Demography employment is a count of persons engaged at an enterprise and sector level. All work conducted by an individual over an annual period is included in the relevant enterprise (and therefore sector) in which they worked, on the basis of weeks (not hours) worked.
- QNHS caps employment at 2 for an individual in relation to full time equivalence only, therefore it takes into consideration a person’s first and second job. Otherwise employment is capped at one for an individual. 
- Timing issues. As stated, QNHS is conducted on a quarterly basis while Business Demography is conducted over a yearly basis. QNHS also takes into account the hours worked by an individual and uses these values in full time equivalent employment calculations. Business Demography operates on a weeks worked basis from files received from Revenue. If an individual is classed as working 52 weeks in a reference period for an enterprise, they are classed as 1 employee (no hours worked is taking into consideration), irrespective of how many hours they have actually worked in those weeks

⁵The composition of sectors used in the graphs is as follows:

- Services: Sectors H,I,J,L,M,N

- Distribution: Sector G

- Industry: Sectors B,C,D,E

- Construction: Sector F

- Financial Service Activities: Sector K excluding 64.20, Activities of holding companies.

⁶Small and Medium Enterprises are defined as enterprises with less than 250 persons engaged. The persons engaged breakdown provided in the figures are;

Less than 10: Micro Enterprises

10 – 49: Small Enterprises

50 – 249: Medium Enterprises

250+: Large Enterprises.

⁷Enterprise Deaths: An enterprise death amounts to the dissolution of a combination of production factors with the restriction that no other enterprises are involved in the event. Deaths do not include exits from the population due to mergers, takeovers, break-ups or restructuring of a set of enterprises. It does not include exits from a sub-population resulting only from a change of activity.

An enterprise is included in the count of deaths only if it is not reactivated within two years.

The population of enterprise deaths in 2013 contains all enterprises that ceased at some point during the year 2013. The figures given in the release in relation to deaths are final figures for the period 2008 - 2012 and are preliminary figures for 2013. Final figures for 2013 will be released in June 2017. 

⁸Enterprise Births: An enterprise birth amounts to the creation of a combination of production factors with the restriction that no other enterprises are involved in the event. Births do not include entries into the population due to mergers, break-ups, split-off or restructuring of a set of enterprises. It does not include entries into a sub-population resulting only from a change of activity.

A birth occurs when an enterprise starts from scratch and actually starts activity. An enterprise creation can be considered an enterprise birth if new production factors, in particular new jobs, is created. If a dormant unit is reactivated within two years, this event is not considered a birth.

The population of enterprise births in 2014 contains all enterprises that started at some stage during the year 2014.

⁹Population, births and survival data in this release relates to 2014, but the latest deaths data available is for 2013.

¹⁰Business Demography figures at an EU level are available at the following link. Latest data available is for 2013.

 http://ec.europa.eu/eurostat/web/structural-business-statistics/entrepreneurship/business-demography

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