1 11 th Joint UNECE/Eurostat/OECD Seminar on Business Registers Valentín Llorente García (INE - Spain) Session 3: Business Register as a source for further development of business demography statistics. Luxembourg, 7 October 2009 Uses of Business Register in the context of Business Demography: the Spanish experience

2 Several issues arisen from Business Demography perspective. - Part one: Uses of Business Register; general overview - Part two: Business Demography - Part three: Employers Demography - Part four: High-Growth Enterprises and Gazelles - Part five: Firm Growth Project 11 th Joint UNECE/Eurostat/OECD Seminar on Business Registers

3 1. CONTEXT Nowadays, the role of Business Register (BR) as source of statistical information is becoming more relevant. But users needs are not only focussed on figures related to a point in time; they search also for indicators showing the evolution of entrepreneurship frame. Business Register department at Spanish National Statistical Institute (INE) has developed works in order to be available several kinds of statistical information:  Standard statistical data (Website of INE)  Tailored data - Institutional users (Civil Services, Local Governments, Chamber of Commerce, Central Bank, Directorate for Small and Medium Enterprises) - Private firms, Foundations, Individual users, …  Specialized economic analyses - Business Demography - Employers Demography and High-Growth Enterprises - Firm Growth Project Part one: Uses of Business Register; general overview

4 2. OVERALL VIEW ON THE PROCEDURE TO EXTRACT INFORMATION Business Register is subjected to a process of statistical analysis by applying international methodology, and particularly:  Computer procedures combined with manual checks mainly focussed on big companies.  Delimitation of target sub-populations paying attention to harmonized methodological definitions.  Making-up of data tables according to requirements specified in each project. Part one: Uses of Business Register; general overview

5 STATISTICAL UNIT The statistical unit to be used for Business Demography data collections is the enterprise defined as follows: ‘The enterprise is the smallest combination of legal units that is an organisational unit producing goods or services, which benefits from a certain degree of autonomy in decision-making, especially for the allocation of its current resources. An enterprise carries out one or more activities at one or more locations. An enterprise may be a sole legal unit.’ POPULATION OF ACTIVE ENTERPRISES (N) The population of active enterprises including all employers and non- employers (N) consists of all enterprises that had either turnover or employment at any time during the reference period. Part two: Business Demography 1. Methodology

6 ENTERPRISE BIRTHS (R) The enterprise births (population R) are covering all enterprises, regardless of whether they are employers or not. Enterprise births are defined as follows: ‘A count of the number of births of enterprises registered to the population concerned in the business register corrected for errors. A 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.’ Part two: Business Demography 1. Methodology

7 SURVIVAL OF NEWLY BORN ENTERPRISES The survival of an enterprise is defined in the following way:  An enterprise born in year xx or having survived to year xx from a previous year is considered to have survived in year xx+1 if it is active in terms of turnover and/or employment in any part of year xx+1 (=survival without changes).  An enterprise is also considered to have survived if the linked legal unit(s) have ceased to be active, but their activity has been taken over by a new legal unit set up specifically to take over the factors of production of that enterprise (=survival by take- over). Part two: Business Demography 1. Methodology

8 ENTERPRISE DEATHS (D) The enterprise deaths (population D) are covering all enterprises, regardless of whether they are employers or not. Enterprise deaths are defined as follows: ‘A count of the number of deaths of enterprises registered to the population concerned in the business register corrected for errors. A 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, take-overs, break-ups and restructuring of a set of enterprises. It does not include exits from a sub-population resulting only from a change of activity.’ NOTE: All these definitions can be consulted in ‘Eurostat-OECD Manual on Business Demography Statistics’. Part two: Business Demography 1. Methodology

9 Part two: Business Demography 2. Spanish results: Population of active enterprises

10 Part two: Business Demography 2. Spanish results: Population of active enterprises

11 Part two: Business Demography 3. Spanish results: Enterprise births

12 Part two: Business Demography 3. Spanish results: Enterprise births

13 Part two: Business Demography 3. Spanish results: Enterprise births

14 Part two: Business Demography 4. Spanish results: Survivals of newly born enterprises

15 Part two: Business Demography 4. Spanish results: Survivals of newly born enterprises

16 Part two: Business Demography 5. Spanish results: Enterprise deaths

17 Part two: Business Demography 6. Spanish results: Enterprise births vs. enterprise deaths

18 STATISTICAL UNIT Again the statistical unit to be used for Employers Demography is the enterprise, but in this case a threshold of 1 employee should be reached. POPULATION OF ACTIVE EMPLOYERS ENTERPRISES (N 1 ) The population of active employers enterprises (N 1 ) consists of all enterprises with 1 or more employees on the annual average in head counts over their operating period. EMPLOYER ENTERPRISE BIRTHS (R 1 ) There are two conditions which qualify an enterprise as an employer birth: 1. It was an enterprise birth in year xx, and had at least one employee in the year of birth, or 2. It existed before year xx, was not an employer for the two previous years and had at least one employee in year xx (entry by growth). The growth should not be due to the take-over of another enterprise with employees. Part three: Employers Demography 1. Methodology

19 SURVIVAL OF NEWLY BORN EMPLOYER ENTERPRISES, two possibilities:  An employer enterprise born in year xx or having survived as employer to year xx from a previous year is considered to have survived in year xx+1 if it has one or more employees in year xx+1 (=survival without changes).  An employer enterprise is also considered to have survived if the linked legal unit(s) have ceased to be active, but their activity has been taken over by a new legal unit set up specifically to take over the factors of production of that enterprise, employees included (=survival by take-over). EMPLOYER ENTERPRISE DEATHS (D 1 ) There are two conditions which qualify an enterprise as an employer death: 1. It was an enterprise death in year xx, and had at least one employee in the year of death, or 2. It had at least one employee in year xx, continued activity but was not an employer for the two following years (exit by decline). The decline in employment should not be due to a split-off. Part three: Employers Demography 1. Methodology

20 Part three: Employers Demography 2. Spanish results: Population of Active Employer Enterprises

21 Part three: Employers Demography 2. Spanish results: Population of Active Employer Enterprises

22 Part three: Employers Demography 3. Spanish results: Employer Enterprise births

23 Part three: Employers Demography 3. Spanish results: Employer Enterprise births

24 Part three: Employers Demography 4. Spanish results: Survivals of newly born Employer Enterprises

25 Part three: Employers Demography 4. Spanish results: Survivals of newly born enterprises

26 Part three: Employers Demography 5. Spanish results: Employer Enterprise deaths

27 Part three: Employers Demography 5. Spanish results: Employer Enterprise deaths

28 Part three: Employers Demography 6. Spanish results: Employer Enterprise births vs. deaths

29 Part four: High-Growth Enterprises and Gazelles 1. Sensitivity Analysis. Growth period

30 Part four: High-Growth Enterprises and Gazelles 1. Sensitivity Analysis. Growth period

31 Part four: High-Growth Enterprises and Gazelles 1. Sensitivity Analysis. Growth period

32 HIGH-GROWTH ENTERPRISES High-growth enterprises as measured by employment (or by turnover) are all enterprises with average annualised growth in employees (or in turnover) greater than 20% per annum, over a three-year period, and with ten or more employees at the beginning of the observation period. GAZELLES Gazelle enterprises are a subset of high-growth enterprises; they are the high-growth enterprises born five years or less before the end of the three-year observation period. In other words, measured in terms of employment (or of turnover) gazelles are enterprises which have been employers for a period of up to five years, with average annualised growth in employees (or in turnover) greater than 20% per annum over a three-year period and with ten or more employees at the beginning of the observation period. Part four: High-Growth Enterprises and Gazelles 2. Methodology

period: 8149 high-growth enterprises and 1476 gazelles period: 8857 high-growth enterprises and 1532 gazelles Part four: High-Growth Enterprises and Gazelles 3. Spanish results (Employment definition)

34 Part four: High-Growth Enterprises and Gazelles 3. Spanish results (employment definition)

35 BACKGROUND The overall aim of this project is to develop relevant, internationally comparable indicators for measuring firms’ growth using business register data. Danish institution FORA has engaged in a partnership with the UK-based National Endowment for Science, Technology and the Arts (NESTA) in order to develop this project. IDEA AND PROJECT OUTLINE The main idea of the Firm Growth Project is to create indicators that place firms in 11 different growth intervals, such that it will be possible to produce distribution curves that are easily comparable across countries. The indicators would be broken down by age, size class and by sector, although in the Spanish case the variable firm’s age was not possible to apply. Additional statistics on firms’ contribution to job creation would also be coupled to the firms within the different intervals. THE INDICATORS The indicators developed in the firm growth project would be an extension of the indicators created in the EUROSTAT-OECD Manual on Business Demography Statistics, where high-growth enterprises are defined. Part five: Firm Growth Project 1. Methodology

36 The firm growth project takes as a starting point the definition of high-growth enterprises but goes further in identifying all firms’ growth, using 11 different growth intervals (numbered 1 to 11) as shown in the Table below. Part five: Firm Growth Project 1. Methodology This gives rise to the following definition of growth measure as it is applied in the Spanish case: The indicators of the firms growth project measure the distribution of firm growth for all employer enterprises over a 3 years period. Growth is measured by the number of employees and data is broken down by size class and sector. The indicator measure the number of firms that fulfil the given requirements. POPULATION The population consists of active employer enterprises (with at least one employee) that have survived during the measurement period from 2002 to It is required that the employer firms have had at least one employee both in period t (2005) and t-i (2002).

37 Part five: Firm Growth Project 2. Spanish results

38 Part five: Firm Growth Project 2. Spanish results

39 Part five: Firm Growth Project 2. Spanish results

40 11 th Joint UNECE/Eurostat/OECD Seminar on Business Registers Session 3: Business Register as a source for further development of business demography statistics. Luxembourg, 7 October 2009 Uses of Business Register in the context of Business Demography: the Spanish experience