Employment by enterprise size
Key findings
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Although large enterprises represent only less than 1% of the total population of enterprises, they account for a significantly higher share of employment – between 47% of persons employed in the business sector in the United Kingdom and 12% in Greece. On average, across OECD countries large enterprises account for around 40% of total manufacturing employment while in services they account for around 25 %.
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Between 2008 and 2014, employment in manufacturing decreased in all but two OECD countries, Luxembourg and Germany, mainly reflecting declines in the number of enterprises, both SMEs and large. Employment levels in countries hit hardest by the crisis remained below 2008 levels in 2014, with SMEs in particular bearing the brunt of the contraction. Similarly, in most economies where employment surpassed pre-crisis highs, SMEs were the main drivers of growth. In the United States however, large service sector enterprises have driven post-crisis employment growth.
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Within manufacturing, employment growth in large enterprises in the euro area, which were less affected by the crisis than SMEs, has continued to outperform that for SMEs, whereas in the United States the opposite has been the case.
Relevance
SMEs are an important driver of employment growth, but can also be more vulnerable to downturns. A better understanding of employment distributions provides important insights on underlying resilience and job-security, and also potential employment growth. When factored with data on average salaries, which typically show lower salaries the smaller the firm, distributional data can shed light on income inequalities.
The number of persons employed corresponds to the total number of persons who worked for the observation unit during the reference year, including working proprietors, partners working regularly in the unit and unpaid family workers. It excludes directors of incorporated enterprises and members of shareholders’ committees who are paid solely for their attendance at meetings, labour force made available to the concerned unit by other units and charged for, persons carrying out repair and maintenance work in the unit on the behalf of other units, and home workers. It also excludes persons on indefinite leave, military leave or those whose only remuneration from the enterprise is by way of a pension.
The total change in the number of persons employed is decomposed into four drivers: changes in the number of SMEs and large enterprises, and changes in the average size of SMEs and large enterprises.
The contribution generated by the change in the number of SMEs is calculated as the product of the difference in the number of SMEs between 2008 and 2014 and the average SME size in 2008. The contribution generated by the change in the average size of SMEs is calculated as the product of the difference of the average SME size between 2008 and 2014 and the number of SMEs in 2014. Both contributions are calculated analogously for large enterprises. The relative share of each contribution is the absolute contribution expressed as a percentage of the total change in the number of persons employed (i.e. the sum of all absolute contributions).
Average employment in an enterprise size class is the number of persons employed in a size class divided by the number of enterprises in a size class, in a given economic sector.
Information on data for Israel: https://doi.org/10.1787/888932315602.
Comparability
All countries present information using the enterprise as the statistical unit except Korea and Mexico, which use establishments. Data on employment in all countries refer to the number of persons employed except for: Switzerland, where data exclude employment in enterprises with less than 3 persons employed; and Canada, Israel, Japan, Korea, the United States and the Russian Federation, where data refer to employees. Estimates of non-employer enterprises in the business economy amount to approximately 1.7 million in Canada, 15.3 million in the United States, and 2.5 million in the Russian Federation.
Data for the United Kingdom exclude employment in (an estimated) 2.6 million small unregistered businesses that are below the thresholds of the value-added tax regime and/or the “pay as you earn (PAYE)” (for employing firms) regime.
Some countries use different conventions concerning the size-class breakdown: the size class “1-9” refers to “1-10” for Mexico and “1-19” for Australia, Canada and Turkey; the size class “10-19” refers to “11-50” for Mexico; the size class “50-249” refers to “20-199” for Australia, “51-250” for Mexico, “50-299” for Canada, Japan and Korea; finally, the size class “250+” refers to “200+” for Australia, “300+” for Canada, Japan and Korea and “251+” for Mexico.
Some care is needed when interpreting changes over time, as the data do not track cohorts of firms. Shrinkages in large firms may lead to them subsequently being recorded as SMEs and, correspondingly, expansions in SMEs may result in them being classified as large enterprises.
Source
OECD Structural and Demographic Business Statistics (SDBS) (database), https://doi.org/10.1787/sdbs-data-en.
Further reading
OECD (2017), Small, Medium, Strong. Trends in SME Performance and Business Conditions, OECD Publishing, Paris, https://doi.org/10.1787/9789264275683-en.
