5.1.2 Comparison with Eurostat data
An alternative approach to analysing firm size is to compare the firm size indicators for New Zealand (with zero-employee and one-year firms included) against those from the Eurostat data (Brandt, 2004).
Table 6 shows the proportion of firms in the population that have 0, 1-4, 5-9, 10-19, and 20+ employees, in New Zealand and in other OECD countries covered by the Eurostat. Zero-employee firms and one-year firms have been left in the New Zealand data for this comparison. The New Zealand figures are averages calculated for the 1997-2000 period, in order to match the time period of the Eurostat data.
| Size (Employees) | NZ | Den | Finland | Spain | Neth | Portugal | UK | Sweden |
|---|---|---|---|---|---|---|---|---|
| 0 | 56.3% | 58.2% | 61.2% | 56.4% | 37.9% | 56.1% | 26.5% | 63.8% |
| 1-4 | 29.9% | 27.8% | 27.9% | 32.4% | 45.5% | 31.5% | 52.3% | 24.9% |
| 5-9 | 5.5% | 6.5% | 5.5% | 5.9% | 6.5% | 6.2% | 10.7% | 5.6% |
| 10-19 | 4.4% | 3.9% | 2.9% | 3.0% | 4.3% | 3.4% | 5.9% | 3.0% |
| 20+ | 3.9% | 3.7% | 2.6% | 2.4% | 5.8% | 2.8% | 4.6% | 2.7% |
Sources: Statistics NZ and Eurostat/Brandt 2004
On this comparison, all of the countries shown have a very high proportion of small firms (95% or above), but New Zealand seems if anything to have a slightly smaller proportion of small firms than most other countries. Of New Zealand’s firms, 96.1% have fewer than 20 employees, the third lowest figure after the Netherlands and the UK. However, it must be kept in mind that the New Zealand data applies a turnover criteria (firms must have annual GST sales/expenses of over $30,000 to be included in the BDS) whereas the Eurostat data does not (any firm with positive turnover is normally included). The $30,000 threshold would be likely to reduce the number of small firms – particularly zero-employee firms – in the New Zealand data relative to the Eurostat. In light of this difference in turnover thresholds, the proportion of zero-employee firms in the New Zealand data appears possibly quite high; however, a definitive comparison is not possible without knowing how many New Zealand firms are excluded by the turnover threshold.
Brandt’s (2004) analysis of the Eurostat firm dynamics data did not include either the share of employment by firm size or the average number of employees per firm. It is therefore not possible to make a comparison with the Eurostat data on these indicators.
5.1.3 Other comparisons of firm size
Some final comparisons of firm size were carried out using publicly available business demographic data from the US census bureau website[6], the UK small business service website[7], and the Australian Bureau of Statistics website.[8] One advantage of this additional data was that it provided a more detailed breakdown of firm size at the upper end of the size distribution, allowing comparison not just of the proportion of small firms, but also of the proportion and share of employment of larger firms. The data from these websites also covered zero-employee firms, allowing additional comparisons at the bottom end of the size distribution.
Comparisons with USA and UK
Tables 7 and 8 compare the distribution of firms and share of employment across size brackets 0, 1-4, 5-9, 10-19, 20-99, 100-499, and 500+ employees, for New Zealand, the USA and the UK. Data for all three countries are for the 2001 year, and are for private sector businesses only to ensure comparability[9]. Zero-employee and one-year firms have been left in for the New Zealand data, as for the other two countries.
| Size (Employees) | NZ | USA | UK |
|---|---|---|---|
| 0 | 61.0% | 77.3% | 69.3% |
| 1-4 | 23.9% | 12.3% | 20.0% |
| 5-9 | 7.8% | 4.6% | 5.3% |
| 10-19 | 4.1% | 2.8% | 3.0% |
| 20-99 | 2.7% | 2.4% | 1.9% |
| 100-499 | 0.4% | 0.4% | 0.3% |
| 500+ | 0.1% | 0.1% | 0.1% |
Sources: Statistics NZ, US Census Bureau, and UK Small Business Service
– Distribution of employment by firm size, NZ, USA and UK – private sector
| Size (Employees) | NZ | USA | UK |
|---|---|---|---|
| 0 | 0.0% | 0.0% | *1.4% |
| 1-4 | 10.9% | 4.9% | 8.4% |
| 5-9 | 10.9% | 5.8% | 6.8% |
| 10-19 | 11.6% | 7.2% | 7.9% |
| 20-99 | 21.9% | 17.7% | 15.2% |
| 100-499 | 19.0% | 14.3% | 13.5% |
| 500+ | 25.8% | 50.1% | 46.7% |
*The UK Small Business Statistics show a small number of employees in “zero-employee” firms. It is not clear why this would be the case, but they have been left in for the purposes of this comparison.
Sources: Statistics NZ, US Census Bureau, and UK Small Business Service
The comparison in Table 7 suggests that the distribution of firms is broadly similar across all three countries. If anything, New Zealand seems to have a slightly lower proportion of small firms than the USA and the UK (where small is defined as fewer than 20 employees): 96.8% of New Zealand firms have fewer than 20 employees, as compared with 97.2% for the USA and 97.6% for the UK.
The USA has the highest proportion of zero-employee firms, and New Zealand the lowest. However, detailed information on any turnover threshold that may have been applied to the US and UK data was not available on the public websites. It could be that the turnover threshold applied in the New Zealand data (minimum of $30,000 in GST sales/expenses) is again impacting on the number of zero-employee firms relative to the other countries in this comparison.
There is also little difference in the proportion of large firms across the three countries: in all three, around 0.1% of the population of firms have 500 or more employees. However, there is a noticeable difference in the share of employment accounted for by large firms, as shown in Table 8. In New Zealand, only 25.8% of employment is in firms of 500+ employees, whereas in the USA and the UK around half of employment is in such firms. Similarly, 44.8% of employment in New Zealand is in firms with 100 or more employees, while the equivalent figures for the USA and UK are 64.4% and 60.2% respectively.[10] Conversely, a larger share of New Zealand’s employment is in small to medium firms.
These figures suggest that New Zealand’s large firms are not as large as those in the USA and the UK, and further analysis confirms this view: for example, the average number of employees per firm in firms with 500+ employees is 2532.2 in the UK and 3321.1 in the USA, but only 1593.9 in New Zealand. However the average number of employees per firm overall (with zero-employee firms included for all three countries) is similar across the three countries: 5.6 for NZ, 5.2 for the USA, and 5.1 for the UK. The USA has the lowest average firm size on this comparison, due to the very high proportion of zero-employee firms in the US data. This again reinforces the significant impact that measurement differences can have in calculations of firm size. When zero-employee firms are removed from the USA data (as in the OECD firm project), the USA has a high average firm size relative to other OECD countries.
Comparisons with Australia
A final comparison of interest – with Australia – is shown in Table 7. The table shows the distribution of firms and share of employment for both countries, across size brackets 0, 1-4 (NZ 1-5), 5-19 (NZ 6-19), 20-99, 100-199, and 200+ employees. The New Zealand data is for 2001 while the Australian data is for 1999-2000. Zero-employee and one-year firms have been left in for both countries, and the figures shown are for private sector firms only to ensure comparability.[11]
| Size (Employees) | Firms | Employment | ||
|---|---|---|---|---|
| NZ | Australia | NZ | Australia | |
| 0 | 61.0% | 48.6% | 0.0% | 0.0% |
| 1-4 | 23.9% | 32.8% | 11.4% | 13.2% |
| 5-19 | 11.9% | 15.0% | 17.8% | 25.1% |
| 20-99 | 2.9% | 3.0% | 22.3% | 22.4% |
| 100-199 | 0.3% | 0.3% | 8.0% | 8.9% |
| 200+ | 0.2% | 0.2% | 36.8% | 30.5% |
Sources: Statistics NZ and Australian Bureau of Statistics
Table 7 suggests that the distribution of firms is broadly similar across the two countries. New Zealand has a noticeably higher proportion of zero-employee firms (61.0% as compared with 48.6% for Australia), while Australia has more firms sized 1-4 and 5-19 employees. However the overall proportion of small (less than 20 employees) firms is very similar in the two countries (96.8% for NZ versus 96.5% for Australia).
The distribution of employment is also similar in both countries, although New Zealand has a somewhat higher proportion of employment in large firms of 200 employees or more (36.8% vs 30.5% for Australia). This suggests that New Zealand’s large firms may in fact be larger on average than Australia’s, and further analysis backs this up: the average number of employees per firm in firms of over 200 employees is 686.8 in New Zealand and 649.6 in Australia.
Notes
- [6]http://www.census.gov/epcd/susb/2001/us/US--.HTM
- [7]http://www.sbs.gov.uk
- [8]http://www.abs.gov.au/ausstats/abs@.nsf/Lookup/A7799B9452831799CA256B35001C9567
- [9]Data was available for New Zealand and the UK that both included and excluded the public sector. However, data for the USA was only available for private sector firms.
- [10]It will be noted that these figures on the share of employment in large firms in New Zealand differ from other studies – for example, MED (2003) and Carroll et al (2002) both calculated the share of employment in firms of 100+ employees at about 40%. However it must be kept in mind that these studies used a “total employment” measure of employment, ie working proprietors were included in the count. In contrast the figures shown here are for employees only. Note also that the MED (2003) study used an FTE measure of employment as opposed to a head count measure.
- [11]Although data was available for New Zealand that both included and excluded the public sector, data for Australia was only available for private sector firms.
