SMEs employ seven in 10 workers in the Republic

CSO’s Business in Ireland study shows 99.8% of enterprises employ less than 250 people

The distribution sector, including retail and wholesale activities, accounted for 22.7 per cent of all businesses and 26.7 per cent of all engaged workers in 2011. Photograph: Michaela Rehle/Reuters

The distribution sector, including retail and wholesale activities, accounted for 22.7 per cent of all businesses and 26.7 per cent of all engaged workers in 2011. Photograph: Michaela Rehle/Reuters

Fri, Nov 1, 2013, 14:42

Small and medium enterprises employed almost seven in every ten people engaged in the workforce in the Republic in 2011 but generated just over half of turnover, analysis by the Central Statistics Office shows.

The Business in Ireland 2011 study published today shows SMEs account for 99.8 per cent of all active businesses in the Republic, but generate just 46 per cent of gross value added (GVA), a key indicator of business productivity.

The headline figures are broadly similar to the previous year.

In 2011 there were 189,000 active businesses in operation, engaging over 1.2 million workers. Just over nine in ten businesses were micro-enterprises with less than 10 employees.

Large enterprises accounted for just 0.2 per cent of all businesses but employed 31.4 per cent of all engaged workers.

The services sector was the largest in terms of numbers of businesses and employees, accounting for 47.6 per cent of active enterprises and 42.1 per cent of workers. This included a wide range of services such as transport, accommodation and food, publishing, telecommunications, legal and accounting activities and scientific research.

This was followed by the distribution sector, including retail and wholesale activities, with 22.7 per cent of all businesses and 26.7 per cent of all engaged workers. Construction accounted for 19.4 per cent of all enterprises but just 7 per cent of engaged workers.

Industry had the largest turnover of any sector, claiming 29.8 per cent of the €376 .7 billion total turnover in the business economy in the year, despite accounting for just 7.3 per cent of all enterprises and 16.6 per cent of all engaged workers.

The distribution sector also claimed a significant proportion of total turnover at 27.3 per cent, while the services sector claimed just 27 per cent. Financial and insurance activities accounted for 13.4 per cent while construction claimed just 2.5 per cent.

The CSO analysis shows the extent of the impact the downturn has had on SMEs, with employment falling 19.7 per cent from 1.045 million in 2006 to 839,000 in 2011.

The construction sector was hardest hit, with 128,000 job losses in the period, a fall of 61.1 per cent. Industry was also affected significantly, with SME employment in the sector falling by 22.8 per cent or 31,000 people between 2006 and 2011. The only sector which showed a marginal increase in employment was finance and insurance.

In contrast to the SMEs, there was a recovery in the numbers employed by large enterprises in 2011, rising by 1,000 to 384,000, driven mostly by the industry and services sectors.

Irish businesses generated €100.6 billion GVA in the year, with industry and services accounting for 36.7 per cent and 33.6 per cent respectively.

Turnover per person engaged averaged €278,000 across all sectors, with industry recording the highest figure at over €594,000 while construction recorded the lowest at €103,000.

GVA per person engaged averaged €76,000 across all sectors, with industry bringing in the highest figure at almost €196,000 and construction the lowest at €37,000.

Industry was the most profitable sector with an operating surplus of 24.5 per cent of turnover. Services, construction and financial and insurance activities recorded similar profitability levels at around 15 per cent. Distribution was the least profitable with an operating surplus of 5.9 per cent.

A more detailed breakdown shows real estate was the most profitable sector with an operating surplus of 37.1 per cent. This was followed by electricity, gas, steam and air conditioning supply with 31.6 per cent, and manufacturing at 24.2 per cent.

The motor trade sector recorded the lowest operating surplus at 2.8 per cent, while wholesale, retail and accommodation and food services recorded between 5 and 7 per cent.

Irish multinationals employed over 246,000 people in foreign affiliates in 2011, primarily in the UK and US, generating a turnover of almost €73 billion. By contrast, foreign multinationals employed over 250,000 in Ireland, generating a turnover of €176 billion.

A new section in the report concentrated on business costs, revealing that Irish enterprises spent a total of €38 billion on personnel costs in 2011, including wages and salaries for employees, and employers’ social security.

Some €33.5 billion was paid in wages and salaries, with the average wage just over €32,900. Wages in SMEs averaged €29,800, significantly lower than the average €39400 in large enterprises.

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