More than half of enterprises reach their fifth year of activity

The years 2002–2006 were good for Estonian economy. Economic growth was accelerating every year, providing good conditions for creation of new enterprises and jobs. As a result, the proportion of newly born Estonian enterprises among all active enterprises was continuously on the increase.

The highest survival rate for enterprises born in 2002 was in the field of health and social work — in 2006 about 85% of them had remained active. The lowest survival rate was for financial services enterprises — only half of them continued in 2006.

More than half newly born enterprises in 2002–2006 started their activity with no employees and about 40% of enterprises started with less than 5 employees.

During 2002–2006 the proportion of dead enterprises of all active enterprises was stable — 7–8%. Since 2002 the business is characterized by the tendency where the number of dead enterprises is has been considerably smaller than the number of newly born enterprises. The biggest difference was in 2006, when two times less enterprises died than were born during the year. There were 7,808 newly born and 3,678 dead enterprises in 2006.

In 2002-2006 about half of dead enterprises finished their activity with 1–4 employees.

The general recession of economy that started in 2007 has also retarded the birth of new enterprises. How this influences business demography will be seen in the future. According to the data of the Business Register, in 2007 compared to the previous year, about 4% less enterprises were registered. Within the 9 months of 2008 the downward trend accelerated — 30% less enterprises were registered in the Business Register compared to the same period a year ago.

Statistics Estonia is producing statistics on business demography since 2003. In business demography enterprises of the secondary and tertiary sector are observed. Of sole proprietors only proprietors with 20 or more persons employed are included in the survey. Enterprises and sole proprietors dealing with agriculture are excluded.

Birth of the enterprise is 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.

Death of the enterprise is 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.