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November 10, 2020BUSINESS AND EMPLOYMENT DYNAMICS, NOVA SCOTIA 2018 Statistics Canada has released the 2018 results for provincial and territorial business and employment dynamics. This covers incorporated and unincorporated businesses in the private sector that issue at least one T4 slip in any given calendar year, but excludes self-employed individuals or partnerships where the participants do not draw salaries.
In 2018, there were a total of 27,300 active businesses in Nova Scotia's private sector, including 24,000 incumbents (continuing operations from previous years) as well as 3,300 new entrants. This was offset by exit of 3,220 firms from the numbers of previous incumbents. Entrants in any given year are enterprises that have current payroll data, but that did not have payroll data in the previous year. Similarly, exits in any given year are identified by the absence of current payroll data, where such data had existed in the previous year.
Measured in percentage terms (relative to an average of prior and current year totals), the entry rate for new firms was 12.1% in 2018, down from 12.4% in 2017. The exit rate for firms increased to 11.8% in 2018, up from 11.0% in 2017. Over time, the pace of business entry and exit has slowed in Nova Scotia, but these rates have stabilized in the last few years.
By sector, unclassified businesses accounded for a notably faster entry rate. Among classified sectors, the fastest entry rates were reported in professional/technical services, finance/insurance, real estate/leasing and information/culture. Entry rates were slower for retail and wholesale trade, personal/repair services and agriculture/forestry/fishing.
The fastest exit rates were also reported among unclassified businesses. Within those businesses classified to a sector, the fastest exit rates were reported in mining/oil/gas and management of companies, though these industries have very few firms. Among industries with larger numbers of firms, there were higher exit rates for information/culture, professional/technical services, real estate/leasing and construction. The slowest exit rates were observed in wholesale trade and manufacturing.
Statistics Canada's business employment dynamics data also examines employment changes in the private sector. In 2018, there was net private sector employment creation of 0.3% in Nova Scotia, down from 1.3% in 2017.
Net employment growth is broken down into four subcomponents of gross employment creation and destruction: employment creation by entrants (1.5%), employment creation by growing incumbents (9.3%), employment destruction by exits (1.4%), and employment destruction by declining incumbents (9.1%).
In all years since 2000, most net private sector employment change is explained by employment creation or destruction by incumbents rather than by new entrants or exiting firms. Employment turnover has been lower and more stable in recent years than it was prior to 2008.
The contribution that each industry makes to overall employment dynamics depends on its share of overall employment and its gross employment creation or destruction. Industries such as manufacturing, retail, wholesale, finance/insurance, administrative and support services, information and culture, and accommodation/food account for a larger share of total employment than their share of active businesses. Agriculture/forestry/fishing, construction, personal/repair services and professional/technical services are examples of industries with a greater share of active businseses than their share of employment.
The share of businesses by firm size (as measured by number of employees) is highest for those firms employing fewer than 5 people. However, these small firms account for 10.5% of private sector employment. In contrast, firms with over 500 employees make up just 0.1% of all firms in Nova Scotia, but employ 19.2% of private sector employees.
The largest contributions to gross employment creation in 2018 came from retail, construction and manufacturing firms.
Gross employment creation had almost equal contributions from firms with 100-499 employees, firm with 5-19 employees and firms with fewer than 5 employees. The contributions to gross employment creation in 2018 were smaller for firms with 20-49 employees, firms with 50-99 employees and firms with 500 or more employees.
The largest contributions to gross employment destruction in 2018 were reported among construction, retail and administrative support (which includes call centres).
As with gross employment creation, there were higher contributions to employment destruction by firms with 100-499 employees and firms with less than 20 employees. Firms with 500 or more employees made less contribution to employment destruction, as did those with between 20 and 99 employees.
Compared to other provinces in 2018, Nova Scotia's Business Entry rate (12.1%) was lower than all provinces except New Brunswick and Quebec. Nova Scotia's exit rate (11.8%) was lower than all provinces except Quebec, Ontario and Manitoba. The highest entry rates were seen in Prince Edward Island (17.5%), Alberta (14.6%) and British Columbia (14.3%). The highest exit rates were in Prince Edward Island (14.9%) and Alberta (14.1%).
Source: Statistics Canada. Table 33-10-0087-01 Business Dynamics measures, by industry, per province or territory; Table 33-10-0088-01 Business Dynamics measures, by firm size, per province or territory; Table 33-10-0090-01 Business Sector employment flow rates by firm size, provinces and the territories; Table 33-10-0089-01 Business Sector employment flow rates, by industry, provinces and the territories; Table 33-10-0091-01 Contribution to private sector employment, gross employment creation and destruction, by Industry, per province or territory; Table 33-10-0093-01 Contribution to private sector employment, gross employment creation and destruction by firm size, provinces and the territories
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