SME Policy Effectiveness in Jordan:User Guide 3: SME statistics and entrepreneurship indicators by OECD

Policy Handbook

SME POLICY EFFECTIVENESS IN JORDAN USER GUIDE 3: SME STATISTICS AND ENTREPRENEURSHIP INDICATORS IN JORDAN

The project â&#x20AC;&#x153;SME Policy Effectiveness in Jordan,â&#x20AC;? implemented by the OECD and the Jordan Enterprise Development Corporation from 2016-19 helped to improve SME and entrepreneurship policy making by reinforcing institutional co-ordination and dialogue, advocating for better monitoring and evaluation of policies and programmes, and identifying ways to improve business and entrepreneurship statistics. Three User Guides are the main outputs of the project: User Guide 1: Reinforcing SME policy co-ordination and public-private dialogue gives guidance on how to orchestrate efforts among the many actors providing SME support. User Guide 2: Effective monitoring and evaluation of SME and entrepreneurship policies and programmes provides advice on how to assess the impact of SME support. User Guide 3: SME statistics and entrepreneurship indicators in Jordan offers useful guidance on how to improve the evidence base for SME policy making. The User Guides build on international practice and provide concrete areas of action for Jordan, but can also be of interest to other countries wanting to improve the effectiveness of their SME policy making. The project was funded by the MENA Transition Fund and was implemented jointly by the Global Relations Secretariat; the Centre for Entrepreneurship, SMEs, Regions and Cities; and the Statistics and Data Directorate of the OECD. www.oecd.org/mena/competitiveness/smes-and-entrepreneurship www.oecd.org/cfe www.oecd.org/sdd

SME POLICY EFFECTIVENESS IN JORDAN . USER GUIDE 3

Micro, small and medium-sized enterprises (SMEs) and entrepreneurs have the potential to become important drivers of change and development in Jordan. Private businesses employing one to nineteen people account for over half of employment in the business economy and from 70 to 80% of jobs in sectors such as professional services, real estate, and wholesale and retail. Yet, the productivity and performance of Jordanian SMEs is limited. For example, over 54% of those working in service-sector businesses employing fewer than four people are unpaid workers (e.g. family members), compared to just 8% in businesses with 5 to 10 workers, and 0.23% of businesses with 20 or more workers.

SME Policy Effectiveness in Jordan User Guide 3: SME statistics and entrepreneurship indicators

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FOREWORD │

Foreword From 2016 to 2019 the OECD and the Jordan Enterprise Development Corporation (JEDCO) have been implementing the MENA Transition Fund project “SME Policy Effectiveness in Jordan” to help improve co-ordination and dialogue among the many actors involved in supporting small and medium-sized enterprises (SMEs) and entrepreneurship in order to increase the impact of their actions, identify gaps and avoid any overlaps. It also aims to introduce and strengthen monitoring and evaluation mechanisms, and to help the Jordanian authorities – notably the Department of Statistics and the Jordan Enterprise Development Corporation (JEDCO) – to improve SME and entrepreneurship data collection to strengthen the knowledge base for policy making. This User Guide provides guidance to improve data collection to strengthen the knowledge base for policy making for micro, small and medium-sized enterprises (SMEs). The document is designed as a user-friendly tool to orient Jordanian analysts and policy makers in their search for, and understanding of, quantitative information on the SME sector, in particular official statistics and internationally comparable data. The guide is also meant to assist professional statisticians in the development of data on the SME sector, by providing them with recommendations on key statistics to be compiled and guidelines for their production and dissemination. It introduces concepts relevant for understanding business statistics and directs the reader to international standard definitions and best practice for statistical production in the area of business and entrepreneurship statistics. For that purpose, the guide provides extensive references, including web links, to international glossaries and manuals of business statistics. While it is acknowledged that international tools provide sound methodological foundations for the production of business statistics, the guide also recognises that the actual implementation of the recommended methodologies is a process that requires time, resources and adjustments to local conditions that statistical authorities will have to consider. The guide is the third in a series of policy manuals or user guides produced for Jordan under this project: 1. User Guide 1: Reinforcing SME policy co-ordination and public-private dialogue. 2. User Guide 2: Effective monitoring and evaluation of SME and entrepreneurship policies and programmes. 3. User Guide 3: SME statistics and entrepreneurship indicators.

SME POLICY EFFECTIVENESS IN JORDAN: USER GUIDE 3- SME STATISTICS © OECD 2019

ACKNOWLEDGEMENTS │5

Acknowledgements

This document was prepared in the context of the project SME Policy Effectiveness in Jordan, funded by the MENA Transition Fund established under the Deauville Partnership for Arab Countries in Transition. This work was also undertaken as part of the activities of the MENA-OECD Competitiveness Programme, which is supported by the Swedish International Development Co-operation Agency. The programme is a structured and concerted effort for MENA countries to benefit from OECD work, tools and standards. This document was prepared by Mariarosa Lunati and Gueram Sargsyan, of the OECD Statistics and Data Directorate, in co-operation with Thamer Barakat of the Department of Statistics, Jordan. The report builds on the exchanges held during various seminars organised by JEDCO and the OECD and with the participation of representatives of the Jordanian Ministries of Industry and Trade, Planning and International Co-operation, Labour, Finance, Municipal Affairs, Higher Education and Scientific Research, among others. The seminars also benefited from the participation of government agencies such as the Department of Statistics, the Customs Department, the Central Bank of Jordan, the Companies Control Department, the Employment and Development Fund, the Jordan Loan Guarantee Corporation and the Income and Sales Tax Department, among others. Important contributions were also provided by the private sector, including the Jordan Chamber of Commerce, the Jordan Chamber of Industry, the Business and Professional Women Association, and other organisations. Agencies and organisations providing support to SMEs and entrepreneurs were also part of the project, including the Business Development Centre, the Young Entrepreneurs Association, Injaz, the Crown Prince Foundation, the King Abdullah Fund for Development, the SME Association, Endeavor, Oasis 500, iPark Technology Hub and the Information Technology Association, among many others. Donors and international partners including the European Union and USAID also contributed to the discussion seminars. The documents produced under this project were reviewed by Alexander Böhmer, Head of the South East Asia Division at the Global Relations Secretariat of the OECD. The documents were harmonised and prepared for publication by Jorge Galvez Mendez, Sophie Elliott, Kristin Sazama and Carla Casado Rubert, under the supervision of Carlos Conde, Head of the Middle East and Africa Division of the Global Relations Secretariat, OECD. Fiona Hinchcliffe edited the reports. The project was implemented by the OECD Global Relations Secretariat, the Centre for Entrepreneurship, SMEs, Regions and Cities, and the Statistics and Data Directorate. The OECD Sherpa Office also contributed to the project in its role of coordinator of the Deauville Partnership and MENA Transition Fund. The Jordan Enterprise Development Corporation was the main beneficiary and co-ordinator institution in Jordan. The project also benefited from the support of To-Excel Consulting, which facilitated the implementation of the activities.

SME POLICY EFFECTIVENESS IN JORDAN: USER GUIDE 3- SME STATISTICS © OECD 2019

TABLE OF CONTENTS │7

Table of Contents

Foreword .................................................................................................................................... 3 Acknowledgements.................................................................................................................... 5 Executive summary ................................................................................................................. 11 Chapter 1. Measuring the SME sector in Jordan ............................................................... 13 1.1.

Recommendations ..................................................................................................... 16

Chapter 2. International best practice in business statistics .............................................. 19 2.1. Business statistics and administrative data .................................................................... 19 2.2. Legal definitions of SMEs and definitions used for statistical purposes ....................... 23 2.3. Glossaries and international guidelines on business statistics ....................................... 24 2.4. Key statistics on the SME sector.................................................................................... 27 2.5. Key statistics on the demography of businesses ............................................................ 30 2.6. Key statistics describing entrepreneurs’ profile ............................................................. 32 2.7. Dissemination of business statistics ............................................................................... 33 Chapter 3. A pilot compendium of statistics on the SME sector in Jordan...................... 35 3.1. Overview of the business sector in Jordan ..................................................................... 35 3.2. Indicator: Number of SMEs ........................................................................................... 40 3.3. Indicator: Employment in establishments ...................................................................... 44 3.4. Indicator: Compensation of employees .......................................................................... 49 3.5. Indicator: Gross output and gross value added .............................................................. 50 3.6. Indicator: Hiring intentions in the business economy .................................................... 51 References ............................................................................................................................. 52 Annex A. A Reader’s guide .................................................................................................... 53 Statistical units ...................................................................................................................... 53 Size class breakdown ............................................................................................................ 53 Definitions............................................................................................................................. 53 Country codes ....................................................................................................................... 54 Economic activity sectors ..................................................................................................... 55

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8 â&#x201D;&#x201A; TABLE OF CONTENTS

Tables Table 1.1. Official business statistics in Jordan..................................................................................... 15 Table 2.1. Core set of structural business statistics on the SME sector................................................. 28 Table 2.2. Core set of indicators of business dynamism ....................................................................... 30 Table 3.1. Contribution to the business economy, by activity sector, Jordan Percentage, 2016 ........... 37 Table 3.2. Number of establishments by size and activity sector Business economy, 2016 ................. 40 Table 3.3. Employment by sector and establishment size Number of persons employed (paid and unpaid employment), 2016 ............................................................................................................ 44 Table 3.4. Employment by nationality Total economy, 2016 ............................................................... 48 Table 3.5. Hiring intentions in private and public sector Number of Persons....................................... 51

Figures Figure 3.1. Contribution to the business economy, three largest sectors in Jordan Percentage, 2016 .. 36 Figure 3.2. Contribution of the ICT sector to the business economy in Jordan Percentage, 2016 ........ 36 Figure 3.3. Number of establishments and persons employed in business economy, by size class Percentage, 2016 ........................................................................................................................... 38 Figure 3.4. Average size of establishments, by industry| Persons, 2016 ............................................... 38 Figure 3.5. Share of paid employees among total persons employed, by industry Percentage, 2016 ... 39 Figure 3.6. Share of establishments by size and activity sector Percentage of all establishments, business economy, 2016 ................................................................................................................ 41 Figure 3.7. Share of businesses by size, Jordan and selected OECD countries Percentage of businesses, business economy, 2016 Panel A ............................................................................... 42 Figure 3.8. Regional Distribution of Establishments Percentage, 2011 ................................................ 43 Figure 3.9. Employment in private and public sector, by size and industry| Percentage, 2016 ............ 45 Figure 3.10. Share of employment by sector and establishment size Percentage of number of persons employed in the sector, 2016............................................................................................ 45 Figure 3.11. Share of employment in business economy by business size, Jordan and selected OECD countries Percentage of employment in the sector, 2016 .................................................. 46 Figure 3.12. Share of paid and unpaid employment by establishment size, business economy Percentage of number of persons employed in the sector, 2016 ................................................... 47 Figure 3.13. Paid employment by gender and education Thousands of individuals, total economy, 2016 ............................................................................................................................................... 47 Figure 3.14. Employment by gender and nationality Percentage of workforce by nationality, business economy, 2016 ................................................................................................................ 48

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TABLE OF CONTENTS

â&#x201D;&#x201A;9

Figure 3.15. Average monthly wages per person, by occupation JOD, total economy except agriculture, 2016 ............................................................................................................................ 49 Figure 3.16. Average monthly wages per person, by gender and occupation Males = 100, total economy except agriculture, 2016 ................................................................................................. 49 Figure 3.17. Output and value added by industry s ............................................................................... 50 Figure 3.18. Hiring intentions, by industry Percentage, 2016 ............................................................... 51

Boxes Box 1.1. Recommendations for improving data on small and medium-sized enterprises (SMEs) and entrepreneurship ............................................................................................................................ 16 Box 2.1. UN Fundamental Principles of Official Statistics ................................................................... 20 Box 2.2. Re-using administrative data .................................................................................................. 21 Box 2.3. Legal form of businesses and measurement of businesses for statistical purposes: Administrative data and statistics on new businesses ................................................................... 22 Box 2.4. Enterprises and establishments ............................................................................................... 27 Box 2.5. Defining the sectoral coverage and size classes of businesses: the example of the structural business statistics of the OECD ..................................................................................... 29

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EXECUTIVE SUMMARY │11

Executive summary One aim of the MENA Transition Fund project “SME Policy Effectiveness in Jordan” is to improve data collection to strengthen the knowledge base for policy making for micro, small and medium-sized enterprises (SMEs). To achieve this, the OECD Statistics and Data Directorate reviewed Jordan’s organisation and production of business statistics between 2016 and 2018. The review identified the national authorities involved in collecting and compiling business statistics and indicators, and assessed the data available on Jordanian businesses. This guide summarises the findings of the review, and also introduces concepts relevant for understanding business statistics. It directs the reader to international standard definitions and best practice for statistical production in the area of business and entrepreneurship statistics, providing extensive references, including web links, to international glossaries and manuals of business statistics. The guide makes a number of recommendations to the Department of Statistics of Jordan that could help improve the statistical basis for analysing SME performance, and bring current practice up to international levels: ●

Adopt the SME definition used by the Jordan Ministry of Industry (enterprises with a maximum of 250 persons employed), and compile statistics for the main variables with breakdowns by size class of employment. This will support a more accurate analysis and monitoring of the diverse businesses in the SME sector, while at the same time facilitating the international comparability of Jordan’s SME performance.

●

Breakdown business performance indicators not only by employment size but also into detailed levels of economic activity whenever possible.

●

Use the enterprise as the statistical unit in addition to the establishment – each enterprise may consist of one or more establishments that are linked through ownership and/or control.

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Complete the development of a Statistical Business Register of Jordan, following international guidelines and best practice.

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Develop business demography indicators for all businesses and for the subset of employer businesses, following international methodologies.

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Consider extending the production of business statistics at the regional level.

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Explore the linking of business statistics, trade registers and other relevant datasets on businesses to develop statistics on trade and SME participation in global value chains.

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12 │ EXECUTIVE SUMMARY ●

Disseminate data following international best practice principles, including increasing the range of official statistics available through the Interactive Database and improving users’ awareness of, and access to, online tools and data sources.

The guide contains three chapters. Chapter 1 introduces the results of a review of business statistics in Jordan and proposes recommendations for the national statistical authorities. The second chapter presents international best practice in and statistical tools for compiling business statistics on the SME sector and entrepreneurship. Chapter 3 concludes with an example of a statistical dissemination tool, e.g. a brief compendium on statistics on the SME sector in Jordan.

SME POLICY EFFECTIVENESS IN JORDAN: USER GUIDE 3- SME STATISTICS © OECD 2019

1. MEASURING THE SME SECTOR IN JORDAN │

Chapter 1. Measuring the SME sector in Jordan

In the framework of the project “SME Policy Effectiveness in Jordan” the OECD Statistics and Data Directorate conducted a review of the organisation of business statistics production in Jordan. The review included the identification of national authorities involved in collecting and/or compiling business statistics and indicators in Jordan, and a careful examination of the data available on Jordanian businesses. Three statistical seminars were held in Amman over the period 2016-2018, to discuss the needs of business statistics in Jordan. They were attended by the main stakeholders, including representatives of Jordan Enterprise Development Corporation (JEDCO), the Department of Statistics (DoS), the Ministry of Industry and Trade, the Ministry of Finance (Customs Department, Income and Sales Tax Department, and Central Bank of Jordan), and the Ministry of Labour. The analysis aimed to discern areas for improvement in the statistical production process and in making data available. Of particular interest for the investigation of the SME sector is the availability of breakdowns of data by the size of employment in businesses. For the purpose of the review, business statistics were considered as a range of statistics on businesses and their activity; these notably include structural business statistics and business demography statistics. The review highlighted the following elements: ●

Statistical governance: The General Law of Statistics of Jordan designates the Department of Statistics of Jordan (DoS) as the core institution responsible for the production of official statistics. It stipulates that government agencies should cooperate with the DoS and provide the relevant administrative data for the production of official statistics. Under this frame, DoS is the authority responsible for official business statistics in Jordan. This provision reflects international best practice. Indeed, to ensure overall consistency and quality of data it is important that the regular production of official statistics is concentrated in a single institution, i.e. the statistics office, which in turn can use data from administrative bodies (e.g. tax authorities, customs, social security administration) for the compilation of statistics

●

Scope of production: DoS produces business statistics covering the economic sectors of mining, manufacturing and services. These statistics come from two main sources: i.

Labour force surveys, under the responsibility of the Employment Division of the Directorate of Economic Statistics of DoS. Labour force surveys cover active businesses of all sizes, either through stratified representative samples, or through complete coverage (in particular, for large enterprises). Data from labour force

SME POLICY EFFECTIVENESS IN JORDAN: USER GUIDE 3- SME STATISTICS © OECD 2019

14 │ 1. MEASURING THE SME SECTOR IN JORDAN surveys are used to compile statistics on the number of establishments and their employment, broken down by activity sector, size class and ownership type (private or public). Also, statistics on employment in businesses are cross-tabulated by ownership type, gender, nationality, and education level. ii.

Industry surveys, under the responsibility of the Directorate of Economic Statistics. Industry survey data are used for statistics on the economic performance of businesses (e.g. output, intermediate consumption, value added) for preparing the national accounts. A national register for economic establishments is maintained on the basis of the Economic Establishment Census and annual updates using administrative data (see http://dosweb.dos.gov.jo/censuses/establish-census/). Labour force and industry survey data compiled by DoS provide a wealth of information on the business sector in Jordan. Nevertheless, a number of key indicators are missing that are important for the analysis of SMEs and entrepreneurship: ‒

Performance indicators: Only a limited number of financial indicators are available (for instance, gross output, gross value added); moreover, data disaggregated by business size class are not available.

‒

Business demography statistics. These are not produced in Jordan. Business demographics are important for the analysis of business dynamism in the economy, e.g. the birth, growth and death of new businesses, and their contribution to employment creation or losses.

●

Data consistency: The Department of Statistics produces a limited selection of structural business statistics, notably on the number of establishments and the distribution of employment by business size class, as well as a set of financial indicators. However, establishment statistics are produced by the Employment Division based on labour force surveys, which are not necessarily consistent in terms of coverage with financial performance indicators compiled by divisions responsible for industry, trade and services statistics.

●

National register: The Department of Statistics regularly carries out economic establishments censuses with the support of the Buildings and Establishments Enumeration Register to ensure the comprehensive coverage of establishments in the country. A national register of economic establishments is set up by DoS on the basis of each Economic Establishments Census, and it is then updated every year using administrative data (see http://dosweb.dos.gov.jo/censuses/establish-census/). The use of administrative data by the DoS is facilitated by the General Statistics Law (Law No. 12 of 2012). In particular, Article 6A stipulates that “Governmental departments shall undertake to facilitate the tasks of the Department’s employees commissioned with any statistical or census activity, guarantee easy contacts with the relevant parties, and supply all the information they request for statistical purposes, including allowing said employees to examine records and other means of storing information.” Between census years, regular employment and economic surveys are carried out annually:

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MEASURING THE SME SECTOR IN JORDAN │

Employment and employees’ compensations survey: annual survey in October of each year (http://dosweb.dos.gov.jo/labourforce/employment-in-establishment/);

Industry and energy: annual survey of establishments (http://dosweb.dos.gov.jo/industry/industry-and-energy/);

Construction: monthly surveys (http://dosweb.dos.gov.jo/industry/construction/);

Wholesale and retail trade: annual survey and quarterly studies (http://dosweb.dos.gov.jo/industry/internal-trade/);

Transportation and storage: annual survey (http://dosweb.dos.gov.jo/industry/transport-storage-and-mail/).

Annual comprehensive surveys of establishments in financial services (banks and insurance) are also carried out by the Department of Statistics. ●

Statistical dissemination: The DoS has a functional website (http://dosweb.dos.gov.jo/) displaying a wide range of official statistics through an online database (StatBank), as well as on the webpages of relevant divisions. Data and methodological notes are also available on the DoS website under the Statistics tab. Statistical yearbooks, analytical reports and other publications can also be accessed on the site. However, specific business statistics are only presented on the webpages of the divisions producing them; it would be helpful to group them under the heading “business statistics” on their own, separate page.

Table 1.1 provides an overview of the official business statistics currently available in Jordan, including whether they are broken down by business size, and the data sources. Table 1.1. Official business statistics in Jordan

Variable

Breakdowns by establishment size

Dataset

Number of establishments

Yes

Total number of persons employed

Yes

Number of paid employees

Yes

Labour force statistics

Number of unpaid persons employed

Yes

Average wages per person

http://dosweb.dos.gov.jo/labourforce/e mployment-in-establishment/tablesof-employment-in-establishment/

Average work hours per employee

Hiring intentions

Yes

SME POLICY EFFECTIVENESS IN JORDAN: USER GUIDE 3- SME STATISTICS © OECD 2019

16 │ 1. MEASURING THE SME SECTOR IN JORDAN Gross output

Intermediate Consumption

Gross value added

Compensation of employees

Taxes on production

Depreciation

Total fixed capital formation

Industry statistics http://dosweb.dos.gov.jo/industry/

1.1. Recommendations This review has identified a number of areas that could benefit from further development (Box 1.1). These recommendations are destined for the attention of the Department of Statistics of Jordan. Box 1.1. Recommendations for improving data on small and medium-sized enterprises (SMEs) and entrepreneurship A. Definition of SMEs The Jordan Ministry of Industry applies a cut-off of 250 persons employed to identify firms as SMEs, in accordance with the international practice followed in many countries across the world and notably in member states of the European Union and in many OECD member and partner countries. It is recommended that the Department of Statistics introduces the same cut-off and starts compiling business statistics by employment size of the business according to international standard breakdowns (i.e. 1-9 persons employed, 10-49, 50-249, 250 and more) This will allow international comparability of SME statistics. B. Additional breakdowns of variables by employment size and by activity a. Produce performance indicators (i.e. production, turnover, value added, investment indicators, compensation of employees, etc.) broken down by employment size class. b. Present data at detailed levels of economic activity (International Standard Industry Classification, ISIC rev.4) whenever possible. C. Statistical units Currently, the establishment is used by DOS as the observation and statistical unit for compiling business statistics. It is recommended that Jordan also adopt the enterprise as statistical unit – each enterprise may consist of one or more establishments that are linked through ownership and/or control (UNECE Guidelines on Statistical Business Registers, 2015). D. Statistical Business Register Complete the development of a Statistical Business Register of Jordan, following the international guidelines and best practice in this domain; see in particular UNECE (2015). The statistical business register is a fundamental tool in the modern approach

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MEASURING THE SME SECTOR IN JORDAN │

to statistical production. It allows for maintaining and updating a comprehensive database covering all economic units in the country, to serve as a sample frame for representative business surveys, and also increasingly for the direct production of statistics, such as business demography statistics. E. Compilation of new statistics and indicators a. Develop business demography indicators on the birth, death, survival and growth of businesses, and the employment creation/destruction associated with these events, following international methodologies (Eurostat-OECD Manual on Business Demography Statistics, 2007); and also business demography statistics for the subset of employer enterprises only. b. Explore the feasibility of extending the production of business statistics at the regional level, in particular for a more accurate measurement of the distribution of employment across regions. c. Explore the feasibility of developing data on trade activities by enterprise characteristics and produce new statistics to account for SME participation in global value chains, through the linking of business statistics, trade registers and other relevant datasets on businesses. F. Data dissemination a. Implement international best practice principles for data dissemination (see Recommendation of the OECD Council on Good Statistical Practice, 2015). b. Extend the range of official statistics available through the Interactive Database to allow users to take advantage of its numerous functions (data selection, data download in multiple formats, etc.). Improve users’ awareness of, and access to, online tools and data sources, in particular the Interactive Database.

c. Produce new dissemination tools, including an annual booklet presenting key indicators on SMEs and entrepreneurship.

SME POLICY EFFECTIVENESS IN JORDAN: USER GUIDE 3- SME STATISTICS © OECD 2019

2. INTERNATIONAL BEST PRATICE IN BUSINESS STATISTICS │

Chapter 2. International best practice in business statistics 2.1. Business statistics and administrative data In the context of this User Guide, business statistics are intended as statistics that describe the characteristics of the business sector and its performance at the national, regional or local level. These statistics are meant to provide an accurate view of the structure of the business sector, notably the size of the business population, as well as the activities of businesses and their contribution to value creation and employment. To that extent, business statistics are an essential input to the compilation of national accounts.1 Business statistics support evidence-based decision making in a wide range of policy areas, such as entrepreneurship and small and medium-sized enterprises (SMEs), regional and local development, innovation, inequality and poverty reduction, industrial and economic development, and the internationalisation of businesses. Official business statistics are those produced by national statistical systems, i.e. national statistics offices (NSOs) and other national authorities. This is especially the case for structural business statistics, short-term business statistics and business demography statistics. In many countries, designated government bodies besides the NSO are also in charge of producing specific business statistics; for instance, statistics on business loans or foreign affiliate businesses are usually compiled by central banks. Supranational and international organisations, such as Eurostat and the OECD, also participate in compiling and disseminating official business statistics, helping to harmonise statistical concepts and methodologies across countries to allow for international comparisons. In addition to official business statistics, other statistics on the business sector are often available from public and private sources. For instance: ●

national or international business surveys conducted by consultancies or research institutes, often on the request of ministries

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Eurobarometer business surveys, conducted by consultancies for the European Commission, e.g. https://data.europa.eu/euodp/fr/data/dataset/S2129_451_ENG

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The Future of Business Survey jointly designed by Facebook, the OECD and the World Bank (http://www.oecd.org/sdd/business-stats/the-future-of-business-survey.htm)

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business statistics compiled in the context of academic research.

For a discussion on business statistics and national accounts, see OECD (2010), Structural and Demographic Business Statistics, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264072886-en.

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20 â&#x201D;&#x201A; 2. INTERNATIONAL BEST PRACTICE IN BUSINESS STATISTICS Analysts and other users of business statistics should always carefully consult the metadata accompanying the data. This is particularly important when the concerned statistics are produced outside of the national statistical system. In fact, while official business statistics will meet a set of rigorous principles regarding data quality (Box 2.1), for other business statistics quality depends on the specific requirements governing their collection. Box 2.1. UN Fundamental Principles of Official Statistics The Fundamental Principles for Official Statistics were adopted by the United Nations Statistical Commission in its Special Session of 11-15 April 1994. They are the following: Principle 1. Official statistics provide an indispensable element in the information system of a society, serving the government, the economy and the public with data about the economic, demographic, social and environmental situation. To this end, official statistics that meet the test of practical utility are to be compiled and made available on an impartial basis by official statistical agencies to honour citizensâ&#x20AC;&#x2122; entitlement to public information. Principle 2. To retain trust in official statistics, the statistical agencies need to decide according to strictly professional considerations, including scientific principles and professional ethics, on the methods and procedures for the collection, processing, storage and presentation of statistical data. Principle 3. To facilitate a correct interpretation of the data, the statistical agencies are to present information according to scientific standards on the sources, methods and procedures of the statistics. Principle 4. The statistical agencies are entitled to comment on erroneous interpretation and misuse of statistics. Principle 5. Data for statistical purposes may be drawn from all types of sources, be they statistical surveys or administrative records. Statistical agencies are to choose the source with regard to quality, timeliness, costs and the burden on respondents. Principle 6. Individual data collected by statistical agencies for statistical compilation, whether they refer to natural or legal persons, are to be strictly confidential and used exclusively for statistical purposes. Principle 7. The laws, regulations and measures under which the statistical systems operate are to be made public. Principle 8. Coordination among statistical agencies within countries is essential to achieve consistency and efficiency in the statistical system. Principle 9. The use by statistical agencies in each country of international concepts, classifications and methods promotes the consistency and efficiency of statistical systems at all official levels. Principle 10. Bilateral and multilateral cooperation in statistics contributes to the improvement of systems of official statistics in all countries. For further reading: http://www.unece.org/?id=3207 and http://www.unece.org/fileadmin/DAM/stats/documents/ece/ces/e/1992/32.e.pdf..

SME POLICY EFFECTIVENESS IN JORDAN: USER GUIDE 3- SME STATISTICS ÂŠ OECD 2019

INTERNATIONAL BEST PRACTICE IN BUSINESS STATISTICS â&#x201D;&#x201A;

Business statistics are not the only possible source of information on businesses. Relevant facts and figures may also be contained in data about businesses gathered as part of nonstatistical data collections. This is notably the case for administrative data, which can be derived from a diverse and long list of data and sources. Examples are company registration data from tax authorities, chambers of commerce or licensing offices; tax records from tax registers; import/export data from customs registers; data on members of industry or trade associations; published business accounts as required by law and/or stock exchange regulations (for enterprises listed on the stock exchange); and many more. While not collected for statistical purposes, administrative data can however be used in the production process of official business statistics as an important complement to information from other sources. Indeed, over time the use of administrative sources has become part of standard procedures in statistical production (Box 2.2).

Box 2.2. Re-using administrative data In the past, business surveys and censuses were the only sources of business information for statistical purposes. The re-use of administrative data has progressively become a recognised best practice in the production of statistics: integrating administrative records with statistics allows to reduce the reporting burden for businesses as well as the costs of production for statistical offices as administrative data are often available free of charge, or for the marginal cost of extraction, particularly if they originate from the public sector. The practice of re-use also helps to improve the quality of official business statistics, for instance when it allows statistics to be produced more frequently. On the other hand, there are also a number of problems with using administrative data that need to be acknowledged, notably variations in statistical and administrative definitions, as well as the risks of changes to administrative regulations or procedures. For further reading: UNECE (2015), Guidelines on Statistical Business Registers, https://www.unece.org/fileadmin/DAM/stats/publications/2015/ECE_CES_39_WEB.pdf.

It is important to stress the differences between business statistics and administrative data. The latter are pieces of factual information, while the former are the result of data analysis. The aim of business statistics is to describe the economic activity in a country or region, while government agencies dealing, for instance, with business registration or taxation collect and use data for the scope of administrative work: for example, to collect taxes, or to register newly created enterprises of a certain legal type in given sectors or activity, etc. A practical example can help clarify the difference between business statistics and administrative data (Box 2.3).

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22 │ 2. INTERNATIONAL BEST PRACTICE IN BUSINESS STATISTICS Box 2.3. Legal form of businesses and measurement of businesses for statistical purposes: Administrative data and statistics on new businesses In the case of new enterprise registrations, the administrative business register is not concerned by whether a new application refers to an entirely new operation or a reorganisation of an existing business or businesses. For example, it is not uncommon for a small company originally created as an individual enterprise to grow and adopt a new legal form, e.g. as a limited liability company. In this case, assuming there is one administrative register for all enterprises, the administrative register will record a dissolution of one individual enterprise and the creation of a limited liability company. However, as far as the economic realities are concerned, there are no changes in the means of production, employment or location of the operations. Hence, from the point of view of business statistics, a change to the legal form of a business should not affect the business count, employment figures or business demography figures (number of enterprise births or deaths). The underlying economic performance – as measured e.g. by turnover or value added – does not depend on changes of the legal status. For further reading: OECD-Eurostat Manual on Business Demography Statistics, 2007; https://www.oecd.org/sdd/business-stats/eurostatoecdmanualonbusinessdemographystatistics.htm.

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2.2. Legal definitions of SMEs and definitions used for statistical purposes Across OECD countries it is common practice to distinguish between legal definitions of SMEs used for administrative purposes and a statistical definition of SME for producing official business statistics. From a legal perspective, requirements to qualify as SMEs in order to obtain government support and various exemptions typically include two elements: 

size threshold(s) based on specific dimensions, e.g. employment, turnover, total assets.



resources (e.g. financing) to which an enterprise has access, that are different depending on whether the enterprise is independent or owned by, linked to or partnered with other enterprises.

For instance, in the European Union the official definition of SMEs is based on three criteria that combine employment, asset and turnover thresholds and on the requirement that an SME should be independent from other entities.2 From a statistical perspective, the implementation of multiple criteria for the compilation of SME statistics faces serious constraints as it entails complexity in computation and also reduces the scope for international comparisons. For statistical purposes, where the coverage, the consistency of data over time and international comparability are very important, it is therefore preferable to apply only one criterion to identify SMEs, in particular the size of the employment in a business, i.e. the number of employees or persons employed. This is the practice adopted by the large majority of countries across the world and also by international organisations, including the OECD. The main reason for preferring employment is that official statistics need to be as complete as possible, and employment is one of the most readily available business indicators, derived from business surveys and several administrative sources. On the contrary, when financial thresholds (for instance, turnover) are applied to compile statistics by business size, changes in thresholds can be necessary in the course of time to align with inflation rates and this will jeopardise the consistency of data series over time. Also, financial thresholds make international comparisons extremely difficult because of, among other things, varying inflation rates and exchange rates in each country.

EC Recommendation of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises, C(2003) 1422, Article 7. Statistics; and The new SME definition, User guide and model declaration. European Commission. EN NB-60-04-773-EN-C 92-894-7909-4.

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2.3. Glossaries and international guidelines on business statistics The regular production of official business statistics for the SME sector is relatively recent in national statistics offices around the world. To support this development, in the past 15 years a number of tools have been produced to assist the work of statisticians in NSOs responsible for this area, and also to help analysts, policy makers and researchers interested in this novel statistical domain. This section lists existing glossaries of relevant terms as well as guidelines and manuals on the development of business statistics suitable for studying the SME sector. These tools, which are typically the result of joint efforts of international organisations and national statistical offices, cover the entire process of production of business statistics, from the collection of data, to the compilation of statistics and their dissemination. They contain comprehensive information and detailed explanations on the production of business statistics. A.

Eurostat Structural Business Statistics online glossary

https://ec.europa.eu/eurostat/statisticsexplained/index.php?title=Category:Structural_business_statistics_glossary This website presents in alphabetical order more than 100 definitions of terms used in business statistics. The glossary also features definitions of related concepts. B.

Eurostat European Business Statistics Manual (2018)

https://ec.europa.eu/eurostat/documents/54610/7779382/EBS-manual-table-of-contentsand-introduction.pdf This manual provides a detailed description of European business statistics, including how they are compiled and the methodologies behind them. It also incorporates future measures to be introduced by the new Framework Regulation Integrating Business Statistics (FRIBS), once it is adopted by the European Council and European Parliament. C. Eurostat Business Registers Recommendations Manual (2010) http://ec.europa.eu/eurostat/ramon/statmanuals/files/KS-32-10-216-EN-C-EN.pdf The Business Registers Recommendations Manual presents methodological and practical issues, and explains the objectives and challenges of international harmonisation of statistical business registers. The manual covers in detail the following topics: the content and coverage of the business register, statistical units (legal units, local units, enterprises, enterprise groups), relationship between units registered in the statistical business register, demographic events and continuity rules for each type of unit, data sources, handling of errors, quality assurance, and access to data and dissemination. D. UNECE Guidelines on Statistical Business Registers (2015) https://www.unece.org/fileadmin/DAM/stats/publications/2015/ECE_CES_39_WEB.pdf The Guidelines on Statistical Business Registers are a joint effort by Eurostat, OECD and UNECE, building upon the Recommendations Manual developed by Eurostat (document

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C above). The document expands on areas of interest to developing countries. It covers: the roles of statistical business registers (live register, survey frame, source of derivation of business statistics, international data exchange); coverage of industrial activity sectors; statistical units (legal units, establishments, enterprises, enterprise groups); relationships between units registered in the SBR; continuity rules; data sources; error handling; and data dissemination. The document explains the key considerations in establishing a statistical business register, and presents country case studies. E. Eurostat-OECD Manual on Business Demography Statistics (2007) http://www.oecd.org/std/39974460.pdf This manual presents the methodological foundations for compiling business demography statistics. It addresses the scope of the enterprise population (active enterprises, active employer enterprises, economic enterprises); definitions of demographic events (birth, death, survival); continuity rules to establish demographic events; measurement of growth (by employment, by turnover); and the definition of high-growth enterprises. For each type of demographic event, the manual suggests a number of indicators that can be produced in addition to enterprise and employment counts. F. UNECE Guidelines on the Use of Business Registers for Business Demography Statistics and Entrepreneurship Indicators (2019) https://www.unece.org/fileadmin/DAM/stats/publications/2018/ECECESSTAT20185.pdf These guidelines build on documents C, D, and E above and focus on the use of statistical business registers for compiling business demography statistics. The guidelines expand on previous documents by presenting indicators obtained via data linking. They also present country cases where the statistical business register is not available yet, and where business demography statistics are estimated based on survey and census data. G. Compilers Guide on European Statistics on International Trade in Goods by Enterprise Characteristics (TEC), 2018 edition https://ec.europa.eu/eurostat/documents/3859598/8697402/KS-GQ-18-002-EN-N.pdf The compilation of trade statistics by enterprise characteristics (in particular: by size class, ownership, type of trader) is based on the linking of customs data or data from trade registers, wherever available, with business registers. H. UN International Recommendations for Industrial Statistics (2008) https://unstats.un.org/unsd/publication/seriesM/seriesm_90e.pdf The International Recommendations for Industrial Statistics are developed by the Statistics Division of the UN Department of Economic and Social Affairs. They extend previous work aimed at providing methodological foundations for the collection of economic statistics, including aspects related to business statistics. The publication has two parts: international recommendations and guidance for implementation. The first part describes: the scope of industrial statistics; the distinction

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26 â&#x201D;&#x201A; 2. INTERNATIONAL BEST PRACTICE IN BUSINESS STATISTICS between manufacturing and wholesale trade in view of outsourcing; the choice and delineation of statistical units (from kind-of-activity unit to multi-territory enterprises); and data items covering various aspects of the economic activity (business demography, employment, balance sheet and income statement items, etc.). The second part covers practical aspects of data collection, including data sources and compilation methods, data quality and metadata, as well as issues of data dissemination. I. UNIDO Industrial Statistics Guidelines (2010) https://www.unido.org/sites/default/files/2012-07/Industrial%20Statistics%20%20Guidelines%20and%20Methdology_0.pdf These guidelines are a further development of the UN International Recommendations (document H above), and highlight the role of statistical business registers as a necessary tool for the compilation of reliable time series of industrial statistics. In addition, they offer practical guidance on sampling for surveys in developing countries and on data processing in industrial surveys, and methodological recommendations on the measurement of industrial performance (e.g. indexes, growth rates, ratios and share indicators).

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2.4. Key statistics on the SME sector Following established best practice in countries worldwide, a key set of statistics is recommended for analysing trends in the structure and performance of the SME sector (Table 2.1). These are known as structural business statistics (SBS), and describe the characteristics and performance of businesses, notably by activity sector and size class. This core set provides an essential overview of the main characteristics of a country’s business population, and of the contribution of different types of enterprises to the creation of value and employment. While a comprehensive suite of indicators can be developed over time to monitor the development of the SME sector against a variety of dimensions such as the involvement in innovation and trade, a basic group of statistics is needed as a first step in the compilation of SME statistics. The main statistical units used by statistical offices for the compilation structural business statistics at the country level are enterprise and establishment (Box 2.4). The statistical unit ‘enterprise group’ is also relevant to determine the independence of a (small) business from the control of other entities. However, the compilation of statistics on enterprise groups remains mostly separate from that of SME statistics, and only a few statistical offices have produced data on dependent and independent SMEs. Box 2.4. Enterprises and establishments An enterprise is the smallest combination of legal units that is an organisational unit producing goods or services, which benefits from a certain degree of autonomy in decisionmaking, especially for the allocation of its current resources. An enterprise carries out one or more activities at one or more locations. An establishment is an enterprise, or part of an enterprise, that is situated in a single location and in which only a single (non-ancillary) productive activity is carried out or in which the principal productive activity accounts for most of the value added. In fact, enterprises can consist of a single or multiple local units, i.e. establishments. In all countries, most enterprises have only a single establishment, but there are also numerous enterprises that consist of many establishments. These multi-plant firms comprise especially large and very large enterprises that can be marked by considerable degrees of geographic diversity and variety in the sectors in which the firm is active. In the United States, for instance, the proportion of multi-plant firms among the entire business population has been estimated to be around one third, but multi-establishment firms constitute around 57 percent of all employment. For further reading: UNECE (2015), Guidelines on Statistical Business Registers, http://www.unece.org/index.php?id=40574; OECD (2017), The Geography of Firm Dynamics: Measuring Business Demography for Regional Development, https://read.oecdilibrary.org/urban-rural-and-regional-development/the-geography-of-firmdynamics_9789264286764-en#page1

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28 â&#x201D;&#x201A; 2. INTERNATIONAL BEST PRACTICE IN BUSINESS STATISTICS Table 2.1. Core set of structural business statistics on the SME sector Variable 1.

Main specifications1

Number of active businesses:

Count of the businesses active during at least a part of the reference period.

Main statistical unit (establishment, enterprise). Scope of coverage in the economy, e.g. relevant economic sectors, minimum size of businesses in terms of employment or turnover. Breakdowns by: - Business size, preferably as defined by employment in the business - Sector of activity

Data sources: Economic censuses, business surveys, company tax reports, annual reports, administrative data See: OECD Structural and Demographic Business Statistics 2006, http://www.oecd.org/sdd/business-stats/36919795.pdf 2.

Employment in businesses:

Employment is measured by the number of persons who worked in or for the concerned unit during the reference year

Main statistical unit, scope of coverage and breakdowns as for variable 1. Measures of employment: - Employees - Persons employed (including employees and self-employed)

Data sources: Employment data sources, economic censuses, business surveys, company tax reports, annual reports, administrative data See: OECD Structural and Demographic Business Statistics 2006 http://www.oecd.org/sdd/business-stats/36919795.pdf 3.

Turnover of businesses:

Main statistical unit, scope of coverage and breakdowns as for variable 1.

Total value of invoices by the business during the reference period corresponding to market sales of good or services supplied to third parties. Data sources: Business surveys, company tax reports, annual reports, administrative data (tax data, electricity distribution board, etc.), economic censuses. See: OECD Structural and Demographic Business Statistics 2006, http://www.oecd.org/sdd/business-stats/36919795.pdf 4.

Value added of businesses:

Main statistical unit, scope of coverage and breakdowns as for variable 1.

Difference between production of the business and intermediate consumption. Data sources: Business surveys, company tax reports, annual reports, administrative data, economic censuses. See: OECD Structural and Demographic Business Statistics 2006, http://www.oecd.org/sdd/business-stats/36919795.pdf 5.

Labour compensation in businesses

Compensation of employees is the total remuneration in cash or kind payable by a business to employees during the accounting period

Main statistical unit and breakdowns as for variable 1. Compensation per employee.

Data sources: Business surveys, company tax reports, annual reports, administrative data (social security, pension fund, etc.), economic censuses. See: OECD Structural and Demographic Business Statistics 2006, http://www.oecd.org/sdd/business-stats/36919795.pdf 6.

Productivity of businesses:

Main statistical unit, scope of coverage and breakdowns as for variable 1.

Value added per person employed or per hour worked. Data sources: Computed from variables 2 and 4. See: OECD Compendium of Productivity Indicators 2019, https://read.oecd-ilibrary.org/industry-and-services/oecdcompendium-of-productivity-indicators-2019_b2774f97-en#page1

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Note: 1. The UNSD International Recommendations for Industrial Statistics is a valuable source of information on concepts, definitions and methodology. https://unstats.un.org/unsd/statcom/doc08/BG-IndustrialStats.pdf.

When measuring the business sector, it is important to delineate what part of the economy is of interest, i.e. the type of economic activity. The overall characteristics and impact on the economy of firms operating, for instance, in agriculture or finance might be different from those operating in the manufacture of goods or providing business services. For similar reasons, a decision is needed on how to operationalise the definition of SMEs for statistical purposes. This means selecting a criterion to identify businesses that belong to the category of SMEs and using it to compile statistics for the relevant category (Box 2.5).

Box 2.5. Defining the sectoral coverage and size classes of businesses: the example of the structural business statistics of the OECD For its database of Structural Business Statistics, which contains internationally harmonised statistics, the OECD focuses on the so-called non-financial business economy, defined as sectors 05 to 82 of the International Standard Industrial Classification (ISIC), Revision 4. The financial and insurance services (64-66 of ISIC Rev.4) are excluded, and agriculture, education and health services are kept separate, because of the specific nature of these sectors. The statistical unit in the database is the enterprise (see definition in Box 2.4). The breakdown of structural statistics by size class of enterprises uses the number of persons employed, following the standard approach by countries in the European Statistical System and in an increasing number of other countries across the world. Specifically: 

micro enterprises: 1 to 9 persons employed



small enterprises: 10 to 49 persons employed (often further subdivided into 10-19 and 20-49)



medium-sized enterprises: 50 to 249 persons employed



large enterprises: 250 or more persons employed.

The number of persons employed is defined as the total number of persons who worked in or for the concerned unit during the reference year, whether full-time or part-time. It includes employees, working proprietors, partners working regularly in the enterprise and contributing unpaid family workers. The staff headcount criterion usually also includes temporary and seasonal employment. See: EC Recommendation of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises, C(2003) 1422, Article 7. Statistics.

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2.5. Key statistics on the demography of businesses Business demography statistics, which measure the births, survival, growth and deaths of businesses, provide information on the development of the business population over time and, importantly, on the change of business employment associated with different demographic events. These statistics are central to the analysis of entrepreneurship and business dynamism in the economy. Table 2.2 presents a set of business demography indicators produced annually by national statistics offices of member states of the European Union for almost a decade. Many member and partner countries of the OECD also regularly produce these statistics, based on the same harmonised methodology and definitions used in the European Union. Table 2.2. Core set of indicators of business dynamism Concept 1.

Indicators

Business birth:

- Number of births in year t

Main specifications Statistical unit (enterprise, establishment).

Creation of a combination of production factors with the restriction that no other enterprise is involved in the event. Excludes entries in the business population due to reactivations, mergers, break-ups, split-offs and restructuring.

- Rate of births - Employment created by business births

Breakdowns by: - Size of employment or turnover at birth - Sector of activity - Legal form - Geographical location.

- Number of deaths in year t

Statistical unit and breakdowns as for variable 1.

Business death:

Dissolution of a combination of production factors with the restriction that no other enterprises are involved in the event. Excludes exits from the population due to mergers, take-overs, break-ups and restructuring of a set of enterprises.

- Rate of deaths

- Number of businesses having survived until year t

Statistical unit (enterprise, establishment).

- Rate of surviving businesses

Breakdowns by: - Size of employment or turnover at birth - Sector of activity

Business survival:

A business born in year t-x is considered to have survived x years till year t if it is still active (in terms of employment or turnover) in any part of year t.

- Employment destroyed by business deaths

- Number and rate of young businesses (less than x years old) - Employment in surviving and young businesses

Business growth:

Growth is typically measured in terms of growth of employment or turnover over a defined period of time.

- Number of high-growth businesses (over a predefined threshold) - Rate of high-growth businesses

Statistical unit: enterprise Breakdowns by sector of activity

- Rate of young high-growth businesses

Data source: Business registers, business censuses, business surveys. See: Eurostat-OECD (2007), Eurostat-OECD Manual on Business Demography Statistics, https://www.oecd.org/sdd/39974460.pdf; UNECE (2018), Guidelines on the Use of Business Registers for Business Demography Statistics and Entrepreneurship Indicators, https://www.unece.org/fileadmin/DAM/stats/publications/2018/ECECESSTAT20185.pdf

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In most countries, the systematic production of business demography statistics by national statistical offices began in the early 2000s. Statistical business registers are the most consistent source of data for the production of business demography statistics. However, in the absence of a suitable statistical business register, some countries (e.g. Korea and Mexico) produce business demography measures using data from economic censuses or business surveys, combining them with data from administrative sources when possible. Business demography statistics can be based on various statistical units and populations. In international data collections by the EU and OECD the statistical unit is the enterprise; at the local level, statistics on establishments are also compiled by several countries, as an enterprise may have two or more locations in different regions (see Box 2.4). A distinction is made between the demography of employer enterprises, i.e. enterprises having a positive number of employees in any part of the reference year, and non-employer enterprises, i.e. enterprises having no employees in any part of the reference year (however, they can still have a positive number of persons employed, e.g. working proprietors, partners working regularly). In terms of demographic events, for example an enterprise birth, the distinction is important: the transition from a non-employer firm to a business with one employee would be counted as a birth in terms of employer business demography. While the compilation of employer business demography is more demanding because of the additional requirements, statistics on employer enterprises are considered more comparable across countries because they are less affected by possible thresholds in the statistical business registers that would exclude for instance, non-employer businesses. Indicators of the growth rates of businesses are also relevant for business demography. Within the entire population of active businesses, it can be of particular interest to identify those that are growing fast, for instance in terms of the impact on job creation. High-growth businesses are those experiencing an increase in employment or turnover above a certain threshold over a certain period of time. Special sub-groups of high-growth businesses can be identified to respond to specific policy questions: for instance, those that are young, to understand whether the business environment supports the growth ambitions of newly created businesses. For a meaningful analysis, a threshold for the initial size of the business is often set when measuring growth: this is to avoid, for instance, counting an enterprise growing from one to two employees as a high-growth enterprise, as this growth has little economic impact. At the same time, the size threshold should be low enough (for instance, 5 or 10 employees) to include as many enterprises as possible in the initial population. For further reading: Eurostat-OECD (2007), Eurostat-OECD Manual on Business Demography Statistics, https://www.oecd.org/sdd/39974460.pdf; UNECE (2018), Guidelines on the Use of Business Registers for Business Demography Statistics and Entrepreneurship Indicators, https://www.unece.org/fileadmin/DAM/stats/publications/2018/ECECESSTAT20185 .

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2.6. Key statistics describing entrepreneurs’ profile Along with data on SMEs and business dynamism, statistics on entrepreneurs are the third important element in developing an overview of the SME sector and entrepreneurship in a country. Key characteristics of an entrepreneur’s profile include gender, age, and education. Information on these aspects is sourced mainly from data on individuals (e.g. labour force surveys, population censuses) because it is not typically available in the data sources used for compiling structural and demographic business statistics. For instance, labour force surveys provide a wide range of information on the self-employed, a category that is used as a proxy for entrepreneurs. Specific information on the self-employed would normally include: age, educational attainment, economic sector of activity, citizenship, and whether the individual is a full-time and part-time self-employed. Also, information on the income from self-employment is provided by income surveys, for example the European Union Statistics on Income and Living Conditions (EU-SILC). The main indicators for profiling entrepreneurs are: 1. Self-employment rates by gender and category, in particular self-employed who are employers, and self-employed who are own-account workers with no employees. 2. Self-employed by gender and activity sector 3. Self-employed by gender and age 4. Self-employed by education level 5. Self-employed by gender and full-time or part-time work 6. Gender gap in self-employment earnings where self-employment rate is measured by the number of self-employed divided by the total number of employed persons. Interesting new statistics linking data on individuals with data on businesses are produced by statistical offices in several countries (for instance, Austria, Germany and New Zealand) in order to follow simultaneously enterprise performance and employers’ profile, as well as employees’ salary, education, type of job and geographic mobility. For further reading: Eurostat, European Union Labour Force Survey data overview: https://ec.europa.eu/eurostat/web/microdata/european-union-labour-force-survey Eurostat, European Union Labour Force Survey methodology: https://ec.europa.eu/eurostat/statistics-explained/index.php/EU_labour_force_survey__methodology#LFS_explanatory_notes The UNECE Guidelines on Statistical Business Registers (2015) contain a dedicated chapter on combining administrative and statistical sources with the aim of profiling the entrepreneurs (http://www.unece.org/index.php?id=40574).

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2.7. Dissemination of business statistics The value of business statistical products does not depend only on the amount and quality of data produced, but also on the use that is made of them. It is not sufficient to have “good business statistics” stored inside the statistical office – they must be easily available in a clear form to all potential users. Comprehensive guidelines on data dissemination have been developed by Eurostat and presented in the European Statistics Code of Practice (2017). The code is consistent with statistical good practice in dissemination included in the OECD Recommendation of the OECD Council on Good Statistical Practice, 2015 . The recommended best practice can be summarised as follows: i.

ii.

iii.

iv.

Develop an adequate dissemination policy which respects the following key principles: 

Relevance: statistics meet user needs. User satisfaction is measured (satisfaction survey)



Accuracy and reliability: statistics accurately and reliably portray reality



Timeliness and punctuality: statistics are released in a timely and punctual manner



Coherence and comparability: statistics are consistent internally, over time and comparable between regions and countries; it is possible to combine and make joint use of related data from different data sources.



Accessibility and clarity: statistics are presented in a clear and understandable form, released in a suitable and convenient manner, available and accessible on an impartial basis with supporting metadata and guidance.

Update the output systems for disseminating products 

Format data and metadata, ready to be put into output databases



Load data and metadata into output databases



Ensure data are linked to the relevant metadata

Prepare products for dissemination 

Prepare the product components: explanatory text, tables, charts etc.



Assemble components into products



Edit the products and check that they meet publication standards



Apply disclosure control (confidential or sensitive information must not be released)

Manage the release of dissemination products 

Check that all the elements for the release are in place



Respect timing of the release

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34 │ 2. INTERNATIONAL BEST PRACTICE IN BUSINESS STATISTICS  v.

vi.

Check that impartiality and objectivity are respected

Disseminate products 

Use customer relationship management tools to better target potential users of the product



Use tools including web sites, wikis and blogs to communicate statistical information to users

Manage user support 

Record customer queries



Respond within agreed deadline



Analyse queries are analysed to detect new or changing user needs.

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3. A PILOT COMPENDIUM OF STATISTICS ON THE SME SECTOR IN JORDAN │

Chapter 3. A pilot compendium of statistics on the SME sector in Jordan

The results of the reviews conducted for Chapters 1 and 2 – i.e. the state of production of official business statistics in Jordan, and the international best practice in the area of SME statistics – were instrumental in developing a pilot compendium of statistics on the SME sector in Jordan. The pilot uses official statistics currently produced by the Department of Statistics (DoS) of Jordan to suggest novel ways to analyse and display the trends and performance of the SME sector. The pilot compendium presents a selection of key indicators of the structure and performance of the Jordanian business sector. Data for Jordan are those produced by DoS (http://dosweb.dos.gov.jo/); for international comparisons, data are drawn from the OECD Structural and Demographic Business Statistics database (http://dx.doi.org/10.1787/sdbsdata-en).

3.1. Overview of the business sector in Jordan In Jordan, three sectors account for almost 90% of the entire business population: manufacturing, wholesale and retail trade, and accommodation and food services. Together they account for 75% of all jobs in the business economy (Figure 3.1). Their contribution is also very high in terms of gross output, at 69%; and gross value added, at 65%. However, the bulk of this is generated by manufacturing (52% of gross output and 43% of value added of the business economy), while accommodation and food services generate only 3.2% and 3.3% respectively. In the European Union the same three sectors (manufacturing, wholesale and retail trade, and accommodation and food services) represent around 45% of businesses, and account for 55% of all the persons employed and 50% of the gross output and value added of the business sector.

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36 │ 3. A PILOT COMPENDIUM OF STATISTICS ON THE SME SECTOR IN JORDAN Figure 3.1. Contribution to the business economy, three largest sectors in Jordan Percentage, 2016

Source: Department of Statistics of Jordan.

While only a small share of businesses operate in the information and communication (ICT) sector, they make a disproportionate contribution to the business economy (Figure 3.2). This is important, as the ICT sector is key to supporting economic and social development.3 Figure 3.2. Contribution of the ICT sector to the business economy in Jordan Percentage, 2016

Source: Department of Statistics of Jordan.

OECD Digital Economy Outlook, 2017, https://www.oecd.org/sti/oecd-digital-economy-outlook2017-9789264276284-en.htm; and OECD Going Digital initiative, https://www.oecd.org/goingdigital/.

SME POLICY EFFECTIVENESS IN JORDAN: USER GUIDE 3- SME STATISTICS © OECD 2019

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Micro and small businesses (with up to 4 and up to 49 persons employed respectively) represent 80% or more of the total businesses in all sectors, apart from energy where however only few establishments are active. In wholesale and retail trade micro businesses account for 95% of total businesses, and in accommodation they are almost 90% of all businesses. Table 3.1. Contribution to the business economy, by activity sector, Jordan Percentage, 2016 Number of establishments

Number of persons employed

Gross output

Gross value added

Three most important sectors (C) Manufacturing

16.5

32.6

52.0

42.5

(G) Wholesale and retail

64.9

35.5

12.7

18.9

8.0

7.6

3.2

3.3

89.4

75.6

67.9

64.6

(B,D-E) Mining, Energy and Water

0.2

3.8

6.9

10.5

(F) Construction

1.8

5.7

5.8

2.7

(H) Transportation

1.0

3.4

11.4

11.9

(J) Information and communication

0.6

2.6

4.4

6.0

(L-N) Real estate, Professional and Administrative services

7.0

8.9

3.5

4.2

(I) Accommodation

Remaining sectors

Business economy, excl. financial and insurance services

10.6

24.4

32.1

35.4

100.00

Source: Department of Statistics of Jordan.

SME POLICY EFFECTIVENESS IN JORDAN: USER GUIDE 3- SME STATISTICS ÂŠ OECD 2019

38 │ 3. A PILOT COMPENDIUM OF STATISTICS ON THE SME SECTOR IN JORDAN Figure 3.3. Number of establishments and persons employed in business economy, by size class Percentage, 2016

Source: Department of Statistics of Jordan.

Figure 3.4. Average size of establishments, by industry| Persons, 2016

Source: Department of Statistics of Jordan.

SME POLICY EFFECTIVENESS IN JORDAN: USER GUIDE 3- SME STATISTICS © OECD 2019

A PILOT COMPENDIUM OF STATISTICS ON THE SME SECTOR IN JORDAN │

The vast majority of unpaid workers, usually family members of business owner’s, are employed in establishments with 1 to 4 persons employed, while in establishments with 50 or more persons employed there are virtually no unpaid workers. In the construction sector the share of paid employees was only 26.5% among the smallest establishments (1 to 4 persons employed) in 2016. In establishments with 5 to 19 persons employed, the share of paid employees was at least as high as 84.3%. Figure 3.5. Share of paid employees among total persons employed, by industry Percentage, 2016

Source: Department of Statistics of Jordan.

SME POLICY EFFECTIVENESS IN JORDAN: USER GUIDE 3- SME STATISTICS © OECD 2019

40 │ 3. A PILOT COMPENDIUM OF STATISTICS ON THE SME SECTOR IN JORDAN

3.2. Indicator: Number of SMEs Table 3.2. Number of establishments by size and activity sector Business economy, 2016 Economic activity sector

1 to 4

Mining and Quarrying

5 to 19

20 to 49

50 to 99

100 or More

Total

129

21 360

4 289

705

243

306

26 904

Electricity, Gas, Steam and air conditioning Supply

Water Supply, Sewerage, Waste Management and Remediation Activities

134

Construction

1 678

975

217

2 975

Wholesale and Retail Trade, Repair of Motor Vehicles and Motorcycles

99 630

5 279

386

103

105 501

Manufacturing

Transportation and Storage Accommodation and Food Service Activities Information and Communication

814

744

1 684

11 277

1 448

124

12 951

482

337

931

Real Estate Activities

1 573

270

1 869

Professional, Scientific and Technical Activities

5 072

1 008

6 186

Administrative and Support Service Activities

2 604

665

3 346

144 618

15 124

1 723

533

628

162 628

Business economy

Source: Department of Statistics of Jordan.

SME POLICY EFFECTIVENESS IN JORDAN: USER GUIDE 3- SME STATISTICS © OECD 2019

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Figure 3.6. Share of establishments by size and activity sector Percentage of all establishments, business economy, 2016

Source: Department of Statistics of Jordan.

Comparing the distribution of Jordan businesses by employment size with that of businesses in selected OECD member countries, very high shares of micro and small firms (with up to 19 persons employed) are observed also in large economies, in particular France and Italy. Indeed, there are several factors affecting the size of a business, including not only the type of industrial specialisation and the size of the market the firm is serving, but also the business environment, which can encourage or hamper growth (for instance depending on the availability and accessibility of financial or skill resources).

SME POLICY EFFECTIVENESS IN JORDAN: USER GUIDE 3- SME STATISTICS ÂŠ OECD 2019

42 │ 3. A PILOT COMPENDIUM OF STATISTICS ON THE SME SECTOR IN JORDAN Figure 3.7. Share of businesses by size, Jordan and selected OECD countries Percentage of businesses, business economy, 2016 Panel A

Top 20% of Panel A magnified

1 to 19

100

20 to 49

50+

98 96

94 92 90 88 86 84 82 80

ITA

ESP

FRA

POL

HUN

ISL

NOR

LVA

FIN

DNK

DEU

NZL

JOR

Source: Department of Statistics of Jordan, and OECD Structural and Demographic Business Statistics database.

Almost half of the establishments (46%) are located in Amman, which point to concentration of economic activity in the capital, followed by the regions of Irbid (17%) and Zarqa (15%), the two second largest cities in Jordan (Figure 3.4).

SME POLICY EFFECTIVENESS IN JORDAN: USER GUIDE 3- SME STATISTICS © OECD 2019

A PILOT COMPENDIUM OF STATISTICS ON THE SME SECTOR IN JORDAN │

Figure 3.8. Regional Distribution of Establishments Percentage, 2011

Source: Department of Statistics of Jordan .

SME POLICY EFFECTIVENESS IN JORDAN: USER GUIDE 3- SME STATISTICS © OECD 2019

44 │ 3. A PILOT COMPENDIUM OF STATISTICS ON THE SME SECTOR IN JORDAN

3.3. Indicator: Employment in establishments Table 3.3. Employment by sector and establishment size Number of persons employed (paid and unpaid employment), 2016 Economic activity sector

1 to 19

Mining and Quarrying

20 to 49

50 or More

Total

787

647

7 565

8 998

77 768

21 736

124 365

223 868

Electricity, Gas, Steam and air conditioning Supply

8 251

8 369

Water Supply, Sewerage, Waste Management and Remediation Activities

529

7 923

8 546

12 726

6 664

19 434

38 825

198 818

10 145

34 748

243 711

7 333

2 164

14 151

23 647

Manufacturing

Construction Wholesale and Retail Trade, Repair of Motor Vehicles and Motorcycles Transportation and Storage Accommodation and Food Service Activities

33 096

3 238

15 771

52 104

Information and Communication

3 902

2 199

12 043

18 145

Real Estate Activities

4 908

332

1 728

6 968

professional, Scientific and Technical Activities

18 924

2 296

4 971

26 191

Administrative and Support Service Activities

10 202

1 024

16 417

27 643

369 045

50 605

267 367

687 015

Business economy

Source: Department of Statistics of Jordan.

A PILOT COMPENDIUM OF STATISTICS ON THE SME SECTOR IN JORDAN │

Figure 3.9. Employment in private and public sector, by size and industry| Percentage, 2016

Source: Department of Statistics of Jordan.

Figure 3.10. Share of employment by sector and establishment size Percentage of number of persons employed in the sector, 2016

Source: Department of Statistics of Jordan .

46 │ 3. A PILOT COMPENDIUM OF STATISTICS ON THE SME SECTOR IN JORDAN Figure 3.11. Share of employment in business economy by business size, Jordan and selected OECD countries Percentage of employment in the sector, 2016

Source: Department of Statistics of Jordan and OECD Structural and Demographic Business Statistics database.

A PILOT COMPENDIUM OF STATISTICS ON THE SME SECTOR IN JORDAN │

Figure 3.12. Share of paid and unpaid employment by establishment size, business economy Percentage of number of persons employed in the sector, 2016

Source: Department of Statistics of Jordan.

Figure 3.13. Paid employment by gender and education Thousands of individuals, total economy, 2016

Source: Department of Statistics of Jordan.

48 │ 3. A PILOT COMPENDIUM OF STATISTICS ON THE SME SECTOR IN JORDAN Table 3.4. Employment by nationality Total economy, 2016 Nationality

Number of persons employed

Jordanian

1 037 698

89.3

Egyptian

61 931

5.3

Foreigner

39 874

3.4

Syrian

13 474

1.2

Other Arabs

8 663

0.7

Source: Department of Statistics of Jordan.

Figure 3.14. Employment by gender and nationality Percentage of workforce by nationality, business economy, 2016

Source: Department of Statistics of Jordan.

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3.4. Indicator: Compensation of employees Figure 3.15. Average monthly wages per person, by occupation JOD, total economy except agriculture, 2016

Source: Department of Statistics of Jordan

Figure 3.16. Average monthly wages per person, by gender and occupation Males = 100, total economy except agriculture, 2016

Source: Department of Statistics of Jordan.

50 │ 3. A PILOT COMPENDIUM OF STATISTICS ON THE SME SECTOR IN JORDAN

3.5. Indicator: Gross output and gross value added Figure 3.17. Output and value added by industry s

Source: Department of Statistics of Jordan

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3.6. Indicator: Hiring intentions in the business economy Figure 3.18. Hiring intentions, by industry Percentage, 2016

Note: Hiring intentions refer to expected jobs to be created by the respondent business in the near future Source: Department of Statistics of Jordan

Table 3.5. Hiring intentions in private and public sector Number of Persons Private Economic activity

Mining and Quarrying Manufacturing Construction

Public

1 to 19

20 or more

1 816

3 287

Wholesale and Retail Trade, Repair of Motor Vehicles and Motorcycles

751

638

Transportation and Storage

245

325

Accommodation and Food Service Activities

928

1 162

Information and Communication

Professional, Scientific and Technical Activities

190

259

Administrative and Support Service Activities Business economy except financial and insurance activities

395

137

4 390

5 841

456

Note: In 2016 there were no publicly owned establishments with less than 20 persons employed. Source: Department of Statistics of Jordan.

52 │ 3. A PILOT COMPENDIUM OF STATISTICS ON THE SME SECTOR IN JORDAN

References Employment in establishments, establishment/ .

http://dosweb.dos.gov.jo/labourforce/employment-in-

Economic surveys, http://dosweb.dos.gov.jo/industry/ . Economic Establishments Census, http://dosweb.dos.gov.jo/censuses/establish-census/ . OECD

Structural and Demographic Business http://dx.doi.org/10.1787/sdbs-data-en.

Statistics

database,

November

2018,

OECD (2010), Structural and Demographic Business Statistics, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264072886-en. OECD (2007), Eurostat/OECD Manual on Business Demography Statistics”, OECD Publishing, Paris, http://www.oecd.org/std/39974460.pdf . UNECE (2015), Guidelines on Statistical Business Registers, https://www.unece.org/fileadmin/DAM/stats/publications/2015/ECE_CES_39_WEB.pdf.

ANNEX │

Annex A. A Reader’s guide

Statistical units Establishment is the statistical unit used by the Department of Statistics of Jordan for the observation and analysis of the business sector. Counts of businesses cover active establishments, defined as those that have employment and/or turnover during the reference year. Statistics based on establishments tend to overstate the number of businesses compared with statistics that have the enterprise as statistical unit: “the enterprise is the smallest combination of legal units that is an organisational unit producing goods or services, which benefits from a certain degree of autonomy in decision-making, especially for the allocation of its current resources. An enterprise carries out one or more activities at one or more locations. An enterprise may be a sole legal unit” (Eurostat-OECD Manual on Business Demography Statistics, 2007). Business employment is measured by DoS with the number of persons employed, broken down into categories of paid and unpaid.

Size class breakdown Business statistics are presented by DoS according to the following breakdowns by employment size: 1 to 4 persons employed, 5-19, 20-49, 50-99, and 100 or more persons employed.

Definitions The following sources are used for definitions: O

UNECE (2015), Guidelines on Statistical Business Registers, https://www.unece.org/fileadmin/DAM/stats/publications/2015/ECE_CES_39_W EB.pdf.

OECD (2010), Structural and Demographic Business Statistics, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264072886-en.

OECD (2007), Eurostat/OECD Manual on Business Demography Statistics”, OECD Publishing, Paris, http://www.oecd.org/std/39974460.pdf.

54 â&#x201D;&#x201A; ANNEX Active establishment: An establishment that had either turnover or employment at any time during the reference observation period. Active enterprise: An enterprise that had either turnover or employment at any time during the reference observation period. Employees (paid employment): Persons who work for an employer and who have a contract of employment and receive compensation in the form of wages, salaries, fees, gratuities, piecework pay or remuneration in kind. Persons employed: The total number of persons who work in the observation unit (inclusive of working proprietors, partners working regularly in the unit and unpaid family workers). Note: In the data published by DoS the term employees is used to include both paid and unpaid workers. Gross Output: The value of gross output (production) corresponds to the sum of the value of all finished products (including intermediary products sold in the same condition as received), of the net change of the value of work in progress and stocks of goods to be shipped in the same condition as received, of the variation of stocks of finished products and of those in progress, of the value of goods or services rendered to others, of the value of goods shipped in the same condition as received less the amount paid for these goods and of the value of fixed assets produced by the unit for its own use. Value added: The difference between production and any intermediate consumption, where production is measured at factor cost or basic prices. Wages and salaries (compensation of employees): all payments in cash or in kind payable to persons counted on the payroll by way of remuneration for work done during the reference period. Monetary variables are presented in current prices in dinars (JOD).

Country codes The compendium uses ISO codes (ISO3) for country names as listed below. CHE

Switzerland

ISL

Iceland

DEU

Germany

ITA

Italy

DNK

Denmark

JOR

Jordan

ESP

Spain

LVA

Latvia

FIN

Finland

NOR

Norway

FRA

France

NZL

New Zealand

SME POLICY EFFECTIVENESS IN JORDAN: USER GUIDE 3- SME STATISTICS ÂŠ OECD 2019

ANNEX │

Economic activity sectors The compendium defines “business economy” as the aggregate covering sections B to N of International Standard of Industrial Classifications (ISIC) Revision 4, with the exception of section K - Financial and insurance activities. International Standard of Industrial Classifications (ISIC) Revision 4 A (01-03)

Agriculture, forestry and fishing

B (05-09)

Mining and quarrying

C (10-33)

Manufacturing

D (35)

Electricity, gas, steam and air conditioning supply

E (36-39)

Water supply; sewerage, waste management and remediation activities

F (41-43)

Construction

G (45-47)

Wholesale and retail trade; repair of motor vehicles and motorcycles

H (49-53)

Transportation and storage

I (55-56)

Accommodation and food service activities

J (58-63)

Information and communication

K (64-66)

Financial and insurance activities

L (68)

Real estate activities

M (69-75)

Professional, scientific and technical activities

N (77-82)

Administrative and support service activities

O (84)

Public administration and defence; compulsory social security

P (85)

Education

Q (86-88)

Human health and social work activities

R (90-93)

Arts, entertainment and recreation

S (94-96)

Other service activities

S95

Repair of computers and personal and household goods

T (97-98)

Activities of households as employers; undifferentiated goods- and servicesproducing activities of households for own use

U (99)

Activities of extraterritorial organizations and bodies

Policy Handbook

SME POLICY EFFECTIVENESS IN JORDAN USER GUIDE 3: SME STATISTICS AND ENTREPRENEURSHIP INDICATORS IN JORDAN

SME POLICY EFFECTIVENESS IN JORDAN . USER GUIDE 3

SME Policy Effectiveness in Jordan User Guide 3: SME statistics and entrepreneurship indicators in Jordan