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Transition Rates


This Document is Archived


SMEs in New Zealand: Structure and Dynamics - 2006

[ Last Updated 2 June 2006 ]


Transition rates measure changes in the numbers of employees in firms over time and can be used as a proxy measure of business growth. The following series of graphs illustrates transitions of enterprises between size brackets between 2000 and 2005.

Few firms with no employees graduated into larger size brackets.

Only a small proportion of enterprises with zero employees in 2000 moved into larger size categories - 90.4 percent still employed no employees in 2003, and 88.0 percent by 2005.

Figure 21: Transition Rates - Enterprises with Zero EC in 2000

Image of "Figure 21: Transition Rates - Enterprises with Zero EC in 2000"

EC Size Group 2001 2002 2003 2004 2005
0 94.31% 92.23% 90.45% 89.54% 88.07%
1-5 5.15% 6.95% 8.42% 9.10% 10.27%
6-9 0.26% 0.41% 0.58% 0.69% 0.84%
10-19 0.18% 0.25% 0.34% 0.41% 0.51%
20-49 0.07% 0.11% 0.16% 0.19% 0.23%
50-99 0.02% 0.03% 0.03% 0.04% 0.05%
100-499 0.01% 0.02% 0.02% 0.03% 0.03%
500+ 0.00% 0.00% 0.00% 0.00% 0.01%

Over 66 percent of firms with 1-5 employees remained the same size.

Of those businesses employing 1-5 employees in 2000, 66.3 percent were still in the same size category by 2005. Over the same period, just over 3 percent of these enterprises had grown into the 10-19 EC size bracket.

Figure 22: Transition Rates - Enterprises with 1-5 EC in 2000

Image of "Figure 22: Transition Rates - Enterprises with 1-5 EC in 2000"

EC Size Group 2001 2002 2003 2004 2005
0 12.69% 15.38% 16.98% 21.60% 19.22%
1-5 81.06% 76.09% 71.57% 65.69% 66.28%
6-9 5.47% 7.14% 9.24% 9.94% 10.79%
10-19 0.61% 1.12% 1.85% 2.29% 3.11%
20-49 0.13% 0.22% 0.30% 0.39% 0.49%
50-99 0.02% 0.03% 0.05% 0.07% 0.09%
100-499 0.01% 0.01% 0.01% 0.01% 0.03%
500+ 0.00% 0.00% 0.00% 0.00% 0.00%

Firms with 6-9 employees are the least likely to remain the same size.

Enterprises with 6-9 employees in 2000 were the least likely to remain the same size by 2005. Just 41.0 percent of these enterprises remained the same size. Of the enterprises that moved out of the employment bracket, there was an equal split between those getting larger and smaller.

Figure 23: Transition Rates - Enterprises with 6-9 EC in 2000

Image of "Figure 23: Transition Rates - Enterprises with 6-9 EC in 2000"

EC Size Group 2001 2002 2003 2004 2005
0 3.05% 3.55% 4.31% 7.73% 5.65%
1-5 21.69% 24.83% 22.97% 21.83% 23.45%
6-9 60.10% 52.03% 47.96% 42.79% 41.01%
10-19 14.61% 18.50% 22.75% 24.74% 26.18%
20-49 0.47% 1.01% 1.86% 2.72% 3.38%
50-99 0.05% 0.05% 0.11% 0.15% 0.24%
100-499 0.02% 0.02% 0.04% 0.04% 0.08%
500+ 0.00% 0.00% 0.00% 0.00% 0.00%

Just over half of firms with 10-19 employees remained the same size.

By 2005, 53.3 percent of enterprises employing between 10 and 19 employees remained the same size. Those enterprises that moved were more likely to move into a smaller employment bracket (25.3 percent).

Figure 24: Transition Rates - Enterprises with 10-19 EC in 2000

Image of "Figure 24: Transition Rates - Enterprises with 10-19 EC in 2000"

EC Size Group 2001 2002 2003 2004 2005
0 2.01% 2.48% 3.24% 6.21% 4.13%
1-5 3.02% 5.10% 4.37% 4.63% 5.71%
6-9 14.79% 16.46% 14.76% 14.15% 15.43%
10-19 71.65% 63.58% 60.60% 55.68% 53.30%
20-49 8.32% 12.06% 16.43% 18.43% 20.09%
50-99 0.16% 0.24% 0.49% 0.77% 1.17%
100-499 0.06% 0.08% 0.11% 0.13% 0.17%
500+ 0.00% 0.00% 0.00% 0.00% 0.00%

Over sixty percent of firms with 20-49 employees remained the same size.

Of the enterprises employing 20-49 employees in 2000, 61.9 percent remained the same size in 2005. Seventeen percent of the enterprises moved into the 10-19 employment bracket, while 13.5 percent grew into larger employment brackets.

Figure 25: Transition Rates - Enterprises with 20-49 EC in 2000

Image of "Figure 25: Transition Rates - Enterprises with 20-49 EC in 2000"

EC Size Group 2001 2002 2003 2004 2005
0 1.53% 1.89% 2.49% 5.01% 3.36%
1-5 1.14% 1.67% 1.72% 1.50% 2.17%
6-9 0.86% 1.39% 1.31% 1.52% 2.04%
10-19 10.74% 14.72% 14.22% 14.34% 16.98%
20-49 80.71% 72.37% 69.92% 65.90% 61.94%
50-99 4.80% 7.63% 9.75% 10.81% 12.10%
100-499 0.23% 0.33% 0.58% 0.90% 1.38%
500+ 0.00% 0.00% 0.02% 0.02% 0.02%

Nearly twenty percent of firms employing 50-99 employees in 2000 grew into a larger employment bracket.

By 2005, 57.8 percent of enterprises employing 50-99 employees remained in the same employment size category.

Figure 26: Transition Rates - Enterprises with 50-99 EC in 2000

Image of "Figure 26: Transition Rates - Enterprises with 50-99 EC in 2000"

EC Size Group 2001 2002 2003 2004 2005
0 0.93% 1.49% 2.10% 3.54% 2.71%
1-5 0.27% 0.63% 0.54% 0.87% 1.03%
6-9 0.22% 0.46% 0.24% 0.62% 0.52%
10-19 0.60% 1.26% 1.08% 1.30% 0.97%
20-49 10.72% 16.45% 16.00% 15.78% 18.81%
50-99 79.38% 68.19% 66.09% 60.62% 57.80%
100-499 7.88% 11.52% 13.95% 17.20% 18.04%
500+ 0.00% 0.00% 0.00% 0.06% 0.13%

Over three-quarters of firms employing 100-499 employees remained the same size.

Of the enterprises employing 100-499 employees in 2000, 77.2 percent remained in the same employment size category in 2005.

Figure 27: Transition Rates - Enterprises with 100-499 EC in 2000

Image of "Figure 27: Transition Rates - Enterprises with 100-499 EC in 2000"

EC Size Group 2001 2002 2003 2004 2005
0 0.79% 1.64% 2.51% 3.35% 3.77%
1-5 0.24% 0.66% 0.43% 0.44% 0.72%
6-9 0.24% 0.08% 0.17% 0.18% 0.18%
10-19 0.40% 0.41% 0.61% 0.71% 0.90%
20-49 1.11% 1.39% 1.73% 1.41% 1.35%
50-99 5.78% 9.11% 8.74% 9.44% 9.69%
100-499 90.10% 83.18% 81.06% 78.84% 77.22%
500+ 1.35% 3.53% 4.76% 5.64% 6.19%

Firms employing 500 or more employees were the most likely to remain the same size.

Of the enterprises employing 500 or more employees in 2000, 88 percent remained in the same employment size category in 2005.

Figure 28: Transition Rates - Enterprises with 500+ EC in 2000

Image of "Figure 28: Transition Rates - Enterprises with 500+ EC in 2000"

EC Size Group 2001 2002 2003 2004 2005
0 0.42% 0.00% 1.79% 4.07% 4.63%
1-5 0.00% 0.00% 0.00% 0.45% 0.00%
6-9 0.00% 0.00% 0.00% 0.00% 0.00%
10-19 0.00% 0.00% 0.00% 0.00% 0.00%
20-49 0.00% 0.43% 0.45% 0.45% 0.46%
50-99 0.42% 0.43% 0.45% 0.00% 0.93%
100-499 4.17% 6.44% 6.28% 5.88% 6.02%
500+ 95.00% 92.70% 91.03% 89.14% 87.96%

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