Change in the Business Frame and Employment Data
In 2003, Statistics New Zealand changed significantly the strategy used to maintain the Business Frame (BF), from which business demography statistics are sourced (for further details refer to Appendix 1). The main change that affects this report is the 2004 change in the measure of employment from a full-time equivalent employee (FTE) count to an employee count (EC).
Employee Count
The EC is a head-count of salary and wage earners, primarily sourced from taxation data. It covers paid employees, but does not include working proprietors other than those who pay themselves a salary or wage.
The FTE measure covered paid employees and included working proprietors who did not pay themselves a salary or wage. The FTE measure was updated annually in the BF by surveying employing businesses (excluding farming businesses).
The EC is sourced primarily from Inland Revenue's IR348 form - the Employer Monthly Schedule (EMS). This form must be completed monthly by employers, and indicates the number of salary and wage earners. February is used as the reference month for business demography statistics. The employee count of a small number of enterprises is collected also by Statistics New Zealand survey.
Why Change to an Employee Count?
The change to an EC measure will significantly improve the accuracy of the data on the BF. Using monthly IRD data, the attributes of businesses on the BF will now be updated more regularly. Sourcing data directly from the IRD also will reduce compliance costs for businesses. The EC measure will improve the BF's coverage of businesses, as it includes information on farming businesses, which were previously excluded.
Will an Employee Count Alter the Statistics on SMEs in New Zealand?
The change to an EC does not significantly alter the proportion of SMEs in New Zealand. Using an EC measure, 96.3% of enterprises had fewer than 20 employees in February 2004. The 2004 Structure & Dynamics report found that 96.8% of enterprises had fewer than 20 FTEs.
However, there is a significant change in the number of firms deemed to have zero employees. Using an EC in February 2004, 64.7% of enterprises had no employees. Last year's Structure & Dynamics report found that only 20% of enterprises had no FTEs. The most likely cause of the difference is that working proprietors are captured by the EC measure only if they pay themselves a salary or wage. As many do not, it means a large number fall into the "zero" employee category. Therefore, this category at present does not give a true picture of the enterprises that genuinely have no one working in them, such as asset holding companies. Appendix 4 shows that the numbers of working proprietor only enterprises from 2000 to 2003 is around 43-46 percent of the total number of enterprises. This means that roughly two-thirds of the enterprises represented in the zero employee category at February 2004 are likely to be working proprietor only enterprises.
Agriculture Statistics
Another change to the BF was to include farming businesses in the maintenance strategy. They have been excluded in this report to maintain consistency with data produced in recent years. Statistics New Zealand has data available for the farming industry for the 2004 reference period, which are being released to users on request. For more information email info@stats.govt.nz or call toll free 0508 525 525.
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