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July 31, 2015BUSINESS AND EMPLOYMENT DYNAMICS, 2013 According to the Statistics Canada’s Longitudinal Employment Analysis Program (LEAP) data, an average annual net employment growth in Nova Scotia’s business sector was 0.4% between 2001 and 2013.
Nova Scotia ranked the 8th among provinces in the average annual net employment growth during this period. Alberta (+3.1%) lead the provinces in the average annual net employment growth, followed by Saskatchewan (+2.0%).
The time period from 2001 to 2013, includes an expansionary phase (2001 to 2008), a recession (2008 to 2009), and recovery period (2010 to 2013).
Between 2001 and 2008, over the expansionary phase, gross employment creation and destruction both trended downwards. In 2009, gross employment destruction increased significantly by 3.6 percentage points, while gross employment creation declined by 2.2 percentage points.
In 2010, gross employment destruction declined by 3.6 percentage points, while gross employment creation increased by 1.7 percentage points.
Gross employment creation in Nova Scotia’s business sector slowed down from 16.7% in 2001 to 9.2% in 2013. The major part of the gross employment creation was attributed to slower employment creation of incumbent firms. In 2013, incumbents contributed 7.6% to employment creation, as compared to 13.6% in 2001. In 2013, new entrants contributed 1.6% to employment creation, as compared 3.1% in 2001.
The gross employment destruction declined from 14.2% in 2001 to 10.9% in 2013. The major part of the gross employment destruction was attributed to declining at slower rate incumbents. In 2013, incumbents contributed 9.1% to employment destruction, as compared to 11.2% in 2001. In 2013, business exits contributed 1.8% to employment destruction, as compared 3.0% in 2001.
Employment reallocation, which is the sum of gross employment creation and destruction, declined steadily, to 20.1% of total employment in 2013 from 30.9% in 2001. In other words, nearly one in three jobs were either created or destroyed in 2001, while one in five jobs was affected by employment reallocation in 2013.
Employment share of the Nova Scotia’s large business sector, defined as businesses with 50 or more employees, increased by 1.0 percentage points from 52.9% in 2001 to 53.9% in 2013. The small business sector’s employment share declined from 47.1% in 2001 to 46.1% in 2013.
Within the large business sector, employment share of firms with 100 to less than 500 employees increased from 20.9% in 2001 to 22.1% in 2013. Employment share of firms with 500 or more employees declined from 20.0% in 2001 to 19.8% in 2013. Employment share of firms with 50 to less than 100 employees remained virtually unchanged at 12.0% between 2001 and 2013.
Within the small business sector, employment share of firms with 5 to less than 20 employees declined from 18.9% in 2001 to 18.6% in 2013. Employment share of firms with 20 to less than 50 employees increased from 16.5% in 2001 to 16.7% in 2013. Employment share of firms with less than 5 employees fall by 1.0 percentage points from 11.8% in 2001 to 10.8% in 2013.
Firm turnover (entry and exit) is very important to business innovation and productivity improvement. Entry rates, measured by the percentage of firms entering the market, declined by 3.9 percentage points, from 14.9% in 2001 to 11.0% in 2013. At the same time period, the exit rates measured by the percentage of firms exiting the market decreased by 3.0 percentage points, from 14.0% in 2001 to 11.0% in 2013.
In 2013, there were a 31.5% less new business entrance in Nova Scotia than in 2001. The largest drop (-56.6%) in new business entrance was reported for firms with 5 to less than 20 employees. The similar pattern was observed in the number of exits, which declined by 22.2% from 2001 to 2013. The largest decline (-44.0%) was reported in businesses with 5 to less than 20 employees.
Entry and exit rates, measured by the number of firms entering or exiting the market differed largely across industries. The service-producing sector had a higher entry rate than did the goods-producing sector.
Source: Statistics Canada CANSIM Tables 527-0010, 527-0011, 527-0012.