After a 5-year decline, number of companies in Brazil grew in 2019 – IBGE

RIO DE JANEIRO, BRAZIL – Entitled Demographics of Businesses and Entrepreneurship, the survey discloses companies’ opening, closing and survival rates, in addition to their mobility and average age. It also shows data related to employee occupation.

The survey is broken down by economic activity and by Brazilian region. IBGE has been collecting these indicators annually since 2008. Public bodies, non-profit entities, individual microentrepreneurs (MEI), and social organizations (OS) are not considered in the survey.

“The exploratory analysis of the companies that generated the most jobs in the period considered can be used as background material for future studies on the subject, particularly related to public policies aimed at fostering job creation in Brazil,” says the IBGE. The body also points out that the indicators gathered in the survey are important for assessing business dynamism in the country.

In 2019, Brazil had 4.7 million companies with an average age of 11.7 years of operation. They had 33.1 million employees. That year, 947,300 new companies were started. Considering that 656,400 closed, there was a positive balance of 290,900.

The IBGE considers that part of this result may reflect an adjustment in the database, as the survey uses the institute’s Central Company Register (Cempre) as a reference, which is updated yearly based on other studies. It also considers the Rais and the Caged, administrative records of the Ministry of Labor and Social Security. But in 2019, both began to be replaced by the Digital Accounting System of Tax, Social Security and Labor Obligations (eSocial).

“It is observed that the 4.7 million active companies had 5.2 million local units also active, of which 50.5% were located in the Southeast Region; 22.5% in the South; 14.9% in the Northeast; 8.4% in the Midwest; and 3.7% in the North Region,” IBGE found.

The most prominent economic areas were “professional, scientific, and technical activities”. The positive balance reached 61,388 companies. According to IBGE, this sector includes many self-employed professionals who provide services and consultancy in business management, engineering, law, and accounting.

“Human health and social services” was another economic activity that stood out. The positive balance of 44,294 companies is mainly due to outpatient care provided by doctors and dentists.

The figures show the interruption of the downward sequence observed between 2014 and 2018. Before this period, Brazil recorded at least 6 years of growth in the number of companies: the annual balance was positive from 2008, when the analyses began to be conducted, until 2013.

It is important to note that IBGE has not yet assessed the impacts of the Covid-19 pandemic, which broke out in Brazil in March 2020. The influence of the health crisis in the country may be observed in the survey’s next edition, to be published next year with data for 2020.

SURVIVORS

Of the 4.7 million companies in the country in 2019, 79.8% were survivors and 20.2% represented new entrants. The survey points out that the average monthly salary of surviving companies, at R$2,549.36 (US$451), is higher than the average monthly salary of new companies, at R$1,553.62. It also reveals that 96.9% of paid staff was employed in surviving entities and 3.1% in the new companies.

The survey also examined the progress of companies created 5 years earlier, i.e. in 2014. The results show that 77.2% survived after 1 year of operation, 64.9% after 2 years, 54.8% after 3 years, and 46.3% after 4 years. In 2019, those surviving after 5 years accounted for 37.6%.

Differences in the survival rate can be noted depending on the size of the company. Companies with no employees, with activities performed only by owners or partners, recorded a rate of 32.1% after 5 years.

Among companies created in 2014 with 10 or more employees, 64.5% were active in 2019. In intermediate firms, which have between 1 and 9 employees, the rate reached 49.1%.