Brazil Records 4.5 Million Business Companies in 2017, Number Declines Since 2014

RIO DE JANEIRO, BRAZIL – This is shown by data released yesterday, October 17th, in Rio de Janeiro, by the Brazilian Institute of Geography and Statistics (IBGE), in the 2017 Business Demography and Entrepreneurship survey.

According to the study, the survival rate of companies, i.e., that remained open after at least one year, stood at 84.8 percent.

The survey considers only business organizations, excluding all public bodies, state-owned companies, non-profit organizations, Individual Micro-entrepreneur (MEI) and Social Organizations (OS).

According to the IBGE’s Registration and Classification Coordination technician Denise Guichard Freire, the data point to lower market dynamism.

“In recent years, it has been noted that companies have entered less and less into the market, this reflects a lower dynamism, but many companies have also left, so with this has increased the survival rate within the active companies,” she said.

Negative balance

The market entry rate stood at 15.2 percent and the exit rate at 15.7 percent, generating a negative balance of 22.9 thousand companies in the market, representing a decrease of 0.5 percent in the number of companies operating in the country.

Denise emphasizes that the trend is not even in the whole country.

“In 2016, for instance, the entry rate was lower than the exit rate for the whole country, in all regions. But in 2017, we saw that in the Midwest and North regions, there are already states where the entry trend is higher than the exit. In the Northeast, it’s even. So, we note that the economy was still a little weak in 2017, but was beginning to wind up a little,” she argues.

While the South and Southeast recorded the highest survival rates – 86.6 and 85 percent -, the highest rates of entry and exit were in the North (19 and 18.8 percent), Center-West (17.2 and 16.4 percent) and Northeast (16.9 percent for both) regions.

Permanence in the market

Less than half of the companies listed in Brazil in the last decade have survived for over five years.

The Business Demographics survey began in 2008 and, since then, the best year in terms of company start-ups that have survived for more than five years has been 2008, with 47.8 percent of listed companies in that year remaining longer.

The most recent data available for the five-year assessment for 2012 show that, of the companies listed that year, 39.8 percent survived the fifth year in the market.

The worst year for the opening of projects was 2010, with an average survival rate of 39 percent.

For the short term, 2013 was the worst year for the birth of companies, 71.9 percent of which survived after one year. Among the companies listed in 2008, 81.5 percent survived the first year.

The best and the worst balance

In the historical series, the best balance was recorded in 2010, with 262,695 more companies in the market. The worst year was 2014 when the balance was negative at 217,687 companies.

The number of active companies varied from 4,077,662 in 2008, peaking at 4,775,098 in 2013, and declining since then, returning to the 2010 level.

Although the balance of companies entering and leaving the market has remained negative since 2014, the number of salaried employees in these companies has remained positive over the years, with 360,000 additional employees in 2017.

By size, 46.2 percent of the companies active in 2017 did not have any salaried employees, with only partners or owners; 43.6 percent had from one to nine, and 10.2 percent had ten or more salaried employees. The average monthly income stood at 2.6 minimum wages.

In the distribution of salaried employees by type of company, the sectors that most employed were trade, repair of motor vehicles and motorcycles, with 8.8 million people, followed by processing industries, with 7.2 million, and administrative activities and complementary services, with 3.5 million.

The sector with the largest inflow of salaried workers was also trade, repair of motor vehicles and motorcycles, with 263,861 people, as well as the largest outflow of 138,522, and also the highest balance, with 125,339 salaried workers in the sector in 2017.

Source: Agência Brasil