In 2005, 42% of the Brazilian companies had less than 5 years of existence, whereas only 3% had 30 years or over. In terms of employed persons, the participation of the latter accounted for 20% of the overall number of workers. The highest rates of company entrance (creation) and exit (closing)¹ were observed in companies with 0 - 4 employed persons (18.6% and 13.1%, respectively). The lowest rates occurred in the group of companies with 100 employed persons or over (1.6% and 1.2%, respectively). 

In relation to the survival of units created in 1997, it was possible to observe that about 20% of the companies did not survive the first year of existence.  Another 27.2% of the companies had their doors closed after two years of existence, and only 51.6% are still at work after 8 years. The regional analysis showed that about 51% of the units created in 1997, in the Northeast and Southeast Region, still existed in 2005 The percentage of survival in the North Region was 46.5%; in the Central West, 47.8% and in the South, 53.8%, the lowest rate.  

These and other data are part of the study about the demography of companies in Brazil, which was based on information of the Central Register of Enterprises – CEMPRE 2005². The complete results of this study are available on the web site - www.ibge.gov.br. 

The study showed that 62.5% of the Brazilian companies have been on the market for less than 10 years, and, among these ones, 42.1% were created less than five years ago. Only 2.9% of the companies were created at least 30 years ago. The oldest companies have a higher average number of employed persons. For example, companies with 30 years of existence or over make up only 2.9% of the total of companies, but employ 20.0% of the overall number of workers. Also in 2005, the companies with up to 5 years of existence made up 42.1% of the total of companies and for 26.0% of the number of employed persons.

Opening and closing of companies leave a total of 625 employed persons  

In 2005, 792 thousand companies were created and 544 thousand were closed, generating positive result of 284 thousand new companies. This result corresponds to opening rate of 16.3% and to closing rate of 11.2%. Extinct companies failed to employ 961 thousand persons and the new ones employed 1.6 million persons, generating positive figure of 625 thousand employed persons³, among whom 361 thousand were salaried ones⁴.

The participation of persons who belong to the group of companies with 0 to 4 persons among the total number of workers reached 63.6%; this percent participation falls to 19.7% when it refers to the number of salaried persons. Nevertheless, in this group are included companies which started their activities without applying the system of salaried work; in this case, the work is done by the business partners or owner of the company.  For this reason, there is a higher percentage of salaried employed persons in other categories. In the flow of entrance and exit of the market, according to the size of companies, there is a predominance of smaller units, once that 94.4% of the companies created and 97.2% of the extinct enterprises employed up to 4 persons. The group of companies with 5 to 19 employed persons had significant increase of salaried persons. 39.0%.    

 Trade, repair of automotive vehicles and of personal and domestic objects lead to the opening of more companies

Among the companies opened in 2005, the highlight was the sector of Trade, repair of automotive vehicles and of personal and domestic objects, which is responsible for the creation of 420.2 thousand new companies and the closing of  304.5 ones, totaling 53.1% and 56.0% of the total, respectively. In second place were Real estate activities, rents and services rendered to enterprises, with 13.9% of the entrance and 11.6% of the exit of the market, and Manufacturing industry, with participation close to 9.0% in both opening and closing processes. Lodging and feeding made up 8.0% of entrances and exits of the market.

In relation to the total employed and salaried persons of companies created in 2005, the main highlights considering the two variables were Trade, repair of automotive vehicles and of personal and domestic objects, with 701.7 thousand employed persons and 212.3 thousand salaried persons; Real estate activities, rents and services rendered to enterprises with 229.5 thousand and 71.2 thousand, respectively, Manufacturing industry, with 212.6 thousand and 122.8 thousand, respectively, and finally, Lodging and feeding, with 119.6 thousand and 51.2 thousand. These same sectors, also in the same order, were the ones which had the biggest number of employed persons and salaried persons due to the exit from the companies from the market.

The analysis of the net figure shows that the major contributions to the increase of the number of employed persons, considering both total and salaried persons, came from Trade, repair of automotive vehicles and personal and domestic objects (268.4 thousand and 152.7 thousand, respectively) and from Manufacturing industry (98.7 thousand and 75.6 thousand, respectively). Although Manufacturing industry did not present significant numbers concerning the opening of companies, the sector is a highlight in terms of number of employed and salaried persons.

North Region has the highest rates of companies created and closed

The lowest rates of entrance and exit of local units, which were below the national average, were those in the South and Southeast Regions. The Northeast and Central West Regions reached very similar figures, whereas the North had the highest rates, of both entrance and of exit of the market (23.9% and 16.9%, respectively).

The difference between the entrance and exit rates was highest in the North Region, 6.9 percentage points; in following positions were the Northeast, with 5.9 percentage points and the Central West, with 5.6 percentage points. The lowest differences were found in the South, 4.6 percentage points and Southeast, 4.7 percentage points. According to the study, in terms of number of local units, there has been increased participation of the North and Northeast Regions, replacing  the South and Southeast.

Among the local units created in 1997, only 51.6% remained active in 2005 

It can be observed that the survival rate of local units created in 1997 decreases with time, for companies of any size. The lowest survival rates were those of local units with up to 4 employed persons. In the first three years, the units of other categories of size did not present differences in the survival rates, although the figures for those which employ between 5 - 99 persons are above those of units with 100 or more employed persons, after 4 years of existence. In 1997, among the 738 thousand new units, those which employed up to 4 persons were responsible for 90.8% of the total of employed persons; those which employed 5 to 19 persons, for 7.6%; those with 20 to 99 persons, for 1.4%; and those with over 100 persons accounted for only 0.2% of the total.     

Considering local units created in 1997, about 20% of them did not survive the first year of existence. After two years , almost 30% of the units no longer existed, after eight years, only 51.6% were still at work.   

In 1997, about 5.3% of the local units which were created and with 0 - 4 employed persons had already moved to the second group in the following year (from 5 to 19 employed persons). On the other hand, the 21.8% who started their activities with 5 to 19 employed persons reduced their size and began in the group aged 0 - 4. Still after one year of existence, 75% of the local units remained in their original groups; however, for the units with 0 to 4 employed persons this percentage was 94.2%.

After eight years in the market (from 1997 to 2005), 88.1% of the local units with 0 - 4 employed persons remained in this group; however, 10.5% of them moved to the group of companies with 5 -19 employed persons. Among those who established themselves in the market with this group of 5 -19 employed persons, 47.1% remained in this group after eight years, and 42.4% had their size reduced, and moved to the group of companied with 0 – 4 employed persons. In companies with 20 – 99 employed persons, 50.7% of the units opened in 1997 remained at work in 2005, without changes in the category of number of workers. In companies with 100 employed persons or over, 58.8% still existed eight years after being created.

The study also showed that, in 2005, 53.8% of the local units created in the South Region, in 1997, were still at work. The lowest survival rate was observed in the North Region, where only 46.5% of the units opened remained active after eight years. In the Northeast Region, 51.6% of the local units survived until 2005, a percentage equivalent to the Southeast Region, 51.8%.

In 2005, the Central Register of Enterprises counted 5.7 million companies all over the country

In 2005, the Central Register of Enterprises was formed by 5.7 million companies and other active organizations, representing 6.1 million local units, which employed 39.6 million persons and paid to their workers R$ 444.3 billion in salaries and other compensation. Among the total persons employed, 81.4% received salaries and 18.6% were partners or owners. About 5 million (89.9%) of the total of active companies and other organizations in 2005 were classified as enterprises. 

There has been significant advance of smaller companies, the size of which is defined according to the number of employed persons. In the Brazilian market, companies with up to 4 employed persons make up 83.0% of the total. When aggregated to companies of the group immediately above, with 5 to 19 workers, small companies represent 96.9% of the total.  

The distribution of the number of employed persons by size of the company, considering the number of employed persons is less asymmetrical than in the previous group. As a result, it can be seen that companies with up to 4 employed persons represent only 22.6%, whereas those with 100 employed persons or over (0.5% of the total of the companies) employ 38.9% of the total employed persons.

The distribution by size of the Brazilian companies is compatible with the sector structure. Trade, repair of automotive vehicles and of personal and domestic objects is the activity of 53.6% of the Brazilian companies, and employs 31.7% of the total workers. In the following positions are Real estate activities, rents and services rendered to enterprises and Manufacturing industry. The contribution of the former to the number of companies and to the number of workers is equivalent (about 13%), whereas in Manufacturing industry, the contribution to the total number of employed persons (25.1%) is twice as that of the group relative to the number of enterprises (10.3%). It is worth mentioning that the average number of employed persons by company in the activity Trade, repair of automotive vehicles and of personal and domestic is below the national average, as well as in the activities Lodging and feeding and Other collective, social and personal services.

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 ¹ Rate of entrance to the market: Ratio between the number of companies/local units created in a year and the population of companies/local units in the previous year. Rate of exit from the market: Ratio between the population of companies/local units in one year, divided by the population of companies/local units in the previous year.  

² CEMPRE encompasses registrations of juridical persons listed in the National Registry of Legal Entities – CNPJ – regardless of the activity performed or of the juridical nature of the company. This study considered 5 million of the 5.7 million companies which were investigated by CEMPRE in 2005. Non-profit and public administration companies have been excluded.

³ Employed persons - Persons effectively employed on December 31 of the year of reference of the Central Register of Enterprises – CEMPRE, including salaried persons with a formal employment contract, as well as owners and partners working in the unit.

 ⁴ Salaried persons – Persons effectively employed on December 31 of the year of reference of the Central Register of Enterprises – CEMPRE, including only salaried persons with a formal employment contract.

 ⁵ A company may have more than one local unity. In this tudy were considered 5.187 million local units and 5.094 companies.

⁶Survival rate: ratio between the number of companies/local unties which started in a year t and remained active in a year t +n, divided by the population of companies/local units created in the year t.