Perpetual crisis: in ten years the number of companies has fallen by 10%

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In the last decade the concentration of firms has grown. Between 2011 and 2020 the number of companies registered in the country fell by 9.5% overall but the evolution is uneven: while large companies increased by 4%, micro-enterprises decreased by 10.3%.

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Data from the Fundación Observatorio Pyme (FOP) show that the concentration of the business sector is the consequence of a strong loss of competitiveness by companies with fewer than 50 employees. These micro-enterprises were 520,000 in 2011 and the latest data show they have dropped to 467,000.

On the other hand, the number of companies with more than 200 employees is growing, which in a decade have added 127 units to reach 3,491 companies.

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to explain this difference the divergence in productivity between the two segments is key. This gap has increased from 50% to 123% in the last 10 years, following a 32% drop in productivity among SMEs and a 52% increase among large ones.

The fact that there are more large companies and fewer SMEs is not harmless to the social situation. Vicente Donato, president of the FOP, explains that micro-enterprises are those that generate formal employment in the low- and medium-skill sectors. The disappearance of formal companies in this sector”It is associated with the increase in poverty and decrease in social cohesion observed in Argentina over the past decade”.

Although SMEs are less profitable, the labor costs they face are the same as large. “Today, an entrepreneur who starts up and hires staff faces the same labor costs as Techint or Arcor,” says Donato.

Faced with the loss of profitability, “the numbers are not given to SMEs: they either close or reduce employment or go into informality”.

The lack of qualified personnel affects profitability because it increases the workload of the rest of the personnel, increases operating costs and slows down the development of new products.

Thus, the FOP survey shows that while midsize manufacturing firms were able to increase formal employment by 29% between 2006 and 2020, the little ones reduced it by 31%.

Low birth rate

The 10% decline in the number of businesses over the last decade places Argentina at the bottom of the rankings in the ranking of business births. In the country There are 1,195 registered businesses for every 100,000 inhabitants. In Brazil that indicator it rises to 2,219, in Mexico to 3,763 and in Uruguay to 5,032.

There are three factors that influence the entrepreneurial birth rate. Donato underlines this The first is the size of the financial system. “Nobody can really undertake with their own shoulders, the size of the financial system is a central variable and in Argentina it does not reach 10% of GDP”.

The other factor is the tax burden on formal corporations, and the third component is knowledge of the population. “While medium and large companies tend to look for university and technical personnel, girls find it difficult to hire qualified non-university personnel”.

At this point Argentina has severe shortcomings. World Bank data proves it only 18% of high school students attend technical instituteswhile in Mexico this percentage reaches 27%, 30% in the European Union and 36% in Australia.

Donato points out that it would be a mistake to try to bridge the profitability gap between SMEs and medium and large SMEs with a differentiated parity scheme, with higher salaries for some and lower ones for others.

«It would be a serious mistake because they condemn the smallest companies to dwarfism. And there would also be first-class and second-class workers. It is necessary to have a uniform salary, but with differentiated tax policies that are favorable to SMEs“.

“It is a luxury to have a uniform tax policy. It can only be done when the differences in productivity between large and small businesses are very low, as in Germany, where they are 10%», underlines Donato.

Source: Clarin

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