The Scottish Government

1. Registered Enterprises

These are estimated from Scottish extracts of the IDBR taken in March of each year (prior to 2005 the November extract was used). Enterprises with no UK activity or dummy enterprises created to help with clerical procedures are excluded. Enterprises which have zero employment and zero turnover are also excluded as they are holding companies whose activity is recorded elsewhere or are enterprises not contributing to the economy at the time of the estimates.

Companies with only one employee (who is also the employer) are treated as a self-employed person working in a firm with zero employees unless the enterprise is part of an enterprise group. As these companies provide no employment for others it is more consistent to classify them as enterprises with no employees.

There were a few instances where several registrations for a single company (usually VAT registrations) occurred at the same address. This may be a result of a legal loophole created as a result of changes in legislation. The Office for National Statistics now exclude these from their publications as the figures would overstate the actual number of businesses in existence and their associated employment in local area tables. Please note the tables up to and including 2001 have not been amended to reflect these changes.

All tables (excluding Table A and Table 3) focus on the business sector - that is companies, sole traders, partnerships, public corporations/nationalised bodies and not for profit organisations - and exclude central and local government. This differs from the ONS publication "UK Business: Activity, Size and Location" which includes the public sector.

Primary Care NHS Trusts and all remaining NHS Trusts were re-classified by the Office for National Statistics to the public sector in 2001 and 2003 respectively. This was done to bring 2003 Standard Industrial Classification in line with international guidelines for National Accounts. The change transferred 54,200 and 95,530 jobs from the business sector to the public sector in 2001 and 2003. This has led to a discontinuity between tables as previously, tables included this employment.

2. Unregistered Enterprises

The Labour Force Survey provides data on self-employment without employees (as first or second job). The figure for second jobs is augmented by data from the Family Resources Survey on self-employment in third jobs.

This estimate of the total number of self-employed jobs (with no employees) is compared to the self-employment registered on the IDBR in enterprises with no employees. As many self-employed people are not required to pay VAT or register for PAYE, the figure from the Labour Force Survey is generally higher.

The difference between the two figures, self-employed jobs in unregistered enterprises, can be used as a starting point to estimate the additional sole traders or partners with no employees. The ratio between sole traders and partners is different for each industry and can be obtained from the Survey of Personal Incomes (undertaken by HM Revenues & Customs). Scottish ratios are calculated where statistically reliable, otherwise UK rates are used to derive the number of unregistered enterprises from the number of self-employed jobs in unregistered enterprises. Each of these unregistered enterprises is assumed to provide employment for one (if sole trader) or two (if partnership).

SPI ratios as at 2005/06 were used to estimate the total number of unregistered enterprises in 2008 as this was the latest data available at the time of analysis.

Turnover in unregistered businesses will generally be lower than that of registered businesses of the same size, as turnover in the former would usually be below the VAT threshold. Turnover for the unregistered enterprises was imputed from turnover per head of registered enterprises with zero employees in that industry division and then scaled down by a factor of a half. For a few 2-digit industry divisions, this still leaves average annual turnover per unregistered business above the VAT threshold. In these cases, the unregistered turnover is reduced to the VAT threshold for that year.

3. Geographical Analysis

The geographical analyses now use a postcode index file from the Office for National Statistics. Unregistered enterprises are not included in the geographical analyses. Hence, the allocable totals for Scottish employment and turnover in these tables do not equate to those in the tables containing full estimates for the zero employee size band.

4. Size bands

Most Tables are classified by employee size bands on the basis of their total UK employees. The rationale behind this approach is that the size of the overall enterprise determines its behaviour as an economic agent. An enterprise with a large number of employees in the UK as a whole is likely to behave like a large enterprise, irrespective of its level of Scottish employment.

Table 11 reports on the number of business sites; these are classified by the total number of employees at that site.

5. Industrial Classification

The industrial sectors presented in the 2007 tables are classified, at publication level, as defined by the 2003 Standard Industrial Classification (SIC). Industrial sectors in all tables prior to 2004 are as defined by the 1992 Standard Industrial Classification (SIC). At the level of detail presented here, there are few differences. The main reclassification concerns head offices. ONS now classify local units as head offices ( SIC 74.15 - holding companies), rather than as the main activity of the business they support. This led to an increase in employment of 580 in SIC 74 in 2003.

An enterprise is assigned to a sector depending on what SIC sector and then division the majority of Scottish employment is classified as. A change in the balance of employment can lead to some enterprises changing their sector between years.

Table 11 provides sector classification at local site level rather than enterprise level.

Our classification follows the standard coding scheme. Some titles have been shortened to make them more readable. The tables generally exclude central and local government (as defined by the legal status of the enterprise); the small number of enterprises that provide support services to public administration are for these tables included with the sector 'Other community social and personal services'. Extra territorial organisations and private households with employees are excluded.

6. Public Sector

The analysis of public sector enterprises in Table 3 is different from the other tables. An enterprise is usually assigned to an industry sector depending on what activity the majority of employment does. Public sector enterprises are involved in more varied activities and Table 3 accounts for this by counting an enterprise once in each sector it has an activity in.