them “startups” and “young incumbents” accounted for more than 70 percent of enterprises and about two‐thirds of all employment in the (non‐subsistence) economy. The remaining one‐third of employment was in “established businesses”, which constituted about 30 percent of the census count of enterprises.<sup>17</sup> Well over one half of all jobs held in Uganda’s non‐subsistence economy of 2010 were thus held in enterprises set up within the decade (since 2001). More than 40 percent of these were in start‐ up businesses, all set up since 2006, while only a third of them had been in business for more than a decade. This averages out substantial differences between the traded and non‐traded sectors with respect to the relative roles of start‐ups and established businesses in employment creation. Thus the employment share of start‐ ups for 2010 was even higher than the economywide average at about 46 percent while the share of established businesses substantially lower. By contrast, the share of established businesses in employment was 36 percent and 50 percent in manufacturing and commercial agriculture respectively, where less than 30 percent of the employment was in jobs held in start‐up businesses.<sup>18</sup> The relatively high employment share of startups within the non‐traded sector itself mainly reflects the dominance of the structure of employment in retail trade in which more than half of employment is in businesses set up within the past five years and more than 70 percent of it is in jobs held in enterprises created within the decade. Other parts of the non‐traded sector including transport and infrastructure, finance and real estate and education and health services were closer in this regard to manufacturing and the traded sector more generally than to retail trade and catering businesses.

Beyond its defining characteristic of shifting employment from the production of tradables to the non‐ traded sector, the structural change that Uganda’s economy underwent in the 2000s also involved a reallocation of labor across the size and age distributions of business enterprises. In the first instance shift in employment towards non‐traded activities entailed sharp rise in the employment share of microenterprises in retail trade and the hotels and restaurants industries and a corresponding decline in SMEs and larger businesses in the tradable sector. Because microenterprises in those sectors tend to be startups, the employment shift from SMEs and larger in manufacturing and commercial agriculture to micro enterprises in retail made the employment share of startups significantly higher than it would otherwise have been.

However, the decade also saw a very steep rise in the employment share of established businesses at the expense of startups and older but still up and coming enterprises. Between UBR 2001 and UBR 2010, the employment share of startups declined by 14 percentage points while that established businesses rose even faster as the share of “up and coming” businesses of the 5 to 10 years age group also declined by about a percentage point. The decline in the employment share of startups and “up and coming” businesses in the latter group may or may not have had implication to the pace of growth in aggregate productivity, which we will explore in the next section with help of data from the UBI.

> 17 Industry level details are provided in Annex Table 5 and Annex Table 6

> 18 Annex Table 6.

23