Update of recommendations for harmonisation for the HBS round of 2005 Household Budget Surveys Working Group - 5-6 May 2003 Update of recommendations for harmonisation for the HBS round of 2005 Item V.4.a) of the agenda

Recommendations for harmonisation for the HBS round of 2005 Household Budget Surveys Working Group - 5-6 May 2003 Recommendations for harmonisation for the HBS round of 2005 1. Introduction 2. Main recommendations 3. Discussion

1. Introduction The HBS round of 1999 is almost finished and the time to start preparing the next round (for the reference year 2005) has come Eurostat has produced an updated methodological guide with two main purposes: To provide methodological information about the HBS round of 1999 To propose a set of recommendations for harmonisation of the following round The recommendations proposed by Eurostat in this document constitute an initial proposal for discussion by the HBS working group

1. Introduction The present document brings together the main recommendations spread out through the “methodology” The presentation will be followed by an open discussion Some specific recommendations are treated separately in specific points of the agenda such as: development of COICOP-HBS standardisation of the variable list selection of standard classifications and nomenclatures to be used for data coding

2. Main recommendations Definition of household Eurostat recommends that the definition of the household for the purpose of HBS be based on only two criteria: co-residence and sharing of expenditures. This definition isolates the units, which from a HBS perspective form a whole for studying patterns of consumption expenditures and income. Members of a household Eurostat recommends using for the HBS the same definitions of Household Membership as those proposed for the EU-SILC project.

2. Main recommendations Reference person Eurostat recommends that the assignment of the reference person should be based on objective criteria. For the tabulation of consumption patterns in the Household Budget surveys, the appropriate criteria is the contribution to household income, by preference the person to be chosen should be the adult (16+) contributing most to the total income of the household.

2. Main recommendations Concept of consumption expenditure Households actual final consumption - Social transfers in kind by the government to the households - Social transfers in kind by the NPISH to the households = Households final consumption expenditure ESA 95, 3.74 and 3.86 ------------------------------------------------------------------------------------------------- - Non-monetary expenditure = Household final monetary consumption expenditure HICP Eurostat recommends that the 'household final consumption expenditure' continues to be the conceptual base of the Household Budget surveys for the 2005 round.

2. Main recommendations Concept of income Eurostat recommends that the income concept to be used for the HBS purposes be the "Total household disposable income" (HY020) as defined in the EU-SILC regulation.

2. Main recommendations Goods or services retained for own final consumption Eurostat recommends that own-account production of a good or service for own consumption by the household be recorded only if this type of production is significant, i.e. if it is believed to be quantitatively significant for specific households (greater than 0,1% of total consumption expenditure), i.e. farmers, households in the retail trade and/or with a vegetable garden. The maximum list of goods and services a country is expected to provide (when significant for the specific household) to Eurostat is the following: withdrawals from stocks (retail trade); agricultural products (not the seeds, storage and processing, etc. which is considered as intermediate consumption); own-account production of housing services by owner-occupiers; domestic and personal services produced by employing paid domestic staff.

2. Main recommendations Goods or services retained for own final consumption In order to be able to compare data from HICP and HBS, it is important for Eurostat to identify the non-monetary own consumption of self-produced products by the households (valued in monetary terms) in the data file it gets from the countries. Own-account production of a good or service for own consumption by the household should be recorded when the output retained is taken into the household for own final consumption and is to be valued at the purchaser's price of similar products sold on the market.

2. Main recommendations Owner-occupied housing For the purpose of valuing the owner-occupied housing services Eurostat recommends applying as far as possible the principles settled by ESA 95 and the Commission Decision of 18 July 1995 (95/309/EC, Euratom). For the countries with small rental markets, which could have problems for implementing the stratification method, the regression method recommended by EU-SILC would also be acceptable. The estimated values are then used to impute the rentals for those households that did not report paying rent (either because they were owner-occupiers or else because their housing was rent-free). In cases where the household just pay a reduced rent and where this is known for the household the countries can - if possible - also impute the value of the reduction in the rent.

2. Main recommendations Leasing and hire purchases For the purpose of registering the acquisition of durable goods by households by means of operating leasing, financial leasing and hire purchase, Eurostat recommends applying as far as possible the principles settled by ESA 95. Transactions in existing goods For the purpose of registering the transaction in existing goods, Eurostat recommends applying as far as possible the principles settled by ESA 95.

2. Main recommendations Wages and salaries in kind Eurostat recommends including the wages and salaries in kind supplied to the households in the form of goods or services by employers for free or at a reduced rate, to the extent that they are believed to be quantitatively significant to the household. It ought to be possible to identify the non-monetary part of these consumption expenditures.

2. Main recommendations Health and education Eurostat recommends that the concept of actual use of health and education services will not be included in the conceptual base of household consumption expenditure of HBS for the round of 2005.

2. Main recommendations Other social transfers in kind Eurostat recommends that the concept of social transfers in kind will not be included in the conceptual base of household consumption expenditure of HBS for the round of 2005.

2. Main recommendations Life insurance Eurostat recommends excluding totally life insurance premiums for the HBS purposes.

3. Discussion The country delegates are invited to give their opinion about the recommendations on the following topics: 1. Definition of household 2. Members of a household 3. Reference person 4. Concept of consumption expenditure 5. Concept of income 6. Goods or services retained for own final consumption 7. Owner-occupied housing 8. Leasing and hire purchases 9. Transaction in existing goods 10. Wages and salaries in kind 11. Health and education consumption expenditures 12. Other social transfers in kind 13. Life insurance 14. Other topics