COICOP 2018 Implementation Item 5.1 of agenda Standards Working Group Meeting July 2018 - Luxembourg Ana Franco Eurostat, Unit B.5 Data and Metadata Services and Standards

Background COICOP was revised! The revision was conducted by a Technical Sub-group of the United Nations Expert Group on International Statistical Classifications and was chaired by Eurostat. Consultations: 2 global (worldwide) consultations, consultation of the Standards Working Group, consultation and agreement of Expert Group on International Statistical Classifications COICOP 2018 was endorsed by the 49th Session of the Statistical Commission (March 2018) COICOP 2018 is much better suited to classify current consumer expenditures (specifically on communication and information services) than COICOP 1999

Documents available United Nations COICOP revision webpage https://unstats.un.org/unsd/class/revisions/coicop_revision.asp Documents available: Introductory guidelines, Structure and explanatory notes, correspondence tables between COICOP 1999 and COICOP 2018 and vice versa and the optional 6 digits structure for food goods

Major changes introduced in COICOP – more detail The new COICOP introduces a 4th level denominated sub-class (5 digits) More detail compared with COICOP 1999 but similar level of detail compared with ECOICOP (Divisions 1-12/1-13) Level COICOP 1999 ECOICOP 2012 COICOP 2018 XX 12 13 XX.Y 47 52 XX.Y.Z 117 146 XX.Y.Z.A N/A 303 298

Major changes introduced in COICOP – more detail An expansion at six digits for Division 01 (270 6-digit codes), fully consistent with the 5 digits classification, is provided as an official Annex to the COICOP because: The consumption on food and beverages in the household consumption is very important (from 21% of the total household consumption to 54% among the World countries) and it was considered important to have more detailed information on this area.

COICOP ISCED ICHA CPC/CPA Major changes introduced in COICOP – better correspondence with other classifications Division 06 Health Division 10 Education COICOP ISCED ICHA A better consistence between CPC and COICOP was considered relevant to analyse product flow. Therefore the possibility of linking COICOP and CPC were analysed and some changes introduced were based on a better consistence between the 2 classifications. However a full consistence between the 2 classifications is impossible taking into account that COICOP classifies individual consumption by purpose and when a product is produced it can be used for different purposes. Division 06 Health was completely restructured according to a proposal from the World Health Organisation. The new structure allows an alignment of COICOP with the International Classification for Health Accounts (ICHA) and its family of classifications. Division 10 Education services was also revised to cope with the new International Standard Classification of Education (ISCED 2011) CPC/CPA

Major changes introduced in COICOP – Separation between goods and services The new COICOP includes the distinction between goods and services whenever this is possible and new classes or sub-classes were created systematically for services like repair, maintenance, installation or renting of goods. However this separation is not always possible: Restaurant services, reparations, inpatient care services : goods and service are often charged together On-line services: products like downloads of music and books in a technical perspective could be viewed as a service, but serve the same purpose as products traditionally viewed as goods Bundles of goods and services (telecommunication bundles)

Major changes introduced in COICOP – Classification by durability A majority of countries supports the distinction of goods in Durable, Semi-Durable and Non-Durable and Services for analytical purposes. The distinction was made at the level of classes and sub-classes.

Major changes introduced in COICOP – Changes at division level The highest level of the classification remained unchanged for most of the Divisions to avoid breaks in the time-series. Division 08 and 09 were considerably reorganised and now break down as Information and communication (Division 08) and Recreation, sport and culture (Division 09). Division 07 Transport that previously was dedicated to the transport of individuals includes now the transport of goods also Division 12 was split into 2 divisions: Division 12 Insurance and financial services Division 13 Personal care, social protection and miscellaneous goods and services

Major changes introduced in COICOP – Modernization The list of inclusions and exclusions of all classes was carefully revised to include goods and services that didn't exist when the previous version of the classification was drafted. Products that do not exist anymore in the market were also excluded from the list of inclusions.

Is COICOP 2018 very different from ECOICOP? ECOICOP is not fully consistent with the COICOP 2018 At 4 digit level, COICOP 2018 is more detailed than ECOICOP (146 - 117 classes) But at 5 digit ECOICOP is more detailed (303 -298 sub-classes)

Is COICOP 2018 very different from ECOICOP? 1-to-1 correspondences: 135 Subclasses in eCOICOP correspond exactly to each one Subclass in COICOP 2018 and vice-versa; n-to-1 correspondences: 20 cases, where each two or more Subclasses in eCOICOP correspond to one Subclasses in COICOP 2018; 1-to-m correspondences: 14 cases, where each one Subclass in eCOICOP is split into two or more Subclasses in COICOP 2018; n-to-m correspondences: 134 cases, where each two or more Subclasses in eCOICOP correspond to two or more Subclasses in COICOP 2018.

Legal matters HICP PPP National accounts HBS Regulation (EU) 2016/792 ESA 2010 Regulation PPP National accounts HBS

Legal matters - HICP ECOICOP is defined in Annex I of the new HICP/HPI framework regulation Article 4(3) of this Regulation says: “The Commission shall be empowered to adopt delegated acts in accordance with Article 10 for the amendment of Annex I, in order to ensure comparability of the harmonised indices at international level in accordance with changes to the UN COICOP.” COICOP 2018 could in principle be introduced by delegated act.

Legal matters - PPP ECOICOP is used in the PPP exercise since 2016 ECOICOP was introduced in the PPP program by means of Commission Regulation (EU) 2015/1163. This is a regulation implementing the PPP basic act of 2007 (Regulation (EU) 1445/2007). Further changes to the classification used for PPPs could be adopted in principle in the same way.

Legal matters – National accounts COICOP 1999 is used in SNA 2008 at 3 digit level Article 2(2) of the Regulation states: “The Commission shall be empowered to adopt delegated acts in accordance with Article 7, concerning amendments to the ESA 2010 methodology in order to specify and improve its content for the purpose of ensuring a harmonised interpretation or to ensure international comparability provided that they do not change its underlying concepts, do not require additional resources for producers within the European Statistical System for their implementation, and do not cause a change in own resources.” Is this article sufficient for an amendment of COICOP by delegated act, or a revision of the Regulation itself is needed?

Legal matters – Household budget survey No legal act for HBS Data is collected every 5 years ECOICOP was first used for the 2015 round The HBS is, at national level, an important source of information for the household expenditure weights that are necessary for HICP and PPP

Calendar of implementation of the new classification use a classification that better reflects consumption patterns adaptation of national production systems

Discussion Should the revised ECOICOP be identical to COICOP 2018 or an adaptation for European purposes would be needed? Should data be collected and delivered at 6 digit level for the food part? What would be the calendar of implementation of the new classification in each relevant statistical domain?