EU KLEMS project on Productivity in the European Union Presentation at EPROS Meeting, Luxembourg, 2-3 June 2005 Gerard Ypma (Groningen Growth and Development Centre, University of Groningen) This project is funded by the European Commission, Research Directorate General as part of the 6th Framework Programme, Priority 8, "Policy Support and Anticipating Scientific and Technological Needs".

2 Main aspects EU KLEMS project is 3-year statistical and analytical research project funded by 6th Framework Programme Purpose is to create a database on productivity by industry for EU member states with a breakdown into contributions from capital (K), labour (L), energy (E), materials (M) and service inputs (S) Full coverage of EU-13 (excl. GR and PT) plus 5 new member states (PL, SK, HU, CZ and SI) Limited coverage of GR and PT and other 5 new member states (CY, MT, LT, LV and EE) Also comparisons with U.S. and Japan Time coverage: , with greatest detail on revision period Conduct out a number of analytical research projects 14 research institutes across Europe, led by GGDC and NIESR

3 Setup of project: Workpackages

4 Statistical vs. analytical modules of database Statistical module of the database: Data consistent with those published by NSIs According to rules and conventions on national accounts, supply and use tables, commodity flow methods, etc. (SNA 1993, ESA 1995) Data meet statistical standards of NSI's and Eurostat and can eventually be incorporated in their present statistical practices. Analytical module of the database Developed parallel to the Statistical module Produces additional data and fills gaps using alternative techniques (e.g. growth accounting) which presently will go beyond the ESA95 and SNA93 or do not (yet) meet statistical standards Consider alternative or pioneering assumptions regarding statistical conventions on, for example, the output and price measurement of ICT goods and non-market services, measurement of skill levels, construction of capital stock and capital services, or capitalization of intangible assets.

5 Participation with NSIs is important for project Three status positions: Subcontracting: Statistics Finland, ISTAT, Statistics Netherlands Participatory status: Statistics Sweden, STATEC (Luxembourg), ONS Observer status: INSEE, Statistics Denmark, Statistisches Bundesamt, Institute of National Statistics (Belgium), Statistics Austria, Statistics Ireland, INE, Statistical Office Slovakia, Statistical Office Poland, CSO Hungary Contacts under development: New member countries covered by project: Czech Republic, Slovenia Contacts to be developed: Greece, Portugal, Lithuania, Latvia, Estonia, Cyprus, Malta Also contacts with: USA (Harvard University, BEA, BLS) Japan (RIETI, Hitotsubashi) Canada (Statistics Canada)

6 Main Issues on WP1-WP4 WP1: Output and intermediate inputs will be based on revised Supply and Use tables (with FISIM adjustment and chain link) Consortium will integrate older pre-revision tables (where possible in co-operation with NSIs) Refinement to methodology to measure use table in basic prices (capture trade and transportation margins) Industry classification (EUK-72) close to NACE Rev. 1 with some refinements Working agreement with OECD STI (Science, Technology and Industry) on SUT work (in consultation with Eurostat)

7 Main Issues on WP1-WP4 WP2: Distinction between labour quantity (hours and employment) and labour quantity (age, gender, education level) Labour quantity uses integrated labour and national accounts as default; but consider alternative approaches Labour quality will be dependent on country sources WP3: Point of departure are capital formation series Key issue is maximum breakdown of asset types (including ICT categories) … … and method of allocation of assets to individual industries

8 Main Issues on WP1-WP4 WP4: PPPs are required on industry-by-industry basis Make partly use of Output PPPs based on unit value ratios (e.g. from Prodcom) … … partly of Expenditure PPPs, allocated to individual industries and adjusted for relative transport and trade margins and relative net taxes Multilateral weighting of industry PPPs on the basis of EKS weighting system

9 Deliverables related to NSIs Statistical roadmap (draft version available, final version after summer 05) Preliminary test version of EU KLEMS database in 1st quarter of 06 First public version of EU KLEMS dataset with EU KLEMS Manual in 4 th quarter of 06 Statistical implementation plan (producer guide) by 3 rd quarter 07 Statistical progress report (every 6 months)

10 Issues in co-operation with NSIs requires continuous contacts on bilateral basis EU KLEMS will try to organize working schedules around individual NSIs programmes, but flexibility is needed to make it work Access to unpublished data and sharing between consortium partners requires specific arrangements with NSIs Assistance and advice in using greater (unpublished) detail from Supply & Use tables as well as historical (pre-revision) SUTs. In principle use integrated labour and national accounts for labour quantity data as default, but alternative sources (including micro data, where possible) are also important Dilemma of not using not so reliable data on industry-by-asset tables or using estimation methods Use of unpublished data for development of analytical module of database needs to be carefully monitored

11 Next steps 9-11 June: EU KLEMS consortium meeting in Helsinki: Further discussion on development of WPs 1-4 Draft statistical roadmap Database system for EU KLEMS (WP5) 3 rd and 4 th quarter 2005 Feedback from NSIs on statistical Roadmap Possibility to plan additional meetings for exchanging information on methods, data, etc. EU KLEMS participation in OECD workshop on productivity measurement (Madrid) December 05: special meeting for NSIs and research from new member states

12 Next steps 1 st quarter 2006: Release of preliminary version of EU KLEMS database 2 nd & 3 rd quarter 2006: Feedback from NSIs on preliminary version of EU KLEMS database Additional data inquiries and collection Start on discussion of statistical implementation plan 4 th quarter 2006: Release first public version of EU KLEMS database

13 Contact Details Bart van Ark (coordinator) Groningen Growth and Development Centre,University of Groningen PO Box 800, 9700 AV Groningen Telephone: Gerard Ypma (project administrator) Groningen Growth and Development Centre,University of Groningen PO Box 800, 9700 AV Groningen Telephone: Website: