FROM ISIC 3.1 TO ISIC 4: The Cayman Islands Experience Workshops on the 2008 System of National Accounts (SNA) Basseterre, St Kitts & Nevis December , 2014 Presenter: Selburn Christian

Outline of Presentation  Overview of ISIC  ISIC Revision  The Transition Process  Challenges  Opportunities

Overview of ISIC  ISIC is the international reference classification of productive activities.  ISIC was developed by the United Nations and is used by the majority of countries globally as:  The national activity classification.  The basis to develop national classifications.  ISIC was first adopted in 1948, it was revised in 1958 (ISIC Rev. 1), 1968 (ISIC Rev. 2), 1990 (ISIC, Rev. 3), 2004 (ISIC, Rev. 3.1), and 2008 (ISIC, Rev. 4).  ISIC has become an important tool for comparing statistical data on economic activities at the global level

Overview of ISIC cont’d  ISIC is subdivided into a hierarchical, mutually exclusive, four-level structure as follows:  The product group level would be the country specific adaptation based on its economic structure.

ISIC Revision  ISIC Rev 4 was released in 2008 and involved contributions from many classification experts and users around the world.  The main objectives of the revision were:  To address the rapid changes in economic structure.  Changing analytical needs of policy makers.  Convergence with other international industrial classifications (e.g. NACE, NAICS, ANZSIC, etc.).

ISIC Revision cont’d  The revisions can be roughly classified into three categories:  Introduction of new categories & industries.  Regrouping of activities of common policy interest.  Clarification and adjustments of concepts (at lower levels) to enhance comparability.  New industries were introduced, particularly in services:  Information and communication.  Professional, scientific and technical activities.  Administrative and support service activities.  Arts, entertainment and recreation.

ISIC Revision cont’d  Activities of common policy interest were grouped.  The new section E (Water supply; sewerage, waste management and remediation activities) resulted from the regrouping of activities of common policy interest.  There has been a significant increase in classification details (especially in services) in ISIC 4 compared to its predecessor.

The Transition Process  The Economics and Statistics Office (ESO) commenced the SNA program for the Cayman Islands in  The program started with the development of a Business Register (BR) to serve as the sampling frame for the business survey.  The initial Business Register was classified using the ISIC 3.1 structure (without adaptation).  The first SNA report for the Cayman Islands was based on ISIC 3.1 and was published June 2009.

The Transition Process cont’d  Based on ISIC 3.1, Cayman’s GDP was published for 15 industries with calculations for 136 estimation groups:

The Transition Process cont’d  Based on ISIC 4, GDP is now published for 18 industries with calculations for 158 product groups as follows:

The Transition Process cont’d  The transition to ISIC 4 commenced in 2010 and occurred as follows: 1. Development of the Cayman Islands Industrial Classification (CIIC) to serve as a country-specific classification scheme of all economic activity.  This entailed the adaptation of ISIC 4 to the economic situation of the Cayman Islands.  The CIIC excludes, compresses and expands ISIC based on the structure of the Cayman Islands’ economy.  The CIIC follows the structure of ISIC 4 down to the class level (4-digit ISIC).

The Transition Process cont’d  Product groups where developed by adding a fifth digit to the ISIC class level.  The CIIC allows for periodic revision as necessary (e.g. addition of new activities).  The process resulted in 553 product groups being identified in the CIIC.

The Transition Process cont’d 2. Recoding of the Business Register using the CIIC.  This was done at the 5-digit product group level.  Correspondence tables were utilized to assist in the recoding up to the 4-digit class level of the CIIC.  Approximately 4000 businesses were recoded.  The recoding was done over a 5-month period. 3. Conversion of worksheets to match the ISIC 4 structure.  Configuring the production and control worksheets to align with the new industrial aggregation of ISIC 4.  The new worksheets included correspondence coding based on both ISIC 3.1 and 4.

The Transition Process cont’d 4. Estimates compiled based on the revised codes and aggregated based on the new industrial structure.  The first publication of Cayman Islands’ GDP on ISIC 4 was released in November The publication contained data for the period

Challenges  A major challenge was the manpower requirements to develop the CIIC and reclassify the BR while keeping pace with the regular SNA work program.  Another issue was moving the individual estimates into the new structure of ISIC 4. This was addressed by:  Including the new CIIC codes into the old production and control worksheets.  The worksheets where then reconfigured to align with the ISIC 4 structure.  The GDP tables could now be generated from the revised control and production worksheets

Opportunities  Only one GDP report was published on ISIC 3.1 which means that revision of the entire series could be accommodated within our published revision policy.  There were no major issues with time series preservation/comparability as the full data series was now on ISIC 4.  The fact that the SNA program was in its developmental phase provided for a smoother transition to ISIC 4.

Opportunities cont’d  The majority of the product groups transferred seamlessly to ISIC 4, some categories require reclassification and splitting due to the greater details in the new system.  The CIIC is now used as the classification scheme for industry data relating to:  The annual Labour Force Survey (LFS)  Work permit by industry data held by the Immigration Department.  The CIIC was also used for Census 2010.

Opportunities cont’d  ISIC 4 allows for several alternative aggregations in line with the demand of statisticians, economists and policy makers (e.g. the composition of the information economy has been standardized).  It provides for greater classification detail in most of the activity areas.  It accounts for the emergence of new technologies and recent changes in the production structure of countries.  It strengthens comparability and convergence with other international activity classifications.