1. Infrastructure for national accounts Clementina Ivan-Ungureanu Training: Essential SNA: Building the basics Addis Ababa, 13-16 February 2012

3. Content Business register Classifications Statistical surveys

4. Infrastructure for NA Pillars for NA implementation: Statistical business register, Classifications, Data sources : statistical and administrative

5. Business Register

6. The SBR should be distinguished from the administrative business register. Business units may be registered in one or more of administrative databases ( MoF, Tax Authority, statistical register, etc)

7. Business Register (cont) Main source for business demography: -Includes the businesses engaged in production -Keeps track of business creations and closures -Presents structural changes in the economy by concentration or de-concentration, -Presents operations such as mergers, takeovers, break-ups, split-off s and restructuring

8. Business Register (cont) The register comprises: All enterprises carrying on economic activities contributing to the GDP and their local units; The legal units of which those enterprises consist; Enterprise groups and multinational enterprise groups

9. Business Register (cont) Objectives To supply the framework for all economic surveys To coordinate the coverage of business surveys and to achieve consistency in classifying statistical reporting units. Data source for compiling demographic information about businesses To provide basic information that is required to meet a strong policy interest in rural development ( combination with other activities not covered by product-based agricultural statistics)

10. Business Register (cont) Register characteristics The units listed in the registers shall be characterized by an identity number and the descriptive details The updating of the list of characteristics and the definition of the characteristics is a continuous process

11. Statistical Business Register

12. Legal unit Definition: Is the unit that has legal “personality”, i.e. the law attributes rights and obligations to it such as: -Right of ownership, permitting it to hold assets in its own name; -Right to engage in activities in its own name and on its own behalf; -Right to conclude contracts with third parties; -Right to institute legal proceedings, i.e. to defend its interests. Legal units can have business or financial relationships with one another. One unit can partly or fully own or control other units.

13. Legal unit (cont) Units that do not have such a legal personality are called natural persons. Incorporated units are recognized by law, and the unit becomes a legal person. Units that are not incorporated are called unincorporated. These are not legal persons, but natural persons. The most important example of a natural person for national accounts is the household.

15. Enterprise Definition An enterprise is the smallest combination of legal units that is an organizational unit producing goods or services. Characteristics: -it is autonomous in decision-making with respect to production. -can be owned by one or more legal units.

16. Local Unit Enterprises can be engaged in the production of many goods and services at many locations Definition A local unit is situated in one geographically identifiable location, having a physical address. One or more economic activities may be carried out at this location. Examples of local units are: workshop, factory, warehouse and office. An enterprise can consist of more than one local unit.

18. Business register - variables The units listed in a register should be described according to type of statistical unit (legal unit, local unit and enterprise) using three categories of variables: – Identification variables (identity number, name of enterprise, name of the owner, address, legal status); – Stratification variables (economic activity, number of employees, sales turnover, geographical location); – Demographic variables (births, date of changes in economic activity, deaths).

22. Implementing an SBR Implementing: based of administrative records taking into accounts the situation in the country, the legislation and the specific conditions Actions: -Identifying the registers in the country -Establishing collaboration -Access to the data -Elaboration of the SBR

23. Update the SBR Administrative sources - the advantage of covering the entire enterprise universe: -Business taxation ; -VAT -Personal income tax; -Social security data; -Corporate tax; -Records by Customs authorities; -Records of Chamber Commerce -Central bank data

24. Update the business register (cont) Economic surveys : SBS Register Maintenance Surveys are specifically undertaken to update an SBR made by statistical agencies in cooperation with the primary registration authority.

26. CLASSIFICATIONS

27. Classifications Classifications are a key element in the compilation of statistical indicators. The SNA four main classifications relevant for national accounts: - transactions- specific for NA - institutions - specific for NA -activities -products.

28. Classifications ( cont) Definition Classifications are an exhaustive and structured set of mutually exclusive and well- described categories, often presented in a hierarchy that is reflected by the numeric or alphabetical codes assigned to them, used to standardize concepts and compile data. Source: Standard Statistical Classifications: Basic Principles, E Hoff mann, M.Chamie, paper presented to the 30th UN Statistical Commission, 1999

29. Classifications (cont) A standard statistical classification (SSC) is a set of discrete categories that may be assigned to a specific variable registered in a statistical survey or in an administrative file, and used in the production or presentation of statistics. International standard statistical classifications (ISSCs) are developed and adopted by international institutions to ensure correct implementation of international agreements and to standardize national and international communication.

30. Implementing a classification Methodological issues: i. User requirements ii. Conceptual tasks iii. Collecting and presenting information iv. Maintenance of a classification

31. (i) User requirements It should be determined -Who the users are, - How they will use the classification and the statistics produced with its help, -How they will contribute to the adaptation of ISSCs to national needs

32. (ii) Conceptual tasks Conceptual tasks Defining the primary variable (s) of a classification: ISIC is activity, CPA is the product, ISCO is the occupation Defining rules for linking different statistical units to the classification’s primary unit : the persons and the occupation, the enterprise and the activity, the production and the product.

33. (ii) Conceptual tasks ( cont) Cases of conceptual tasks Formulating rules for classifying units into the same detailed categories: the characteristics of the production for ISIC or the characteristics for job developed for ISCO Formulating similarity criteria for defining higher level categories :, to be made and which present a classification structure map, listing levels, codes, hierarchies, correspondence tables between classifications etc.

34. (iii) Collecting and presenting information To develop a classification, information needs to be collected and explanatory notes prepared : -Boundaries between each of the classification categories using definitional descriptions -Listing what is included or excluded. - correspondence tables -Classification structure map, listing levels, codes, hierarchies, etc.

35. (iv) Maintenance of a classification Includes the activities for: -Continuous update of the explanatory notes or associated coding tools -Updating : what is news in the field, introducing new categories into the existing structure and new coding tools.

36. Main classifications Standard Industrial Classification of All Economic Activities, Revision 4 (ISIC, Rev.4) Central Product Classification Version 2 (CPC Ver.2) Standard International Trade Classification (SITC Rev.4) The Classification by Broad Economic Categories (BEC) Rev.3

37. Main classifications (cont) Classification of Individual Consumption According to Purpose (COICOP), Classification of the Functions of Government (COFOG) Classification of the Purposes of NPISH (COPNI) Classification of Outlays of Producers According to Purpose (COPP)

38. ISIC Rev.4 Scope to provide a set of activity categories that can be utilized for the collection and reporting of statistics according to such activities.  Provide a tool for international comparison  Provide guidance to countries for a national activity classification structure

39. ISIC Rev.4 ( cont) Uses: -Provides the basis for the construction of the survey framework, SBR -In NA is used for estimating production account and the generation of income accounts by industry -Estimation of industrial production price index (IPPI) based on a representative sample of economic operators for each ISIC activity class -Social indicators relate to ISIC, being compiled by industry : number of employees, gross/net average salary, labour force cost indices, etc.

40. Implementation process of ISIC Rev.4 1. Structuring national classifications  Creation of a new national version of national classification according to ISIC Rev.4 for national use: - Using ISIC as a starting point - Based on historical national versions- correspondence tables  Should involve other stakeholders / users/ data providers 2. Recoding Business Register  Implementation in the Business Register the new national classification 3. Statistics update process  Co-ordinate simultaneous the translation in statistics to new classification and the control of the quality of time series

41. Implementation process of ISIC Rev.4 ( cont) Major tasks and challenges: -Defining a new classification and associated tools -Reclassification of all units on the business register according to the revised classification -Maintaining two classifications for an interim period -Sampling and weighting under the new classification -Simultaneous estimation and results assessment under both new and old classification -Construction of industry weights for short term statistics -Construction of back series in terms of the revised classification -Handling of the national accounts move to the revised classification

43. CPC Ver.2 Based on the physical characteristics of goods or on the nature of services rendered Includes products that are an output of an economic activity, including transportable goods, non-transportable goods and services Presents categories for all products that can be the object of domestic or international transactions or that can be stocked

44. CPC Ver.2 (cont) The main purpose of the CPC Ver.2 - to provide a framework for comparing international product statistics - to serve as a guide for developing or revising existing product classification to make them compatible with international standards.

45. CPC Ver.2 (cont) Main uses : -SNA uses the CPC to balance the supply and uses tables. In this sense, all main component aggregates are balanced by product; -instrument for assembling and tabulating all kinds of statistics requiring product detail; -the calculation of industrial production indices, quantitative data regarding achieved production of goods are registered using the CPC; -the industrial production price index is based on selling prices for industrial products identified by CPC, for selected industries classified using ISIC

46. SITC Rev.4 Classify commodities into different categories according: -to the nature of the merchandise -the materials used in their production - the production stage of the merchandise SITC is the aggregated classification of transportable goods both for international trade statistics and for analytical purposes

47. SITC Rev.4 ( cont) Uses: -To present and disseminate the huge amount of data in respect of import and export of goods, for different purposes, including customs, national accounts, statistical and analytical

48. Linked classifications The classifications ISIC, CPC and SITC are closely interrelated: -ISIC represents the activity side of the system, -CPC is the central instrument for classifying goods and services - SITC is, for analytical purposes, the aggregated classification of goods for international trade statistics

50. BEC Rev.3 Developed by UNSD - means of converting external trade data compiled using SITC into end-use categories that are meaningful within the framework of the SNA: - capital goods, -intermediate goods and -consumption goods

51. BEC Rev.3 - structure 1 - Food and beverages; 2 - Industrial supplies not elsewhere specified; 3 - Fuels and lubricants; 4 - Capital goods (except transport equipment), and parts and accessories thereof; 5 - Transport equipment and parts and accessories thereof; 6 - Consumer goods not elsewhere specifi ed; 7 - Goods not elsewhere specifi ed. Source: http://unstats.un.org/unsd/cr/registry/regcst

52. COICOP Classification of the individual consumption Has 14 main categories, the first 12 refer to individual consumption expenditure of households and the last two identify those parts of consumption expenditure by NPISHs and general government

53. COICOP - structure 1. Food and non-alcoholic beverages; 2. Alcoholic beverages, tobacco and narcotics; 3. Clothing and footwear; 4. Housing, water, electricity, gas and other fuels; 5. Furnishings, household equipment and routine household maintenance; 6. Health; 7. Transport; 8. Communication; 9. Recreation and culture; 10. Education; 11. Restaurants and hotels; 12. Miscellaneous goods and services; 13. Individual consumption expenditure of NPISHs; 14. Individual consumption expenditure of general government.

54. COFOG Identify consumption expenditures that benefit individual households and which are transferred to Division 14 of COICOP to derive the 2008 SNA aggregate of actual final consumption of households. Used to distinguish between individual and collective services provided by general government

55. COFOG - structure 1. General public services; 2. Defense; 3. Public order and safety; 4. Economic aff airs; 5. Environmental protection; 6. Housing and community amenities; 7. Health; 8. Recreation, culture and religion; 9. Education; 10. Social protection.

56. COPNI Classification of the Purposes of NPISH Classifies individual outlays of NPISHs according to the purpose they serve: from health, education services, religious associations,

57. COPNI - structure 1. Housing; 2. Health; 3. Recreation and culture; 4. Education; 5. Social protection; 6. Religion; 7. Political parties, labour and professional organizations 8. Environmental protection; 9. Services n.e.c

58. COPP Classification of Outlays of Producers According to Purpose Is applies to all producers, market or non- market Provide information on ‘outsourcing’ business services, that is, on the extent to which producers buy catering, cleaning, transport, auditing and other services that were previously carried out as ancillary activities within the enterprise

59. COPP - structure 1. Outlays on infrastructure; 2. Outlays on research and development; 3. Outlays on environmental protection; 4. Outlays on marketing; 5. Outlays on human resource development; 6. Outlays on current production programmes, administration and management

60. Statistical data sources

61. Statistical sources Two main categories: 1. Censuses 2. Surveys A survey is an investigation about the characteristics of a given population by means of collecting data from a sample of that population and estimating their characteristics through the systematic use of statistical methodology. A census is a survey conducted on all members of the population instead of just a sample.

62. Statistical sources ( cont) advantages (+) and disadvantages (-): Census: enumerate the whole target population –Complete, detailed and specific information (+) –Time consuming, costly (-) Sample survey: enumerate part of target population –Fast, cheap (+) –Incomplete information of target population (-)

63. Census Agricultural census; the observation unit is the agricultural holding, which is the techno- economic unit of agricultural production Economic census :the observation unit is the non-agricultural establishment with a fixed structure (size) and location characterized by a unique economic activity. Population census: the observation unit is the household and the person

64. Surveys Whereas a census is carried out infrequently, e.g. once in ten years, a survey is carried out frequently, once a year, or even every quarter or month. There are four main categories of surveys relevant for national accounts: Agricultural surveys Business surveys Price surveys Household surveys Mixed household-enterprise surveys:

68. Agriculture statistics Information from: -censuses of agriculture and livestock, -crop estimation surveys, -studies on farm management and cost of cultivation -agricultural household surveys -various data collected by administrative agencies concerned with prices and production relating to agriculture

69. Agriculture statistics Example of one Household agriculture survey

70. Structural Business Statistics (SBS) Describes the structure, coordination and performance of economic activities, down to the most detailed activity level Collects detailed information about: -The enterprise, -The activity carried out Main source for NA

71. SBS ( cont) Main variables: Demographic variables (e.g. date of the creation of the enterprise, temporary interruption, permanent closure, changes in the capital structure, etc.); Input-related variables: labour input (e.g. employment, personnel costs) and capital input (e.g. investment, research and development); Output-related variables (e.g. turnover, own account assets production, expenditures, taxes, changes in inventories, value of the direct export).

72. SBS ( cont) Example of the SBS

73. Prices The main price index used for NA: Consumer Price Index (CPI): measures change over time in the general level of prices of goods and services that a reference population acquires, uses or pays for consumption Producer Price Index (PPI): measure of the change in the price of goods and services as they leave their place of production.

74. Households statistics Labor Force survey (LFS) a survey that provides data on working-age persons living in private households. Its main emphasis is on employment, unemployment and inactivity Household Budget Survey ( HBS): provides data on consumption expenditures of private households, broken down by household characteristics such as income, size and composition, socio-economic characteristics, degree of urbanization, region etc.