harmonisation of definitions essnet wp3 …...harmonisation of definitions of variables in european...

Harmonisation of Definitions of VariablesHarmonisation of Definitions of Variables in European Economic StatisticsFinal Workshop ESSnet Consistency WP3

Session 3: User and producer perspective on proposalsSession 3: User and producer perspective on proposals

18-19 November 2013, Stockholm, Sweden

Sanjiv MahajanHead of International Strategy and Coordination

Office for National Statistics (UK)[email protected]

Harmonisation of definitions of variables in European Economic Statistics – ESSnet WP3

Overview

Economic Statistics ESSnet WP3

• Vision – Integrating the way forward (statistical unit is the heartbeat)

• Statistical value chain (economic statistics framework)

• Development of key international guidance manuals

• Measuring UK Gross Domestic Product g• Life cycle of National Accounts data - estimation timeframe

• National Accounts • Type of data needed • EU Demand for economic statistics • Links to source data • Has to adapt requirements and terminology

• Comments on the Draft ReportS ifi t i t fl t/ dd i th t t• Specific comments, issues to reflect/address in the next steps

• Any questions

Harmonisation of definitions of variables in European Economic Statistics – ESSnet WP3Economic Statistics ESSnet WP3

Vision - Integrating the way forwardNational Accounts Key

cross-cutting issues

SectorsClassifications

Industries Products

Sectors

Compliance

Confidentiality

Definitions

Stocks Flows Resources

Revision Policies

Timeliness Statistical

Unit

Regions Prices

Costs

Users

Business Register

Balance of PaymentsPublic Sector Finance

Regions Prices

Accounts

Focus on Quality

Compiled bySanjiv MahajanFebruary 2012


Statistical value chain

Economic Statistics – ESSnet WP3

Compiled bySanjiv Mahajan

March 2010

Business Register (and the statistical unit)→ Data collection, editing and validation processes

→ Production of survey results

March 2010

y→ Census and population

→ National Accounts including Supply and Use Tables→ Labour, prices and social statistics, p→ Symmetric Input-Output Tables→ Regional and Environmental Accounts~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

→ Balance of Payments→ Public Sector Finance~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

L b A t d S i l A ti M t i

The boundary covering compilation of economic statistics in each National Statistical Institution → Labour Accounts and Social Accounting Matrices

→ Tourism Satellite Accounts→ Other satellite accounts

National Statistical Institution varies across Member States

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~→ Regional, impact and policy analyses

→ CGE and economic modelling


Development of key international guidance manuals



April 2013

Pre-1930s ..…1930s ..… 1940s ...… 1950s ..… 1960s ..… 1970s ..… 1980s ..… 1990s ..… 2000s ..…

UN SNA 1953 1968 1993 2008

April 2013

Eurostat ESA 1970 1979 1995 2010

IMF BPM 1948 1950 1961 1977 1993 2008

Plus Numerous and various manuals and handbooks, involving UN, Eurostat, OECD:• Statistical and Reporting Units (1993) • Manual on Government Deficit and Debt (2000, 2002, 2010, 2012 and 2013) ( , , , )• Eurostat Handbook on Price and Volume Measures in National Accounts (2001, 2014?) • Eurostat Manual on Supply, Use and Input-Output Tables (2008) • UN Handbook on Input-Output, Compilation and Analysis (1976, 1996, 1999, 2014?) • Manual on Statistics on International Trade in Services (2002)• Manual on Statistics on International Trade in Services (2002)

Eurostat Regulation covering national, regional, environmental, labour and social statistics.

Measuring UK Gross Domestic ProductLife cycle of National Accounts data - estimation timeframeLife cycle of National Accounts data estimation timeframe

Use of short term indicators A l A l

Q t

Use of short term indicatorsand smaller sample size business surveys

Blue Book

Annual balancing

Blue Book

Annual balancing

3rd Estimate of GDPand Quarterly

National Accounts

2nd Estimateof GDP

1st Estimateof GDP

Quarter Blue Book 1

Latest year annualdata based on sum ofquarterly data but not

Blue Book 2

Full SUT frameworkplus

benchmarkingNational Accounts(85 days)(55 days)(25 days)

Output (production)

on benchmarked data short-term indicators

Output (production)

Expenditure

Income

Compiled bySanjiv MahajanNovember 2004


National Accounts – Type of data needed

Examples of variables and data required for National Accounts

EmploymentFISIM

Purchases of goods

and services

Employment numbers

Changes in inventories M&F, WIP, FG

Taxes on products

Taxes

Balance sheets

Imports of goods and

services

FISIM

and many others ... Happy customers?

Turnover Income earned-in-kind GFCF

Taxes on production

Subsidies

services

Purchases of goods for resale without further

processing Labour

Consumption of fixed capital

Subsidies on production

Subs d eson products

Financial Transactions

Exports of goods and

services

costs on production

Prices

Each of the categories need to be split as appropriate, for example:By institutional sector, by industry, by product, by asset, by type, by flow, by stock, etc.


EU demand for economic statistics


Examples of EU Statistical Regulations

Balance of Payments

UK Government

Structural Business Statistics Prices

Business

BPM 5

National Accounts

GDP / GNI

EU Policy European

Commission

Short-Term Statistics ITIS

Business Registers

Maastricht

National Accounts ESA 95

Excessive Deficit

Eurostat European

Central Bank PRODCOM FDI

FATS

Maastricht Debt and Deficit

MGDD

Deficit Procedure

INTRASTATLabour Market

Compiled bySanjiv MahajanSeptember 2012

INTRASTAT


National Accounts – Links to source data


• Business Surveys/Administrative data and National AccountsBusiness survey or administrative based data

+ coverage adjustments+ conceptual adjustments

+ quality adjustmentsq y j+ balancing/coherency adjustments

equals National Accounts on SNA 2008 or ESA 2010

Business survey data (frequency)→ Monthly (limited detail, short-term indicators)

→ and/or quarterly→ and/or quarterly→ and/or annually (detailed structural information)

→ less regularly ?

• Each of the above may have different approaches/steps.


National Accounts – Links to source data


• Company Accounts and National Accounts• Examples of differences/issues

A d f f t• Access and frequency of accounts. • Accounting year start and end dates. • Different types of accounts. • Different company structures. • Treatment of specific items, e.g. exceptional items, depreciation, etc. • Matching company activities with NACE Rev. 2. • Valuations, e.g. historic cost versus current replacement cost. • Treatment of mergers and acquisitions. • Treatment of non-resident activity.• Other issues, e.g. currencies, holding gains/losses, fines and penalties, etc.

• Paper on ‘Challenges of using Company Accounts based data in N ti l A t ’ b S ji M h j (J 2013)National Accounts’ by Sanjiv Mahajan (June 2013).


National Accounts – Has to adapt requirements & terminology

Total output (at basic prices)equals

Total sales of goods and services (as invoiced, excluding VAT)

plus Change in inventories of work-in-progress and finished goods

plus Output produced for own use for example computer software R&Dplus Output produced for own use, for example computer software, R&D, and construction (also known as own account capital formation)

less Purchases of goods and services for resale without further processing (thereby only including the gross margin within output)(thereby only including the gross margin within output)

plus Income earned-in-kind

less Any taxes on productsless Any taxes on products

plus Any subsidies on products


National Accounts – Has to adapt requirements & terminology

Total intermediate consumption (at purchasers’ prices)equals

Total purchases of goods and services consumed as inputs to the process of production (excluding employment costs & GFCF) excluding deductible VAT and including non-deductible VAT

less Change in inventories of materials and fuels

less Any purchased/bought-in computer software & R&D (treated as GFCF)

plus Any imputed insurance premium supplements

less Any payments to employees such as income earned-in-kind

Gross value added (at basic prices)equals

Total output (at basic prices)Total output (at basic prices)

less Total intermediate consumption (at purchasers’ prices)


Draft Report on proposed adjustments from ESSnet WP3

Specific comments (1)• Treatment of specific issues requiring further work

• Consistency between turnover (producer prices) and output (basic prices): • Excise duties

• Turnover will include some duties paid (i.e. taxes on product). • Output excludes all taxes on products. p p

• Taxes and subsidies – both need clearer treatment. • Merchanted goods (purchases of goods and services for resale without any further

processing) • Sale value should be in turnover but deducted for output. • Purchase value should in purchases but not be in intermediate consumption.

• Licence fees.

• Consistency of definition of investment in tangible goods: • Need to reflect R&D• Need to reflect R&D. • Output produced for own use (treated as output and capital formation).

• Employment stock options/share based payments.

• Invoice values: • Does not work for long-term contracts, e.g. shipbuilding, aerospace, etc.



Specific comments (2)• Treatment of specific issues requiring further work

• Need to reflect market producers and non-market producers: • Different approach to measure NPISHs, etc.

• Production value (need to ‘modernise’) • Not a service industry concept. • Some inclusions need to be reviewed, e.g. other operating income that do not relate

to the production and sale of goods and services.

• GVA definition can only be an ‘approximation’:• GVA definition can only be an approximation : • Will not include conceptual adjustments from National Accounts. • Need to review items like other operating income.

• Gross investment – need to reflect intangible assets. g

• Personnel costs - what is this trying to cover and why? • Consider re-naming as total labour costs and reflect appropriate picture. • Need to include items like redundancy payments, subsistence, etc. • Need to review some items excluded, e.g. Illness payments, maternity leave, etc. • Directors’ fees – is this a ‘wage’ or a ‘service’ payment?



Description of where we are (1)

• Considerable progress has been made – more still to do.p g• Very difficult piece of work to re-align existing definitions.

• Good draft report – should be treated as draft and not final.

• Good reflection of different Member State situations: • Tax laws, administrative data, etc. • Need a mechanism to address future differences and special cases. p

• Output driven focus should, and will always, remain: • Proposals do provide better link with inputs. • Reflect business ability to provide data linked via company accounts link• Reflect business ability to provide data linked via company accounts link.

• Various earlier concerns raised have been addressed: • Recognition that complete consistency is not achievable!

• Good, pragmatic, sensible and practical links to company accounts.



Description of where we are (2)

• Slant/thinking driven by manufacturing mindset/bias – needs ‘modernising’ g y g g• Indicated by language and items included/excluded. • Inclusions/exclusions should be tested for service industries, e.g. licence fees. • Production value should not be used but output.Production value should not be used but output. • GVA at factor cost should not be used but GVA at basic prices. • Turnover should be sales of goods and services and not include financial

turnover.

• Need to cover variables in full and beyond ‘core’ variables • Full coverage of GFCF. • Taxes and subsidies split between products and production. • Financial flows. • Balance sheets.


Ideas for the way forward

Issues to reflect/address in the next steps ...,

• Need firm evidence before acceptance: p• Horizontal consistency - links to the ‘range’ of surveys need to be tested.

• Are the proposals appropriate for STS, SBS, Prodcom, ITIS, Financial, etc.?

• Can the survey respondents provide the new requirements as laid out?Can the survey respondents provide the new requirements as laid out? • Respondents do not always read lengthy definitions. • Where possible, need close matching to accounting definitions.

• Are the proposals consistent with those from other ESSnets (e g WP2 WP7)?• Are the proposals consistent with those from other ESSnets (e.g. WP2, WP7)?

• Are the users (NA, BoP, Regional, Labour, etc.) content?

• Need some supporting impact analyses.Need some supporting impact analyses.

• Other issues: • Need to ensure changes are in line with ESA 2010 and BPM 6.

• Need to reflect any changes from ESS Vision 2.0.

Harmonisation of definitions of variables in European E i St ti ti ESS t WP3Economic Statistics – ESSnet WP3

Any questions?Any questions?Sanjiv MahajanSanjiv Mahajan

Head of International Strategy and CoordinationOffice for National Statistics (UK)

[email protected]

Developing a Way Forward – User Demands for Business Statistics

Statistical unit is key to all aspects of the statistical system

Business Statistics

Main types of units (EU Statistical Units Regulation)

Enterprise Group (EG)M

Survey (S) orNational Accounts (NA)

S

Enterprise (ENT)

Institutional Unit (IU)

M A I N

NA

S

Also known as ‘establishment’

Kind-of-Activity Unit (KAU)

Unit of Homogeneous Production (UHP)

Local Unit (LU)

A N A L Y T

S

S

NA

Local Unit (LU)

Local Kind-of-Activity Unit (LKAU)

Local Unit of Homogeneous Production (LUHP)

T I C A L

S

S

NA

Heterogeneous? Homogeneous?

Less? More?

M ? L ?

Activity

Burden on business

A tMore? Less?

Likely? Unlikely?

Autonomy

Detailed accounts

Type of use/userMacro? Micro?


April 2011

harmonisation of definitions essnet wp3 …...harmonisation of definitions of variables in european...

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