13-Jul-07

NACE: How the revision of a classification can affect quality of statistics

Ana Franco

13-Jul-07 Name of the presentation

NACE a tool for comparing statistics at world level

The European Classification of Economic Activities (NACE) is the European reference framework for the production and the dissemination of statistics related to economic activities.

NACE is identical with, or an extension of, the ISIC (International Standard Industrial Classification of all Economic Activities - classification developed by the UN as a standard way of classifying economic activities). Also, the coding systems used in both classifications are, as far as possible, the same.

The main principle in ISIC and NACE is to code together enterprises if they produce the same type of goods or service or if they use similar processes (i.e. the same raw materials, process of production, skills or technology).

13-Jul-07 Name of the presentation

NACE: The revision process

At its thirtieth session in 1999, the United Nations Statistical Commission agreed that the ISIC should be revised every five years, thereby keeping the classifications relevant while avoiding major disruptions in time series. NACE has followed this revision round and NACE Rev. 2 entered into force in 2008.

The purpose and rationale for these revisions is to repair weaknesses in the classifications, to reflect changes in technology or economic organization, to respond to new and permanent demands for data and to achieve greater comparability or convergence among different classifications.

Focused work on the revision of ISIC/NACE started in 2001 and the regulation establishing the statistical classification of economic activities NACE Rev. 2 was adopted on the 20th December of 2006.

13-Jul-07 Name of the presentation

NACE: The revision process (stakeholders)

UN Statistical

Commission

Technical Subgroup

Statistical Programme Committee

NACE/CPA Working Group

Task force

UN Expert Group

UN EUROSTAT

13-Jul-07 Name of the presentation

Revision of NACE: an opportunity to improve quality

Relevance Accuracy Timeliness and punctuality Accessibility and clarity Comparability and coherence Cost and Burden

13-Jul-07 Name of the presentation

RelevanceDuring the process of revision of NACE/ISIC the opinion of

the users was carefully taken into account.

NACE Rev. 2

UN

World-wide consultation:

How: 3 rounds of questionnaires

To whom: 235 countries and international organizations worldwide

When: from 2001

EULarge consultation:-National Statistical Institutes (NSI’s)- European trade associations (FEBI’s)- European Commission- Eurostat- European Central Bank- And anybody else using the classification

FAO Working Party on Indicators of the Information Society

Association of Southeast Nations

Workshops in different regions of the world

Afristat

UN Technical Subgroup

NAICS/NACE convergence project

13-Jul-07 Name of the presentation

Relevance As one could expect in such a large operation of identification

of user needs, it has been impossible to take all wishes into account. Nevertheless, some general concerns were identified and the result is a revised classification with:

New groupings– Information and communication sector– water supply, sewerage, waste management and remediation

More tabulation categories for services– professional technical, and business services– administrative and support services– real estate, rental and leasing services– art, entertainment and recreation

More divisions ( to increase international comparability)– for new groupings and growing services – in manufacturing and construction– human health services

13-Jul-07 Name of the presentation

Accuracy

Correspondence between NACE Rev 1.1 and Rev.2

Rev 1.1 Rev.2

1 1196

Rev 1.1 Rev.2

a

b

c 1

d

e

86

Automat ic

Rev 1.1 Rev.2

a

1 b

c

Rev 1.1 Rev.2

a e

b f

c g

h

18

214

Manual

Good occasion to correct

errors!

13-Jul-07 Name of the presentation

Timeliness and punctuality

2001

Start of revision

Adoption of regulation

End-2006

Business registers updated

2008

-Business register-Labour Force Survey-Road freight survey- Structural Business Surveys- …

- Labour Cost Index- Job Vacancy survey- Inform. Soc.

2009 2010 2011

National Accounts

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Accessibility and clarity

A dedicated web page which would contain all available information on NACE Rev.2:

1.1 the structure of NACE Rev. 2, 1.2 the introductory guidelines, 1.3 the explanatory notes for each code 1.4 the text of the Framework regulation 1.5 the Implementation regulation. 1.6 the correspondence tables between NACE Rev. 2 – NACE Rev. 1.1 and NACE

Rev. 1.1 - NACE Rev. 2 in different formats1.7 Five Handbooks to help National Statistical Institutes during the complex project of

the implementation of NACE Rev. 2• - Setting up an implementation plan for NACE Rev. 2• - Implementation of NACE Rev.2 in Business Registers• - Handbook on methodological aspects related to sampling designs and

weights estimations • - Handbook on back-casting• - Rules for classification of units outsourcing their production

A paper publication which will regroup the elements mentioned under 1.1 to 1.5.

13-Jul-07 Name of the presentation

Accessibility and clarity

A CD Rom containing the same information can be created at request

A general paper informing on the main changes brought by the new classification has been prepared. This information will be visible in the Eurostat web site and will contain a link to the dedicated web page above mentioned.

The SDDS files, detailed metadata files presented in a common format which are associated with the data base New Cronos containing all EU data published by Eurostat, will be revised informing the users on the changes in the activity classification and on the specific impact for the statistical domain.

13-Jul-07 Name of the presentation

Comparability (between geographical areas)

Among EU countries… Use of NACE is mandatory within the European

Statistical System: Regulation (EC) No 1893/2006 of the European Parliament and of the Council of 20 December 2006

Although national versions allowed… And there are also:

– Explanatory notes– Introductory guidelines

13-Jul-07 Name of the presentation

Comparability (between geographical areas)

But also with the rest of the World:

Agreement signed by the heads of the statistical agencies of Canada, the European Union and the United States concerning a project on the convergence of NAICS and NACE

A taskforce consisting of experts from the participating parties have drawn up a list of changes to NACE and NAICS which may improve the convergence.

In addition, ISIC had taken into account these revisions to other major national industry classifications such as ANZSIC (Australia and New Zealand), JSIC (Japan) and NatSIC (China).

ISIC

NACE

NAICS (USA, Canada, Mexico)

13-Jul-07 Name of the presentation

Comparability between statistical domains

Data is published by Eurostat according to NACE in 33 different statistical domains

Solutions: – Dual coding– Back casting

2008

21

2009

3

2010

6

2011

3

13-Jul-07 Name of the presentation

Comparability over time

Discontinuity in historical statistics is to be expected in many statistical domains, both at European and national levels

Solutions: – Dual coding– Back casting– Correspondence tables

NACE Rev 1.1

NACE Rev.2

Sections 17 21

Divisions 62 88

Groups 224 272

Classes 514 615

1 to 1 196

n to 1 86

1 to n 18

n to m 214

Correspondences:

282

13-Jul-07 Name of the presentation

Coherence

ISIC

NACE

National versions of NACE

CPC

CPA

National versions of CPA

PRODCOM

National versions of

PRODCOM

HS

CN

SITC

Economic

Activities Products Goods

World level

EU level

Nat. Level

13-Jul-07 Name of the presentation

Cost and Burden

The revision of NACE will imply several operations in the Member States:

The setting up of the implementation plan The recoding of the Business Registers according to the new

NACE (or its national version) The adaptation of the statistical surveys (samples and

estimation techniques) The reconstruction of time series (double reporting, back-

casting) The changes of the reference database and related

dissemination issues The elaboration of the national version of NACE and the

adaptation of national legislations following the adoption of the Regulation establishing NACE

33%!

32%!

13-Jul-07 Name of the presentation

Conclusion

The revision of a classification, although a costly and heavy operation is absolutely needed and is a good opportunity to improve the quality of the date produced using it.

Relevance is for sure the quality component which more benefits in such a revision.

It is a good opportunity to improve geographical comparability

Accuracy can also be improved in the operation of updating of the register

A revision of a classification always entails breaks in the series,

Not all the statistical domains are able to use the new classification at the same time

In the transition period timeliness can undergo.

The information of the users shouldn't be neglected and it is important not only to provide information on the new classification but also on its impact for the data in the different statistical domains.