n. rainer, statistics austria ________________________________________________________

ESSnet on Consistency of Concepts and applied Methods of Business and Trade-related Statistics:

Statistical Units

N. Rainer, Statistics Austria________________________________________________________

ESSnet on consistency – Statistical Units Workshop Riga, 19 – 20 June 2012

Improved, new, operational, etc. definitions of the main statistical units for European

business statistics

Session: What do we need?

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Content

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Statistical units current European business statistics

Statistical unit regulation

Current definition of enterprise, KAU, LKAU, and local unit

Proposed definition of enterprise, KAU, LKAU and local unit

Discussion

Resume and further procedure

The classification by activity, by region and by size classes are dependent on the choice of the statistical unit

Populations (coverage) and frames are mainly defined by means of classifications and thus are dependent on the choice of the statistical unit

The choice of the characteristics/variables and the values of the characteristics/variables depend on the choice of the statistical unit

There is nothing in our statistical system that does not depend on the statistical unit

Relevance of statistical units

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Nr Project Part Statistical UnitStat. Unit accord. 696/93

RemarksReference to 696/93

Coverage NACE from

Coverage NACE to

5 Structural business statistics I Enterprise A yes 5 825 Structural business statistics I Enterprise A yes 95 955 Structural business statistics II Enterprise A yes 5 395 Structural business statistics II Kind of activity D yes 5 395 Structural business statistics III Enterprise A yes 45 475 Structural business statistics IV Enterprise A yes 41 435 Structural business statistics IV Kind of activity D yes 41 435 Structural business statistics V Enterprise A yes 651 6525 Structural business statistics V Business 651 6525 Structural business statistics VI Enterprise A yes 6419 64195 Structural business statistics VI Enterprise A yes 6492 64925 Structural business statistics VI Branches 6419 64195 Structural business statistics VI Branches 6492 64925 Structural business statistics VII Enterprise A yes 653 6535 Structural business statistics VII Ancillary activities yes 653 6535 Structural business statistics VIII Enterprise A yes 582 5825 Structural business statistics VIII Enterprise A yes 62 625 Structural business statistics VIII Enterprise A yes 631 6315 Structural business statistics VIII Enterprise A yes 691 6915 Structural business statistics VIII Enterprise A yes 702 7025 Structural business statistics VIII Enterprise A yes 711 7125 Structural business statistics VIII Enterprise A yes 731 7325 Structural business statistics VIII Enterprise A yes 78 78

Overview of statistical units used in business related statistics (Source: External study)

The current choice of the statistical units in the European business statistics (1)

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Coverage NACE from

Coverage NACE to

6 Short-term statistics A Kind of activity D yes 5 336 Short-term statistics A Kind of activity D yes 351 3526 Short-term statistics A Kind of activity D yes 35 366 Short-term statistics A Kind of activity D yes 383 3836 Short-term statistics B Kind of activity D yes 41 436 Short-term statistics C Enterprise A yes 45 476 Short-term statistics D Enterprise A yes 49 826 Short-term statistics D Enterprise A yes 85 967 Prodcom Enterprise A certain exceptions yes 5 33

7 Prodcom Enterprise Asecondary activities of enterprises not classified in NACE 5 to 33

yes 1 99

8 FATS I Enterprise A * or Branch yes 5 828 FATS II Enterprise* A * or Branch yes 5 828 FATS II Enterprise* A * or Branch yes 85 969 Tourism I Local kind of activity G called "establishment" yes 551 553

10 Energy Enterprise ** ** not clear no11 Waste Local kind of activity G yes12 ICT I Enterprise no 10 6312 ICT I Enterprise no 68 7412 ICT I Enterprise no 77 8212 ICT I Enterprise no 951 951

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Coverage NACE from

Coverage NACE to

13 Intrastat Company not necessarily identical with enterprise

no 1 99

14 Research & Development In Enterprise some exceptions indirectly 5 3914 Research & Development In Enterprise some exceptions indirectly 46 4614 Research & Development In Enterprise some exceptions indirectly 49 5314 Research & Development In Enterprise some exceptions indirectly 58 5814 Research & Development In Enterprise some exceptions indirectly 61 6614 Research & Development In Enterprise some exceptions indirectly 71 7114 Research & Development S&T Enterprise some exceptions indirectly 1 99

15.2 Statistics earnings/labour costs Local unit F yes 5 8215.2 Statistics earnings/labour costs Local unit F yes 85 9615.3 Job vacancies Business units unit undefined no 1 315.3 Job vacancies Business units unit undefined no 5 8215.3 Job vacancies Business units unit undefined no 84 9616 Vocational Training Enterprise A yes 5 8216 Vocational Training Enterprise A yes 90 9618 National accounts (ESA) Enterprise A sector accounts no 1 9918 National accounts (ESA) Local kind of activity G production sphere no 1 99

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The current situation is characterised as follows:

• Different statistical units are applied over the statistical domains

• Even partly within a statistical domain• Some units for which data are requested are

not supported by the business register regulation

• Some statistical domains refer to units which are not defined in the unit regulation

• Data input relations between statistical domains are not always considered

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Achieve a higher consistency between the various statistical domains of European business statistics

Achieve a higher consistency between the data of each domain of business statistics between the MS

Basic goals:

Aims and goals (1)

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Aims and goals (2)

Technical goals:

Propose improved / operational definitions for the main statistical units of European business statistics

Make sure that the definitions are comprehensive

Take into account the results of ESSnet Profiling

Consider the requirements for FRIBS

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The Statistical Unit Regulation (696/93) (1)

Units covered by the Regulation:A. Enterprise

B. Institutional unit

C. Enterprise group

D. Kind-of-activity unit (KAU)

E. Unit of homogeneous production

F. Local unit

G. Local kind-of-activity unit (LKAU)

H. Local unit of homogeneous production

Observableyes

yes

yes

yes

no

yes

yes

no

WP1 relevanceyes

yes

(yes)

yes

no

yes

yes

no

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The Statistical Unit Regulation (696/93) (2)

Reasons for revision:

• Not specific in terms of certain economic branches: agricultural sector, public administration; non-profit sector

• Not up-to-date: e.g. enterprises groups; business accounting; ....

• Ambiguous and not always operational

• Specific units not considered, such as SPE, captive financial units, artificial subsidiaries, head offices, ....

• Split into observable and non-observable units

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References to other sources defining statistical units (1)

ISIC Rev. 4:

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– Institutional unit: is defined as an economic entity that is capable, in its own right, of owning assets, incurring liabilities and engaging in economic activities and transactions with other entities

– Enterprise: An institutional unit in its capacity as a producer of goods and services is known as an enterprise. An enterprise is an economic transactor with autonomy in respect of financial and investment decision-making, as well as authority and responsibility for allocating resources for the production of goods and services. It may be engaged in one or more productive activities.


ISIC Rev. 4:

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– Establishment: is defined as an enterprise or part of an enterprise that is situated in a single location and in which only a single (non-ancillary) productive activity is carried out or in which the principal productive activity accounts for most of value added. In case of most small and medium-sized business, the enterprise and the establishment will be identical. Large and complex enterprises that are engaged in many economic activities belonging to different ISIC industries will be composed of more than one establishment, provided that smaller, more homogeneous production units can be identified for which production data can be compiled.


ISIC Rev. 4:

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– Kind-of-activity unit: is an enterprise or part of an enterprise that engages in only one kind of productive activity or in which the principal productive activity accounts for most of value added. Compared with the establishment, there is no restriction on the geographic area in which the activity is carried out.

– Local unit: is an enterprise or part of an enterprise which engages in productive activity at or from one location.


SNA 2008:

ESA 2010:

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Enterprise, Kind-of activity unit, Local unit, Establishment: Same definition as in ISIC Rev.4

In principle: Same definition as in SNA 2008

Head offices and holding companies, Special purpose entities

Current definition: The enterprise (1)

The enterprise:

The enterprise is the smallest combination of legal units that is an organisational unit producing goods or services which benefits from a certain degree of autonomy in decision-making, especially for the allocation of its current resources. An enterprise carries out one or more activities at one or more locations.

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The enterprise:– Can carry out one or more activities

– Can have one or more locations

– Can consist of one or more legal units


Each legal unit that is not part of an enterprise group / not controlled by another legal unit, is per se an enterprise

For the delineation of the enterprise, a separation between legal units belonging to an enterprise group and legal units not belonging to an enterprise is essential

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A split of legal units which serve different enterprises of the same enterprise group is not explicitly required, even on the contrary

The delineation of enterprises is done at the national level, considering only those legal units resident in the country

As the enterprise is “the smallest combination of legal units....”, the starting point for the delineation are the legal units, thus the current approach is a “bottom - up” approach

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The current definition implies that an enterprise may correspond to:

– a single legal unit (including a natural person),

– an enterprise group as a set of legal units under common control,

– or to a part of an enterprise group


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Proposed of ESSnet Profiling: The enterprise (1)

Proposed definition

The enterprise is a single legal unit (including a natural person), an enterprise group as a set of legal units under common control, or a part of an enterprise group, producing goods or services. It benefits from a certain degree of autonomy in decision-making, especially for the allocation of its current resources. The enterprise will appear as an organisational unit that can provide meaningful data for statistics.

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The delineation process for the establishment of enterprises (Profiling) starts from the (global) enterprise group in a dialogue will the group head

There are at least as many enterprises in a group as there are different sectors in the closed financial accounts (according to IFRS) of the group, but possibly more

At the global group level, first “global enterprises” are being delineated. In a further step “truncated (national) enterprises” are delineated


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Within an all-resident enterprise group, the global enterprise and the truncated enterprise are one and the same unit

The number of truncated enterprises in a specific country cannot be bigger than number of global enterprises

The new approach is a “top-down” approach as the delineation starts from the enterprise group / enterprise group head

Also “top-down” as the delineation first aims to define the global enterprise, the national delineation is a result from the global profiling


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The proposed unit model:


Economic/statistical world (global)

Global Enterprise group

Legal Unit

Legal/administrative world (global)

Local (legal) unit

Global Enterprise

Local unit

Economic/statistical world (sub-global)

Truncated Enterprise group

Truncated Enterprise

Local unit

Legal/administrative world (sub-global)

Legal or operational unit (sub global)

Local unitlegal or operational

SPE SPE

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Comparison of current and proposed definition:


Current definition Proposed definition

…. is a organisational unit ... ... appear as an organisational unit that can provide meaningful data

for statistics ...

... producing goods or services ... ... producing goods or services ...

... benefits from a certain degree ... benefits from a certain degree in decision making ... in decision making ...

... especially for the allocation ... especially for the allocation of its current resources ... of its current resources ...

... smallest combination of ... smallest combination of legal units ... legal units ...

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Comparison between current and proposed approach:


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Current approach Proposed approach(Essnet Profiling)

Delineation approach Bottom-up Top-down

Focus and consistency National Global

Split legal units in exceptional cases Yes, if necessary

Data provision agreed with national units agreed with group head

Criteria of autonomy:


The group (head) has full autonomy at the highest level and exercises this mainly for strategic and long term decisions

Enterprises (within a group) are deemed to have only limited autonomy, especially related to the allocation of current recourses in the production process

The limited autonomy needs to be further specified by listing criteria, as the situation might be quite different between the groups

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National versus global view:


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Global enterprise (Manufacturing)

Activity 1 (Manufacturing)

Activity 2 (Wholesale)

Two truncated enterprises?

Country A

Legal unit (Wholesale)


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Global enterprise (Manufacturing)

Legal unit (Manufacturing)

Truncated enterprise?

Activity code?Trun

cate

d en

terp

rise?

Activ

ity co

de?

National versus global view:

Questions:


– What is the relation between “autonomy” and ancillary”?

– Which types of ancillary activities?

– Treatment of holding companies

– What are the consequences of consolidation for the ancillary unit?

– Is the global view suited for national statistics and national accounts?

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Current definition: The kind-of activity unit (1)

Kind-of-activity unit

Kind-of-activity unit (KAU): The kind-of-activity unit groups all the parts of an enterprise contributing to the performance of an activity at class level (four digits) of NACE Rev.1 (2) and corresponds to one or more operational subdivisions of the enterprise. The enterprise’s information system must be capable of indicating or calculating for each KAU at least the value of production, intermediate consumption, manpower costs, the operating surplus and employment and gross fixed capital formation.

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The KAU was devised as an operational unit in order to improve the homogeneity by activity

An entity which only carries out ancillary activities for the enterprise to which it belongs cannot be considered as a separate KAU

For the definition of a KAU it is essential that the information system of the enterprise is capable to deliver data

A KAU still can have secondary activities

Current definition: The kind-of activity unit (2)

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The new definition is principally the same as the current definition. It only adds thresholds for the operational implementation.

An enterprise should be split into KAUs, if

• the enterprise has an annual production value of over ... mio €,

and• at least one secondary activity accounts for more than 30%

of total production at class level of NACE Rev. 2 or• at least one secondary activity accounts for more than 20%

of total production at division level of NACE Rev. 2

Proposed definition: The kind-of activity unit

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Current of definition: The local unit

Local unit

Local unit: The local unit is an enterprise or part thereof (e.g. a workshop, factory, warehouse, office, mine or depot) situated in a geographically identified place. At or from this place economic activity is carried out for which – with certain exceptions – one or more persons work (even if only part-time) for one and the same enterprise

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There is a change proposed with respect to the criteria of persons working.

It should be more explicitly specified when a local unit where no person - not even temporarily - is working, is still to be treated as a separate local unit

Proposed definition: The local unit

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Current definition: The local kind-of-activity unit

Local kind-of-activity unit

Local kind-of-activity unit (LKAU): The local kind-of-activity unit is the part of a KAU which corresponds to a local unit.

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No change compared to the current definition.

For the operational implementation a LKAU needs only to be specified, if two or more KAUs were established within an enterprise

Therefore, an enterprise for which no split into KAUs is requested - because below the threshold - will only have one KAU (i.e. the enterprise itself) and each local unit corresponds to a LKAU

Proposed definition: The local kind-of-activity unit

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Resume and further procedure

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Concerning enterprise definition: current and proposed definitions are only relevant for legal units control of an all-resident or multinational enterprise group

There should principally be no different treatment, whether an all-resident or multinational enterprise group

Autonomy still the main criteria for enterprise definition

Exemptions of autonomy in case of national purpose

ESSnet on Consistency of Concepts and applied Methods of Business and Trade-related Statistics:

Statistical Units

Thank you for your attention!

Please address queries to:Norbert Rainer

Contact information:Guglgasse 13, 1110 Viennaphone: +43 (1) 71128-7703

fax: +43 (1) [email protected]

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n. rainer, statistics austria ________________________________________________________

Documents

applied methods of business

main statistical units

statistical system

statistical unitthe

current choice

statistics austria

traderelated statistics

unit accord