1 escwa/unsd expert group meeting on national accounts 12-14 may 2009, cairo, egypt u n statistics...

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ESCWA/UNSD Expert Group Meeting on National Accounts

12-14 May 2009, Cairo, Egypt

U N Statistics DivisionU N Statistics Division

ISIC and CPC ImplementationISIC and CPC Implementation

Implementing New classifications

Presentation Outline

Introduction Implementation process - Steps

Structuring national classifications Adaptation of business register Sample designs and weights for surveys Backcasting

Points for discussion

Since its creation in 1948, ISIC had two goals: Provide a tool for international comparison Provide guidance to countries for a national activity

classification structure

ISIC periodically updated to keep it relevant with economic developments. Side effect: Increasing need for detailed data has

lead to more detailed versions of ISIC

Introduction

Implementing New classifications

Structuring national classifications Creation of a new national version of national

classification (NSIC) according to ISIC Rev.4 for national use

Should involve other stakeholders / users/ data providers

Recoding Business Register Switchover in the Business Register to new NSIC

Statistics update process

Co-ordinate simultaneous switchover in statistics to new NSIC and the control of the quality of time series

Structuring national classification

How can national classifications be structured?

1. Using ISIC as a starting point 2. Based on historical national versions3. Starting completely from scratch

Using ISIC as a basis

Countries that use ISIC as a basis for their national classification, can do this to varying degrees:1. Adopt ISIC “as-is”2. Use the complete ISIC and add subdivisions to

reflect nationally important industries (but maintain the ISIC coding structure) – can be “numerically truncated” back to ISIC [Example]

3. As above, but with changes of the coding structure (example: NACE) – requires correspondence table [Example]

4. Elevating lower level ISIC categories to higher national levels, (e.g. combine ISIC categories at 2- or 3-digit level) [Example]

ISIC link through “numerical truncation”

ISIC Rev.4 National Classification 23101 Manufacture of flat glass 23102 Shaping and processing of flat glass 23103 Manufacture of hollow glass 23104 Manufacture of glass fibres

2310

Manufacture of glass and glass products

23109 Manufacture and processing of other glass, including technical glassware

2391 Manufacture of refractory products


23921 Manufacture of ceramic tiles and flags 2392

Manufacture of clay building materials

23922 Manufacture of bricks, tiles and construction products, in baked clay

International comparability is maintained. No additional tools are required.

Link between ISIC and NACE

ISIC Rev.4 NACE Rev.2 2311 Manufacture of flat glass 2312 Shaping and processing of flat glass 2313 Manufacture of hollow glass 2314 Manufacture of glass fibres

2310

Manufacture of glass and glass products

2319 Manufacture and processing of other glass, including technical glassware



2331 Manufacture of ceramic tiles and flags 2392


2332 Manufacture of bricks, tiles and construction products, in baked clay

International comparability is maintained. However, correspondence table is required.

Combining of ISIC categories

ISIC Rev.4 National Classification 2311 Manufacture of flat glass

2310 Manufacture of glass and glass products

2319 Manufacture and processing of other glass


2392


2390

Manufacture of refractory products and clay building materials

International comparability is reduced Correspondence table is required.

Using ISIC as a basis

The first three methods maintain full comparability with ISIC at all levels

Option 4 limits internationally comparability to a higher aggregation level only

Is use of the same coding as ISIC 4 a requirement? - No, but it makes comparisons easier.

Using historical national classifications as a basis

Using non-ISIC based classifications always creates difficulties for international comparison Correspondence tables are necessary

May limit data conversion due to splits Efforts are encouraged to line the

historical versions up to ISIC At detailed level (without considering

aggregation structures) or By lining up individual sections

What detail should be considered? (1)

The United Nations Statistical Commission recommends that detailed categories of a national classification can be rearranged and aggregated so that they correspond with the 2-digit level of ISIC without loss of data.

However, most statistics and users will require more

Countries might want to add detail for industries of particular importance to the national economy.

Countries might want to remove detail for reasons involving size and relevance, confidentiality or homogeneity

What detail should be considered? (2)

Classification for collection may be more detailed than for distribution of data Using more detail for collection allows for future

adjustments if individual industries are growing Level of detail for publishing depends on type of

statistics anyway

No fixed guidelines exist for the proper choice of detail

ISICPossible approaches

“Formal approach”

Homogeneitybased

“Pragmatic approach”

Based on variables like:• # of statistical units• # of employees• value added

With chosen variable, compute ratio R between what is found within a category and average among “siblings”:• R < 0.5 => delete• R [0.5, 1.5] => keep• R > 1.5 => split

Drawbacks:•Hard to define levels/weights• Level of detail influence outcome• Ignore dynamic aspects

Compress or expand classification based the value of these ratios

Based on:Homogeneity ratios (as described in ISIC Rev. 3)

Drawbacks:• Not enough usable data• No definitive and mutually exclusive definition of activities by products

Based on:• Input from data users• Special concerns (confidentiality, extra burden, growing industries)

• New subclasses only created if user demand• Data users must justify their needs for splits, and estimate number of affected units and turnovers• Take confidentiality and extra burden into account in advance• No strict thresholds

Drawbacks:• Challenging and intense discussions, not all user needs can be met

Options to consider or avoid (1)

ISIC structure and definition are based on few criteria (input, process, output, use of outputs)

Should other criteria be added for national purposes, such as private vs. public entity, manufacturing by hand (crafts) vs. manufacturing by machines? What are the applications?

Generally, avoid unnecessary addition of detail

Options to consider or avoid (2)

When following the ISIC structure and coding system, don’t renumber codes if you want to skip a code number

Regardless of legality, size or other concerns, it is still within conceptual scope, and must be accounted for in the SNA.

Renumbering makes the ISIC link less intuitive

Rules for good housekeeping If a category at level n is not further subdivided, the

code at level n+1 should be the same code with a “0” appended

Use digit “9” for residual categories

Implementation of ISIC and

CPC Expert Group

Expert Group discussed a proposal for the implementation of ISIC and CPC at its meeting in April 2007

Main recommendations relate to: Timetable Documentation and tools Regional workshops Technical cooperation

Implementation Timetable

EG recommended two milestones: Countries should adapt their national classification

to ISIC Rev.4 by 2009 To meet population census target of 2010

International data reporting in ISIC Rev.4 format should begin in 2012

No specific dates have been recommended for completion of: Adaptation of business register Sample designs and weights for surveys Backcasting

Reasons:◦ The timing and organization of surveys varies by country◦ Scope (length) of backcasting differs by country

Documentation and tools

UNSD will develop: A Companion Guide to ISIC and CPC that helps

to understand: the concepts and structure of the classifications Application of the classification

Correspondence tables ISIC and CPC indexes

UNSD will also set up an open discussion forum and expand the classifications website into a larger knowledge platform

Documentation and tools

UNSD will develop documents, based on European and other experiences, for: Establishing a national classification Recoding of business registers Sampling design and weight estimation Backcasting

Implementation of ISIC Rev.4 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

NSIC setup process

Register update process

Statistics update process

Coordination of work

Groups involved in the three processes need to be coordinated◦ Need for a programme manager

Communication with users of the classification (potential data providers)◦ Need to get other users involved in setup and

keep them updated on work and impact according to a fixed schedule

Recoding the business register

Based on known correspondence table, can use different methods:

Direct (straight) recoding Use of additional info from NSO or external registers Surveys Profiling Probabilistic models

Recoding the business register

Dual coding should be kept for several years◦ Problem: some units may cease operation

Use of reference dates may help

◦ Can be implemented by using a transition code Reflect correspondence table

Can computer-assisted coding help?

Points for discussion

Has the process for implementing new classifications been set up by the ESCWA countries? If

Yes – Status No – Plan for implementation

Thank You

Regional workshops Regional workshops have been supported in

two phases: Workshops on final versions of ISIC and CPC in

2007/8 Workshops on specific elements of

implementation*, such as: Adaptation of business registers Statistical collection programmes Use of the classification for administrative data

* (carried out most likely in connection with industry workshops)

Technical cooperation

EG supported regional partnership for technical cooperation

Proposal:◦ US, Canada, selected S. American countries support

ECLAC◦ EU members support ECA, ECE, ESCWA (where

relationships already exist)◦ Australia, Japan, India support ESCAP◦ UNSD will serve specific sub-regions

First steps of cooperation will be organized through the open discussion forum

Sample timetable for transition (1)

Jan 2009

BR recoded to old and new classification

2009 Continue sampling according to old NSIC but use Register information to tabulate the existing sample against the new strata in new NSIC. Use this scheme as the first attempt at the sample on the new basis. For strata that are weak, in terms of their sample size, estimate the numbers required for acceptable results on the new NSIC and seek approval to carry out this top-up of the sample

Sample timetable for transition (2)

Jan 2010

Draw the sample on new NSIC (initially: old sample tabulated against the new industries and new strata, with weakest strata under the new NSIC boosted by a top-up of the sample)

2010 Calculate variance of the elements in the sample in each of the strata based on returned data. Use sample variances as approximations of the population variances and use Neyman allocation to calculate new samples.

Jan 2011

Re-allocate the sample based on reported data (in a more efficient way now). The top-up sample can cease. Survey can be conducted according to new NSIC.

Additional guidance More detailed guidance for developing new

national classification, recoding of business register, sampling design and weight estimation, backcasting is being prepared in the implementation materials

1 escwa/unsd expert group meeting on national accounts 12-14 may 2009, cairo, egypt u n statistics...

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