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N. Rainer, Statistics Austria ________________________________________________________

ESSnet on Consistency of Concepts and applied Methods of Business and Trade-related Statistics: Statistical Units. Session: What do we need?. Improved, new, operational, etc. definitions of the main statistical units for European business statistics. N. Rainer, Statistics Austria

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N. Rainer, Statistics Austria ________________________________________________________

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  1. ESSnet on Consistency of Concepts and applied Methods of Business and Trade-related Statistics: Statistical Units Session: What do we need? Improved, new, operational, etc. definitions of the main statistical units for European business statistics N. Rainer, Statistics Austria ________________________________________________________ ESSnet on consistency – Statistical Units Workshop Riga, 19 – 20 June 2012 1

  2. Content • 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 2

  3. Relevance of statistical units • 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 3

  4. The current choice of the statistical units in the European business statistics (1) Stat. Unit Reference Coverage Coverage Nr Project Part Statistical Unit accord. Remarks to 696/93 NACE from NACE to 696/93 5 Structural business statistics I Enterprise A yes 5 82 5 Structural business statistics I Enterprise A yes 95 95 5 Structural business statistics II Enterprise A yes 5 39 5 Structural business statistics II Kind of activity D yes 5 39 5 Structural business statistics III Enterprise A yes 45 47 5 Structural business statistics IV Enterprise A yes 41 43 5 Structural business statistics IV Kind of activity D yes 41 43 5 Structural business statistics V Enterprise A yes 651 652 5 Structural business statistics V Business 651 652 5 Structural business statistics VI Enterprise A yes 6419 6419 5 Structural business statistics VI Enterprise A yes 6492 6492 5 Structural business statistics VI Branches 6419 6419 5 Structural business statistics VI Branches 6492 6492 5 Structural business statistics VII Enterprise A yes 653 653 5 Structural business statistics VII Ancillary activities yes 653 653 5 Structural business statistics VIII Enterprise A yes 582 582 5 Structural business statistics VIII Enterprise A yes 62 62 5 Structural business statistics VIII Enterprise A yes 631 631 5 Structural business statistics VIII Enterprise A yes 691 691 5 Structural business statistics VIII Enterprise A yes 702 702 5 Structural business statistics VIII Enterprise A yes 711 712 5 Structural business statistics VIII Enterprise A yes 731 732 5 Structural business statistics VIII Enterprise A yes 78 78 • Overview of statistical units used in business related statistics (Source: External study) 4

  5. The current choice of the statistical units in the European business statistics (2) Stat. Unit Reference Coverage Coverage Nr Project Part Statistical Unit accord. Remarks to 696/93 NACE from NACE to 696/93 6 Short-term statistics A Kind of activity D yes 5 33 6 Short-term statistics A Kind of activity D yes 351 352 6 Short-term statistics A Kind of activity D yes 35 36 6 Short-term statistics A Kind of activity D yes 383 383 6 Short-term statistics B Kind of activity D yes 41 43 6 Short-term statistics C Enterprise A yes 45 47 6 Short-term statistics D Enterprise A yes 49 82 6 Short-term statistics D Enterprise A yes 85 96 7 Prodcom Enterprise A certain exceptions yes 5 33 secondary activities of 7 Prodcom Enterprise A enterprises not classified in yes 1 99 NACE 5 to 33 8 FATS I Enterprise A * or Branch yes 5 82 8 FATS II Enterprise* A * or Branch yes 5 82 8 FATS II Enterprise* A * or Branch yes 85 96 9 Tourism I Local kind of activity G called "establishment" yes 551 553 10 Energy Enterprise ** ** not clear no 11 Waste Local kind of activity G yes 12 ICT I Enterprise no 10 63 12 ICT I Enterprise no 68 74 12 ICT I Enterprise no 77 82 12 ICT I Enterprise no 951 951 • Overview of statistical units used in business related statistics (Source: External study) 5

  6. The current choice of the statistical units in the European business statistics (3) Stat. Unit Reference Coverage Coverage Nr Project Part Statistical Unit accord. Remarks to 696/93 NACE from NACE to 696/93 not necessarily identical with 13 Intrastat Company no 1 99 enterprise 14 Research & Development In Enterprise some exceptions indirectly 5 39 14 Research & Development In Enterprise some exceptions indirectly 46 46 14 Research & Development In Enterprise some exceptions indirectly 49 53 14 Research & Development In Enterprise some exceptions indirectly 58 58 14 Research & Development In Enterprise some exceptions indirectly 61 66 14 Research & Development In Enterprise some exceptions indirectly 71 71 14 Research & Development S&T Enterprise some exceptions indirectly 1 99 15.2 Statistics earnings/labour costs Local unit F yes 5 82 15.2 Statistics earnings/labour costs Local unit F yes 85 96 15.3 Job vacancies Business units unit undefined no 1 3 15.3 Job vacancies Business units unit undefined no 5 82 15.3 Job vacancies Business units unit undefined no 84 96 16 Vocational Training Enterprise A yes 5 82 16 Vocational Training Enterprise A yes 90 96 National accounts (ESA) Enterprise A sector accounts no 1 99 18 National accounts (ESA) Local kind of activity G production sphere no 1 99 18 • Overview of statistical units used in business related statistics (Source: External study) 6

  7. The current choice of the statistical units in the European business statistics (4) • 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 7

  8. Aims and goals (1) Basic goals: • 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 8

  9. 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 9

  10. The Statistical Unit Regulation (696/93) (1) • Observable • yes • yes • yes • yes • no • yes • yes • no • WP1 relevance • yes • yes • (yes) • yes • no • yes • yes • no • Units covered by the Regulation: • Enterprise • Institutional unit • Enterprise group • Kind-of-activity unit (KAU) • Unit of homogeneous production • Local unit • Local kind-of-activity unit (LKAU) • Local unit of homogeneous production 10

  11. 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 11

  12. References to other sources defining statistical units (1) ISIC Rev. 4: • 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. 12

  13. References to other sources defining statistical units (2) ISIC Rev. 4: • 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. 13

  14. References to other sources defining statistical units (3) ISIC Rev. 4: • 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. 14

  15. References to other sources defining statistical units (4) SNA 2008: Enterprise, Kind-of activity unit, Local unit, Establishment: Same definition as in ISIC Rev.4 Head offices and holding companies, Special purpose entities ESA 2010: In principle: Same definition as in SNA 2008 15

  16. 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. 16

  17. Current definition: The enterprise (2) 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 17

  18. Current definition: The enterprise (3) 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 18

  19. Current definition: The enterprise (4) 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 19

  20. Proposed of ESSnet Profiling: The enterprise (1) Proposeddefinition 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. 20

  21. Proposed of ESSnet Profiling: The enterprise (2) 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 21

  22. Proposed of ESSnet Profiling: The enterprise (3) 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 22

  23. Legal/administrative world (global) Economic/statistical world (global) Economic/statistical world (sub-global) Legal/administrative world (sub-global) Legal Unit Legal or operational unit (sub global) Global Enterprise group Truncated Enterprise group SPE SPE Global Enterprise Truncated Enterprise Local unitlegal or operational Local (legal) unit Local unit Local unit Proposed of ESSnet Profiling: The enterprise (4) The proposed unit model: 23

  24. Proposed of ESSnet Profiling: The enterprise (5) 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 ... 24

  25. Proposed of ESSnet Profiling: The enterprise (6) Comparison between current and proposed approach: 25

  26. Proposed of ESSnet Profiling: The enterprise (7) 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 26

  27. Proposed of ESSnet Profiling: The enterprise (8) National versus global view: Global enterprise (Manufacturing) Country A Activity 1 (Manufacturing) Activity 2 (Wholesale) Two truncated enterprises? 27

  28. Proposed of ESSnet Profiling: The enterprise (9) National versus global view: Global enterprise (Manufacturing) Country A Legal unit (Manufacturing) Truncated enterprise? Activity code? Truncated enterprise? Activity code? Country B Legal unit (Wholesale) 28

  29. Proposed of ESSnet Profiling: The enterprise (10) 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? 29

  30. Current definition: The kind-of activity unit (1) Kind-of-activityunit 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. 30

  31. Current definition: The kind-of activity unit (2) 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 31

  32. Proposed definition: The kind-of activity unit • 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 32

  33. Current of definition: The local unit Localunit 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 33

  34. Proposed definition: The local unit 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 34

  35. 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. 35

  36. Proposed definition: The local kind-of-activity unit 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 36

  37. Resume and further procedure 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 37

  38. 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 Vienna phone: +43 (1) 71128-7703 fax: +43 (1) 71128-7053 norbert.rainer@statistik.gv.at 38

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