Potential of Administrative Data in Business Statistics

1. Potential of administrative data in business statistics -a special focus on improvements in short term statistics IAOS Conference on Reshaping Official Statistics Shanghai, 14-16 October 2008 Hannele Orjala Statistics Finland

2. Presentation • Administrative data as the core of statistics production • Exploitation of VAT (value added tax) data • Suitability of VAT data for statistics compilation • VAT data in the production of the Industrial Production Index (IPI) • Conclusions Business Trends

3. Data sources: Administrative and register sources • The majority of the basic data for economic statistics is obtained from administrative and register sources • Principles of the Finnish Statistics Act (2004): • It is compulsory to use existing data (if suitable) • Guarantees access to administrative sources • State government and social security institutionsare obliged to deliver their data to Statistics Finland • Free of charge, compensation of direct cost of larger releases • Data confidentiality: only some unit level data of the Business Register is public Business Trends

4. Administrative data sources Tax Administration National Board of Patents and Registration National Board of Customs Bank of Finland Population Register Centre State Treasury Local Government Pension Institution Confederations of Finnish Industries The Finnish Vehicle Administration commercial sources Commercial/other data sources Business Trends [1] VAT = Value Added Tax; PAYE = Pay As You Earn

5. Direct collection vs. the use of administrative datafrom Tax Authorities in statistics on enterprises Number of enterprisesAdministrativeDirect collectiondata Structural Business Statistics 8 000 (4%) 180 000 Business Register 25 000 (5%) over 500 000 Short Term Business Statistics turnover 2 000 (1%) 250 000 wages and salaries 93 (<1%) 110 000 Even for the enterprises in direct collection some data are taken from administrative sources. Business Trends

6. The contents of VAT (Value added tax) and PAYE (pay as you earn) data • Monthly data from Tax Administration • Covers all enterprises with an annual turnover ofover EUR 8,500 • Primary production, all commercial sales of products and services are subject to value added tax • Covers the employer contributions of the employers who regularly pay wages and salaries • Total coverage of units (250 000 statistical units, 150 observations, 40 variables) • Each months’ data accumulates over a 6 month period, delay one-two months from the due date Business Trends

7. Central role of VAT and PAYE data in the production of economic statistics Business Trends

8. The usages of VAT data in short term statistics • Quality control of preliminary releases • Optimising sample sizes • Simplifying calculation methods • A complementary data source • Estimation of missing data by using the VAT data • Possibility for detailed analysis Business Trends

9. Comparison between turnover trends in the manufacturing industry Comparision of different areas Business Trends

10. The VAT data in the production of the Industrial Production Index (IPI)- development 2006-2009 • Before: sample of 1,000 largest establishments, lag 30 days • Reasons for making changes: • the share of goods has declined and the share of services has increased in manufacturing output • industrial services: also service activities as adminservices or subcontractingand commission trade margins • the growth rate of small enterprises has exceededlarger enterprises Business Trends

11. The VAT data in the production of the Industrial Production Index (IPI)- development 2006-2009 • Deflation of data on value was introduced at the beginning of 2008 • the share of value data raised to 50 % the value of output • the coverage of services improved • changes in the quality of commodities and services better taken into consideration • The sample and the calculation method were redefined • VAT data • already utilised in estimations of missing data • enlarge in utilising in the case of SME’s -> reduce response burden • when only quarterly data available -> some data has to be estimated based on the history of the time series of enterprises’ own value data and some other data available on them Business Trends

12. Impacts of actions: Industrial Production Index (IPI)Manufacture of electrical and optical equipment (Nace DL) Business Trends

13. Conclusions • The VAT data have offered tremendous possibilities for improving statistics, their coverage and coherence • That brings us to the question of dependency on a data source that is not under our control and may change due to legislative reviews • Changes in business activities necessitate the exploitation of ever more diversified data • Globalisation requires continuous evaluation of statistics, new statistical data, wide utilisation of source data and novel interpretation of statistics Business Trends

14. Thank you for your attention! Contact information: Hannele Orjala Director, Business Trends Statistics Finland email: hannele.orjala@stat.fi tel: +358 9 1734 3582 www.stat.fi Business Trends