Linking administrative and survey data - employment variable for enterprises and establishments in Finnish Business Regi

1. Linking administrative and survey data - employment variable for enterprises and establishments in Finnish Business Register Jaakko Salmela Statistics Finland/ Business Register JaakkoSalmela Statistics Finland Business Trends/ Business Register P.O. Box 3B Fin- 00022 Statistics Finland Tel: +358 9 1734 3454 Email: jaakko.salmela@stat.fi

2. Topics Employment variables in BR Administrative data FTE estimation of paid employees Headcount estimation of paid employees Estimation of entrepreneur employment figures, FTE and HC Allocation of the enterprise level employment to local-kind-of-activity-units 24.5.2014 2

3. Employment variables in BR Two main employment variables Full-time equivalent: labour input equivalent corresponding average working hours within industry Headcount: actual number of persons working in certain period 3 persons working half time throughout the year 1.5 in FTE 3 in HC Problems: operating periods, no exact dates for working periods, part-time, temporary, ... Separate variables for paid (wages & salaries) and entrepreneur labour input If entrepreneur’s compensation taken out from business in form of common wages, he/she will be counted as ‘paid employee’ 24.5.2014 3

4. Administrative data Annual wages and salaries data (Tax Administration) Core of all employment figures Based on annual declarations of paying unit. Information about paid wages and salaries, tax withdrawals, type of work relation taxation status, benefits, etc., etc. Contain link between paying unit (LeU or natural person) and receiving natural person by working relation. Missing information: starting and ending dates of each work relation Pension insurance scheme files for entrepreneurs (Finnish Centre for Pensions) Paid (“saved”) pension insurance by paying unit (LeU or natural person) Not always direct link to “enterprise” which is true payer of the pension insurance 24.5.2014 4

5. Other administrative data and registers • The registry of completed degrees (Education statistics) • Occupation code from • Public sector : registers kept by municipalities and state • Private sector : employers’ organization (via Salary statistics) • Other sources : Social Insurance Institution, Bank of Finland, occupation survey for small enterprises, additional information from wage- and employment surveys • Survey on enterprises with multiple local kind of activity units (in co-operation with employment statistics)

6. FTE estimation of paid employees Forecasting persons labour input by legal unit Expected value of wages explained by person’s and LeU’s indicator variables: LeU activity and sector code, location of the workplace, person’s occupation, education, age and gender Persons labour input calculated by dividing real (paid) wages with expected value of wages Before fitting the model ‘cleaning’ of data Only principal jobs accepted Continuous principal work relation from previous year Wages>=40% of overall median Median annual wages by occupational category restrictions Estimation of the FTE /person / LeU Aggregating FTEs by LeU 24.5.2014 6

7. Headcount estimation of paid employees (1) Tax file + FTE estimation labour input by person by LeU + operating periods from VAT&PAYE data Idea is to define first what kind of working relation certain individual has in linked LeU: Full-time job, part time job, change of full-time job, temporary job. By using Principal/secondary job status LeU operating time One/ many paying LeU’s Continuity of the job from previous year Straight forward decision making by job type and operating period Total HC count is compiled simply by aggregating employee level HC’s by LeU. 24.5.2014 7

8. Headcount estimation of paid employees (2) 24.5.2014 8

9. Estimation of entrepreneur employment figures, FTE and HC (1) Flagged entrepreneur wages in Tax file Entrepreneur pension insurance files, missing PIN-LeU link Additional tax files, owners and partners of LeU’s Problems: 1) in which LeU does the entrepreneur work as ‘entrepreneur’, 2) what is his/her actual labour input in this LeU Matching insurance file persons step-by-step against annual tax file, flagged entrepreneur work relation type (principal and secondary) secondary ID for BR legal units with positive turnover/ agricultural income tax partner files where PIN flagged as active partner ownership files, only unique PIN-BID relations accepted 24.5.2014 9

10. Estimation of entrepreneur employment figures, FTE and HC (2) Entrepreneur HC: Linked persons FTE Compiling theoretical maximum for entrepreneur labour input = 1 – FTE of person/LeU . Aggregate by LeU Compiling statistical maximum FTE for entrepreneurs by relating industry average turnover per person indicator to LeU’s derived indicator (total –FTE paid). Selection of smaller of these two Pool of non-linked entrepreneur’s allocated to small LeU’s where turnover/person employed too small compared to average. From statistical point of view OK From register maintenance point of view? 24.5.2014 10

11. Allocation of the LeU level employment to LKAUs How to allocate LeU level employment to LKAUS? Single LKAU enterprises → no problems because LeU=LKAU Multi-LKAU enterprises → what is the aggregate number of persons? → who is working where? BR annual inquiry to all multi-LKAU enterprises Joint data collection with Regional Employment Statistics where BR maintain the structure of the LKAUS and RES collect LKAU – person link Central and local government units treated separately Person-LKAU link together with well established registers and administrative data enable register based production of versatile business and social statistics. Among others register based populaiton census 24.5.2014 11

12. Thank you for your attention! Jaakko Salmela Statistics Finland Business Trends/ Business Register Tel: +358 9 1734 3454 Email: jaakko.salmela@stat.fi 24.5.2014 12