The Revision of ISIC and NACE: Implications for National Accounts

1. The Revision of ISIC and NACE: Implications for National Accounts Joint EFTA/UNECE/SSCU Seminar July 2007 Presentation by Tihomira Dimova, UNECE

2. International Family of Economic and Social Classifications • Integrated system of statistical classifications developed and approved as guidelines by UN SC or other intergovernmental body; • The International Family of Economic and Social Classifications includes: • Classifications for economic activity (ISIC), products (CPC, HS), expenditures according to purpose, employment (ICSE), occupation (ISCO),….; • Derived or related classifications used for regional or national purposes; • Comparability of statistics at world level.

3. Activity classifications • Reference classification • ISIC (UN, Global level) 17 Sections, 62 divisions, 161 groups, 298 classes • Derived classifications • NACE (EU level) 17 Sections, 62 divisions, 224 groups, 514 classes • Related classifications • NAICS (US, Canada, Mexico) 20 Sectors, 103 Sub sectors, 328 Industry Groups, 728 industries, national industries • ANZSIC (Australia and New Zealand), JSIS (Japan), etc.

4. Revision of ISIC • The revision of the whole system ISIC, CPC and HS started in 1999; • UN SC adopted ISIC Rev. 4 in March 2006; • Objectives: • Relevance – address the economic changes; • International comparability – convergence of NAICS, NACE, ANZSIC; • Continuity; • Consider the larger frame of revised international standards (SNA, BoP).

5. Main changes in ISIC Rev.4 • The number of detail has significantly increased especially in services (9 to 13 Sections); • Specific categories for “support services” close to the corresponding activities; • Integrated activities - units should be classified according to their principal activity defined by value added principle and a top-down method (or substitutes based on gross output, sales, inputs).

6. Main changes in ISIC Rev.4 (cont.)

7. Main changes in ISIC Rev.4 (cont.) • Agriculture • “Agriculture, hunting and forestry” and “Fishing” are combined into a new section A “Agriculture, forestry and fishing”. • Industry • “Mining” and “Construction” are restructured; • “Publishing activities” and “Recycling” are moved out from Section C “Manufacturing”. Other activities have been regrouped; • “Electricity gas and water supply” is split; • A new section E “Water supply, sewerage, waste management and remediation activities” is combining activities from the previous sections “Manufacturing” and “Electricity, gas and water supply”

8. Main changes in ISIC Rev.4 (cont.) • Services • “Repair of personal goods” is moved out of G “Trade”; • “Transport, storage and communication” is split and communication goes to the new section J. Travel agencies are also removed; • A new section J “Information and Communication” combines activities previously classified in “Manufacturing”, “Transport, storage and communication”, “Real estate, renting and business activities”, and “Other service activities”; • Of relevance for NA is the more detailed structure of section K “Financial and insurance activities”. New groups have been created for “Activities of holding companies”, “Trusts funds and other financial vehicles” and “Fund management activities”. Insurance, reinsurance and pension funding are separate groups;

9. Main changes in ISIC Rev.4 (cont.) • “Real estate, renting and business activities” is divided into 3 sections: L “Real estate activities”, M “Professional, scientific and technical activities” and N “Administrative and support service activities”; • Section Q “Human health and social work activities” has been restructured and additional breakdown is added. Veterinary activities are moved to the new section M; • “Arts, entertainment and recreation” becomes a separate Section R. It excludes radio/TV activities (moved to J); • S “Other service activities” includes repair of computers and household goods.

10. Specific aggregation levels • Two specific SNA/ISIC aggregation levels have been developed for worldwide reporting of NA data: a top-top level A*10 and an intermediate level A*38; • At the EU level A*66 level will also be introduced; • In NA other characteristics of producing units are also important in addition to ISIC Groupings: type of producer, type of ownership, institutional sector; • Alternative aggregations for other specific needs could also be developed: informal sector aggregates, ITC sector, etc.

11. Implementation of ISIC Rev.4 The 38th UN SC reviewed the following timetable for implementation of ISIC Rev.4: • Adaptation of national classifications by 2009; • Adaptation of business registers by 2010; • Use of revised ISIC and CPC in statistical programmes starting in 2011; • Use of revised ISIC and CPC in national accounts by 2015; • Use in population census, and so forth, as soon as possible. Flexibility, allowing countries to speed up the process.

12. Implementation of ISIC Rev.4 in UNECE region • Implementation process will be more advanced in some UNECE countries as compared to the global level • Three groups of countries: • Eurostat coordinated group (27 EU + 4 EFTA) Operation 2007 - programme for implementation of NACE Rev.2 • North America (US, Canada) Implementation of NAICS 2002 and NAICS 2007 • Western Balkans and CIS Different classifications in use – ISIC/NACE, CBNE

13. EU countries – NACE Rev.2 and CPA • 1 January 2008: units in BR should be classified in NACE Rev.2 (double coding at least for 2008); • 2008: First reference year for structural business statistics; • 2009: Short term statistics (M1 2009 and Q1 2009) and Labour cost index; • September 2011: reporting of National accounts in NACE Rev.2; • 2011: Balance of Payments and Agricultural statistics, • 2012: All community statistics will be produced according to NACE Rev.2. and CPA

14. Level A3 Level A6 Level A17 Level A31 Level A60 Discontinued Replaced by A*10 (quarterly and regional accounts) Replaced by A21 Replaced by A*38 (annual accounts) Replaced by A*66 (supply/use and IO tables) EU countries –NACE Rev.2

15. North America – NAICS • OECD questionnaire in 2006; • Canada will implement the revised NAICS in business surveys in 2007. National accounts will be reported in the new classification in 2010; • US will also provide national accounts in the revised NAICS in 2010; • Both countries will provide levels A*10 and A*38.

16. Western Balkan and CIS countries • In spring 2007 eight countries provided to UNECE information on their plans to introduce the new ISIC; • Some countries are currently switching from CBNE to ISIC Rev.3; • Armenia, Moldova, Serbia and the former Yugoslav Republic of Macedonia are translating the classification and developing national versions and explanatory notes; • Armenia, Moldova and Serbia plan to introduce ISIC Rev.4 in business statistics in 2008, and Ukraine in 2011; • National accounts will be reported in ISIC Rev.4 in 2011 by Serbia and in 2012 by Ukraine.

17. Implementation of ISIC Rev.4 in UNECE region • About 50 of UNECE member countries (out of 56) are regularly producing and reporting national accounts data in activity breakdown; • UNECE expects that by 2012 between 35 and 40 countries will introduce the revised ISIC/NACE in their statistics.

18. Useful links • Eurostat, Operation 2007: Revision of NACE and CPA http://circa.europa.eu/irc/dsis/nacecpacon/info/data/en/index.htm • Eurostat, Metadata Server RAMON http://ec.europa.eu/eurostat/ramon/index.cfm?TargetUrl=DSP_PUB_WELC • UNSD, Economic and Social Economic Classifications http://unstats.un.org/unsd/cr/registry/class_default.asp