Transcript Third International Conference on Establishment Surveys Introductory Overview Lecture Definitions and Units Andreas Lindner OECD Statistics Directorate ICES-III CONFERENCE Montreal, 19th June 2007

Third International
Conference on
Establishment Surveys
Introductory Overview Lecture
Definitions and Units
Andreas Lindner
OECD Statistics Directorate
ICES-III CONFERENCE
Montreal, 19th June 2007
1
Content of the lecture
• Importance of statistical units
• National
data collection systems and their integration
into the international dimension
• Different definitions of statistical units
• OECD survey on SME business frames
• Compilation
strategies and links to administrative
sources
• The impact of globalisation
• Linking systems together
• Multinational
enterprises (MNEs) and Enterprise Groups
(EGs)- a new statistical unit
• Outlook
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Are statistical units important?
• The definition of units is the backbone of registers
• They
largely determine whether or not economic and
social reality is correctly reflected in statistics
• Together
with the business register design they allow (or
prohibit) to correctly measure production, the flow of
•
•
•
goods, services and capital, employment, financial data,
ownership, control etc.
A coherent system of interrelated standardised
statistical units is key for effectively combining data from
different surveys and, hence, capturing the full array of
economic activities
Coherence with and integration of the international
dimension is required since it reflects the way
businesses operate
Statistical units are very important!
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Units constitute systems
• Administrative & legal system
• Economic system
• Statistical system
• Global, international system
• …Are these systems in tune with each
other ?
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National systems…
• Great
variety of units and definitions exist,
because they have to “fit” the national set of
•
•
•
conditions
The statistical unit(s) are the translation of the
legal and administrative set of conditions into an
as much as possible standardized statistical
representation of the society
Ideally, they should allow consistent linking
across data collections, representing a data
warehouse and not isolated stovepipes
Countries largely differ in their ability to do so
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…should allow to “bridge” to the
international dimension
• Any economy is today more than ever integrated
•
•
in an international world economy with complex
interrelations
For statistical analysis, this requires to have
standardized concepts and definitions across
countries, allowing to compare the comparable
This represents a permanent challenge to
statisticians and International Organisations are
called upon to facilitate this process by issuing
international recommendations and
measurement standards
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An OECD survey on SBS/SME
statistics identified the following
statistical key policy recommendations:
•
•
•
•
•
Promote international convergence of statistical
concepts and processes
Foster greater international comparability of
statistics
Promote development of an integrated
business statistical register
Promote data linking to make better use of
existing data and reduce respondent burden on
SMEs
Carry out policy-relevant empirical analyses to
underpin evidence-based policy making
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A mix of definitions of SME’s
• Legal = statistical definition(5 countries)
• Most EU countries differentiate legal from
statistical purposes (see box 1)
• Statistical definition generally based on number
•
of employees or mix (e.g. persons and turnover
etc.)
Different thresholds and sector-specific
particularities
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Legal/administrative vs. statistical
definition of SMEs in the EU
Box 1: The definition of SMEs according to the European Commission recommendation 2003/361/EC
- For legal and administrative purposes:
Enterprises
Employees
Annual Turnover
< 2 million euro
Annual Balance
sheet
Autonomous
Micro enterprise
1 to 9
< 2 million euro
Small enterprise
10 to 49
Medium enterprise
50 to 249
25% or more of
< 10 million euro < 10 million euro the capital or
voting rights of
< 50 million euro < 43 million euro another enterprise
Large enterprise
More than 250
> 50 million euro > 43 million euro
- For statistical purposes:
The main criteria of SME statistics for statistical purposes are the number of persons employed.
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Rich variety of statistical units
• General impression: the same name does not
•
•
necessarily mean the same thing in another
country. True? Evidence suggests that this is the
case.
Is the enterprise vs. establishment split
meaningful? Why not calling it “economic
statistical unit”?
Despite Council Regulations, the situation in the
EU seems less harmonized than one might
assume
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Council Regulation 696/93: 8
different statistical units (legal,
geographical, activity criteria)
• the Enterprise;
• the Institutional Unit;
• the Enterprise Group;
• the Kind-of-activity Unit (KAU);
• the Unit of Homogeneous Production (UHP);
• the Local Unit;
• the Local Kind-of-Activity Unit (local KAU);
• the
Local Unit of Homogeneous Production
(local UHP).
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UN classification ISIC
• the enterprise;
• enterprise group;
• kind-of-activity unit (KAU);
• local unit;
• establishment;
• homogeneous unit of production.
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The Canadian statistical structure:
• Enterprise: the highest level of the hierarchy with
•
•
•
complete financial statements and information about
international links. An enterprise may have one or more
companies
Company: A somewhat homogeneous production
structure with balance sheets data. May have one or
more establishments.
Establishment: The most homogeneous production
level with economic key data(output, inputs, wages…).
May have one or more location.
Location: A unique physical production unit.
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A wealth of statistical units
• The
EU focus on “enterprise” can be considered
as a compromise taken in 1993 to accommodate
•
•
•
•
very different national practices
The system of international standardisation is
incoherent with respect to statistical units
EU terms need to be translated into world-wide
methodology
The legal dimension needs to be distinguished
from the economic dimension
The economic dimension is likely to become
more important
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OECD survey: business frames
used for SME statistics
• Half of countries reported use of
•
•
combination of different sources,
sometimes according to sectors and/or
size classes
Agriculture often the exception to the rule
(agr. = from statistical source)
Very different thresholds across countries
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Effects of different thresholds on coverage:
four EU countries in comparison to the Italian
BR = 100
Graph 3 - Effects of different inclusion thresholds on the coverage ratio of the Italian BR=100 - 2001
100,0
90,0
80,0
70,0
60,0
50,0
40,0
30,0
20,0
10,0
0,0
Serie1
Denmark
(2,683 euro)
Finland
(8,409 euro)
Portugal
(9,976 euro)
United Kingdom
(83,000 euro)
Threshold values in brakets
Source: ISTAT
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Identified limitations of Business
Frames for SBS:
•
•
•
•
•
•
Different updating intervals limit comprehensive coverage
A specific SME frame is the exception
Confidentiality issues limit availability of data for other
users/producers
General concern about quality and coverage of demographic
data, in particular for deaths
Difficulties were reported as to the proper allocation of
activities to industries
The quality of the Business Frame was generally considered as
appropriate, although improvements are foreseen in many
countries with respect to SMEs, change of activity, legal status
etc.
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The traceability issue
• Ability to trace change through a unique
•
identifier code for the local
unit/establishment would allow to better
capture unit activity and de-registration
Similarly, the introduction of links between legal
units in enterprise groups and groups of
companies would enhance identification of
changes in size, ownership and location for units
involved in events such as mergers and splits
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Collection and compilation
strategies
• Germany and the US are the only countries in the
•
•
sample under review where the NSO is not in charge of
official statistics on SMEs.
Almost all countries have different treatment for core and
specific statistics
Some countries have developed tools to monitor the
response burden. The strategy developed is therefore to
collect core variables through the integration of
census/surveys based data and administrative data
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Collection and compilation
strategies (2)
• In the majority of countries the NSO is fully in charge of
data collection
• In the remaining countries, the NSO plays an important
•
coordinating role (Germany is the exception where the
NSO has “outsourced” SME data collection)
In the majority of countries, SME core statistics are
differentiated from specific SME variables. The typical
pattern is a reduced sample for core data as opposed to
– often voluntary – thematic surveys
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Data linkage with administrative
sources
• Very
different access patterns for NSOs to
individual records could be identified, ranging from
•
•
full to no access.
Where access to administrative and other sources
is partial, differences in the definition of variables
have been commonly seen as a major impediment
to the use of administrative sources, different
observation units, classification and the absence
of a unique identification number have also been
mentioned.
Sometimes technical problems hinder access to
administrative sources. Countries generally have
identified the main sources they would like to
access
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Access and linkage with
administrative sources
• The
picture regarding access of NSOs to
administrative SME data is mixed. Country
•
•
•
practice differs ranging from full access via partial
access to no access:
Although about 2/3 of responding countries state
that NSOs have full access, half of them reported
problems in uses or little practical experiences
Five countries reported only partial access
Japan and Switzerland reported that no access
was granted to NSOs
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Access and linkage with
administrative sources (2)
• Inreason
the case of access, but no usage, the main
were different basic units and absence of
•
•
•
•
links between registers and administrative data
Similarly, the main impediments to a better use
of available data in the two distinct sources
were:
Different definitions of variables
No common identifier
Different classifications and thresholds
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The impact of globalisation on
statistical units/definitions
• One of the most visible manifestations of a more
•
globalised world is trade. The remarkable growth
of trade flows is undisputable, in particular for
emerging major players (see next slide)
But, as can be seen from the remarks later
under “Linking systems together…”, even trade
and business statistics are rather separate
entities needing reconciliation/standardisation…
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Relative growth of exports of goods
Growth over the period 1996-2005,
OECD total = 1
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The impact of globalisation on
statistical units/definitions (cont’d)
• The real problem is that statistical systems
•
have been “overtaken” by the speed of
globalisation obliging national reporting
systems and structures to align to this
paradigm shift
In other words, “national” concepts need to
incorporate the international dimension to
adequately reflect the reality of today’s
production process
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Statistical units/definitions more or
less in tune
Administrative & legal system
Statistical System
Economic System
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…went out of tune
Administrative & legal system
Statistical System
Economic System
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As a consequence, both
Administrative & legal and
Statistical System…
• Need to adapt to (=better integrate) the new
reality
• …where the production process is international,
• …with more complex structures/processes exist
(outsourcing, flatter vertical integration…)
• …and where control and ownership become
more dominant features than legal forms
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Linking systems together: business
statistics and trade
• Global economies require data on who is trading
•
•
and what are the characteristics of trade
operators
This question requires establishing a direct
relation between foreign trade and industrial
statistics.
But these two statistical domains are based
upon different concepts (products versus
economic activities) and use different
classifications (SITC, HS, ISIC, CPC).
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Linking systems together: business
statistics and trade
• Central issue of such an analysis is to try to
•
•
classify trade operators according to enterprise
characteristics
But this depends on the possibility of using or
developing common identifiers between the
trade register and the business register
Countries largely differ in their ability to perform
such a linking.
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The present situation
•
•
The situation in Non-EU countries of OECD can
be summarized as follows:
Six out of eight countries reported having a
trade register, only 1 country reported having a
formal trade register
How is the trade register updated? Customs
declarations provide the basis. In half of the
responses there is a link to the Business
Register and data from fiscal authorities is
used as well
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The present situation (cont’d)
•Which
is/are the unit(s) of reference in the
trade register(s)? Enterprises and
•
•
establishments constitute together with legal
units the reference units used.
Is there at least one common unit of reference
between the business register and customs
forms/register? All countries, except one,
reported “yes”.
Is (or can) the basic statistical unit of the
business register linked to customs forms/
register of traders? Almost all countries
reported that they can link the basic
statistical unit to customs forms/trade registers
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The present situation (cont’d)
•The
situation reported was a mix of different
identification means, such as the tax
•
•
registration number, name of the company and
its address, the Business Register identification
code.
Although linkages do well exist, different
reporting systems in countries inhibit to some
extend linking.
The risk of double-counting was acknowledged
and the problematic measurement of multinationals was highlighted.
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The present situation (cont’d)
•Have
Non-EU countries of OECD carried out
any statistical matching exercise between the
•
•
•
trade register and the business register?
Only three countries reported to have done
so
The more systematic integration of the
international dimension into business frames
seems to be rather the exception than the rule
This could be pursued as a development goal
at international level together with countries
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Multinational enterprises (MNEs)
and Enterprise Groups (EGs)
• Beyond the national territory, a statistical
•
•
•
system needs to take into account more
systematically the international dimension
Foreign Direct Investment
Foreign Affiliates Statistics
Enterprise Groups, in particular
Multinational Enterprises as new statistical
unit
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FDI Flows and Stocks
• Foreign direct investment (FDI) is a key
element in the rapidly evolving process of
international economic integration. FDI
creates direct, stable and long-lasting links
between economies. FDI encourages the
transfer of technology and know-how
between countries, and it allows the host
economy to promote its products more
widely in international markets
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FDI
• Foreign
direct investment (FDI) is defined as investment
by a resident entity in one economy with the objective of
•
•
obtaining a lasting interest in an enterprise resident in
another economy.
The lasting interest means the existence of a long-term
relationship between the direct investor and the
enterprise and a significant degree of influence by the
direct investor on the management of the direct
investment enterprise. Absolute control by the foreign
investor is not required, and ownership of 10% of the
voting power is the criterion used.
Inward stocks are the direct investments held by nonresidents; outward stocks are the investments held in
other economies.
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FDI – global trends
•
•
•
•
•
•
The global environment for FDI improved in 2005 while at the
same time corporate profitability was generally strong.
Direct investment into OECD picked up in 2005 when inflows
reached $622 bn.
The United States and the United Kingdom were the main
destinations for FDI in the OECD.
Investment flows to EU countries also increased notably by
75% while half of the increase accounts for FDI flows into the
United Kingdom, which tripled in 2005.
Investments into China, amongst the foremost destinations of
FDI, further progressed.
The OECD area continued to be net outward investor at around
$95 bn in 2005
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FDI
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Why Foreign Affiliates?
• Since
the mid-1980s and with the quickening pace of
globalisation of the economy, foreign direct investment
•
•
has become central to worldwide industrial restructuring
and one of the most dynamic elements of international
transactions
The need to assess the role and impact of direct
investment, not only in financial terms but also in the
context of its impact on jobs, sales and trade, has
underlined the importance of having data indicative of
the industrial activity of multinational firms
To meet these new needs in analyzing the globalisation
process, the OECD launched the regular collection of
data on the performance of foreign affiliates in the
manufacturing sectors of the OECD countries
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Foreign Affiliates
• OECD Definition: An affiliate under foreign
control is defined as one in which
• A single foreign investor holds more than 50% of the
shares with voting rights.
• The notion of control allows all of a company’s
activities to be attributed to the controlling investor.
• This means that variables such as a company’s
turnover, staff or exports are all attributed to the
controlling investor and the country from which he or
she comes. Control may be direct or indirect.
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Foreign Affiliates economic activity is significant in
OECD countries: Employment in manufacturing and
services in affiliates under foreign control (as % of total
employment, 2004 or latest available year)
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A new statistical unit is needed: the
Enterprise Group (EG)
• EU definition:
• An enterprise group is an association of enterprises
•
•
bound together by legal and/or financial links. A group
of enterprises can have more than one decisionmaking centre, especially for policy on production,
sales and profit. It may centralize certain aspects of
financial management and taxation.
It constitutes an economic entity which is empowered
to make choices, particularly concerning the units
which it comprises.
EUROSTAT is actively working on the EG Register
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EGs and EG-sub-groups: a
scenario based upon real data
• The economic picture of a country crucially
depends on the degree of inclusion or
exclusion of statistical units
• France has launched in 2005 a major high•
•
level project of re-designing its enterprise
statistics system
This project was carried out by the CNIS, the
National Council for Statistical Information
In April 2007, the final report was presented
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•
•
•
•
•
•
•
EGs and EG-sub-groups: a
scenario based upon real data
Some conclusions:
INSEE, the French NSO, will use this report for defining
procedures to incorporate enterprise groups in the collection
system of economic statistics
An affiliate is no longer considered as an equivalent ot an
enterprise unit
An affiliate can not be considered as enterprise (lack of
autonomy)
A MNE has to be considered globally (an MNE and its branches
think and define themselves globally)
Many economic actors consider the EG (or sub-group of it) as
the relevant unit of analysis
Users want to analyse market realities, not hierarchical
structures within EGs
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EGs and EG-sub-groups: a
scenario based upon real data
• The CNIS recommends the addition of a Global
Statistical Unit (GSU) for EGs
• It is at this level where the strategic direction and
•
•
decisions on affiliates are taken (mergers,
acquisitions, investment, relocations etc,)
This GSU is independent of national frontiers
This logic of definition leads to a statistical
representation of the national economy as the
sum of all French GSUs world-wide
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EGs and EG-sub-groups: a
scenario based upon real data
• This approach is innovative in macro
•
economic statistics since it goes
systematically beyond the national territory
(to our knowledge, only the BEA in the US
has a similar approach)
Most “traditional” economic statistics take
the national approach in terms of national
territory
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Simulation done by the CNIS in
France
France
(A)Foreigncontrolled
Companies
2M
World
(B)Legally
Independant
Companies
6,3 M
(C)French
Groups
2,1 M
(D) International French Groups:
Df = 4,2 M
Dw = 3,6 M
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Simulation done by the CNIS in
France
• Truncated “Global Statistical Unit(GSU)”:
A+B+C+Df = 14,6 million salaried employees
• French truncated GSU
B+C+Df = 12,6 million salaried employees
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•
Simulation done by the CNIS in
France
“World-wide” French GSU:
B + C + Df + Dw = 16,2 million salaried empl.
•
A world-wide “French” measurement, including
the activities abroad from French EGs would
yield 16,2 million employees, compared to
14,6 million in the “territorial” view; a plus of
1,6 millions
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Outlook
• This lecture has tried to shed some more
•
light on the need to move towards a better
integration of the international dimension
into national statistical reporting
Much need to be done and this includes
the following:
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Updating the SNA
• to allow a better measure and integration of the
increasingly global nature of economic
transactions and arrangements. Particular
attention should be paid to
• Goods for processing: the gross or net treatment
•
•
would fundamentally affect the nature and size of
trade in goods and services (goods or services)
Government-owned foreign subsidiaries: recognize
both the parent and the subsidiary as statistical unit
Better measuring cross-border service flows
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International production processes
necessitate a fresh look at international
trading and contracting
• More an better data needed on re-exports
• More
and better data needed on further
processing and merchanting
• FATS
=> inward FATS alongside SBS needed,
idem for a reduced set of outward FATS data
•
(more difficult)
MNEs => consistent definition of EGs needed
and integration into registers
• Profiling of domestic operations needed
• results
Difficulty: consolidation/deconsolidation of financial
of EGs
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A preliminary conclusion:
• Along with more consistent national data,
•
greater international consistency with respect to
concepts and definitions of statistical units is
necessary, namely the addition of
The enterprise group as unit of analysis
• …which is relevant for the analysis of MNEs
• …and which should be recognized and recommended
in SNA as one statistical unit
• ... and should be integrated in national data collection
systems
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Thank you for your attention!
Questions? => [email protected]
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