Monica Consalvi, ISTAT, Italy The role of the business register as an informative source for business analysis 19th International Roundtable on Business Survey Frames Cardiff, 16 – 21 October 2005 Session N.2 Monica Consalvi, ISTAT, Italy

A new role for the BR The need for information on specific aspects of social and economic life is extended to an increasing demand for integrated data ISTAT is changing its way of producing business statistics, following the idea of a coherent system of economic statistics

The BR was… the official statistical source for information on the structure and the demography of the business population supporting structure tool for preparing surveys supplying sample and population data basis for grossing‑up results to produce business population estimates

The BR now is also: The new coordinating role of the BR cooperation among the various departments “core” of a coherent system of economic statistics The BR as a dissemination tool (dissemination of data directly from the BR)

The use of the register as a tool for production of statistics new difficulties: different kind of users development of new methodologies for data treatment treatment of data confidentiality time series coherence the point of view is completely different from a survey approach: the BR is a “live entity”, which is constantly revised and updated

The variations observed between two “snapshots” of the BR are due to: structural development of the economy (demographical aspects, effects due to the evolution of the size of the enterprises and to changes in their economic activity) process of revision of the register

The incoming/outgoing flows The basic accounting equation for a generic sub‑set (i) of the whole population (e.g. a NACE division, a NUTS region, a size class): Nt+1 (i) = Nt (i) + D∆t (i) + V∆t (i) where: D∆t(i) = IBirth∆t(i) ‑ ODeath∆t(i) is the balance between the demographic flows V∆t(i) = IV∆t(i) ‑ OV∆t(i) is the balance between the flows caused by changes in the characteristics that draw up the boundaries of the subset

The updating of the register at time (t+1) is determined by actual changes, and adjustment of characteristics of the units during the period (t, t+1) the BR may acquire data referring to a previous time actual changes recorded at a later time delay in recording birth/death or in recording changes in characteristics in the administrative registers

The adjusted population at time (t) is: Nt* (i) = Nt (i) + ED∆t (i) + EV∆t (i) where: ED∆t (i) = EOD∆t (i) ‑ EID∆t (i) is the balance of the errors (or adjustments, or delays in updating) related to the state of activity EV∆t (i) = EOV∆t (i) ‑ EIV∆t (i) is the balance of the errors related to the other characters that delineate the scope of the subset For instance EID∆t (i) are the false active units belonging to the subset (i), that were considered active in (t) but actually ceased before, so that they have to be eliminated from the subset of active units. In the same way EOD∆t (i) are the false non active units belonging to the subset (i), that were actually active in (t) and have to be added up to the subset of active units. Similarly EOV∆t (i) and EIV∆t (i) will be respectively the units belonging to and the units not belonging to the scope of the subset, after having changed the economic activity code, or the number of employees or the administrative address of the enterprise.

[D∆t (i) ‑ ED∆t (i)] + [V∆t (i) ‑ EV∆t (i)] So the actual balance between (t) and (t+1) will be: Nt+1(i) ‑ Nt*(i) = [Nt+1(i) ‑ Nt(i)] + [Nt(i) ‑ Nt*(i)] starting balance adjustment [D∆t (i) ‑ ED∆t (i)] + [V∆t (i) ‑ EV∆t (i)] This equation removes the two components of error from the balances D∆t and V∆t.

The updating process of the Italian BR logical and physical integration of data resident in some administrative and statistical sources output: the “frozen” file (the set of the estimated active units in the reference year, at the end of the first quarter of each calendar year) updating of a relational database containing the history of each unit

The BR is constantly revised and updated the treatment of errors is performed using the micro approach (they are detected at the individual business level) Improvement in the total quality of the register fixed and documented procedures each character of each unit is referenced: the production process (integrated process, survey, mode of correction,…) the source of the corrected value reference date of the value the type of correction (if updating or error)

The new role of the BR as a dissemination tool For the first time, ISTAT published structural data on active enterprises retrieved from the statistical business register, for the reference year 2002 (hereafter referred to as “BR04”) BR04 was the basis for grossing‑up SBS survey results

The new role of the BR as a dissemination tool Publication of new data from the same source for the reference year 2003 new adjusted release for the reference year 2002 (hereafter referred to as “BR05”)

2002-2003 differences are due to: structural development of the economy process of revision of the register The changes in the economic structure from 2002 to 2003 are different, depending on which release of the register is taken into account for the reference year 2002 (the one published in 2004 or the adjusted one, after one year revision)

Changes in the two 2002 releases 16 thousands non-active enterprises wrongly considered as active: delays in the registration of the cessation date in the administrative registers used as sources of the BR About 15 thousands economic activity codes were modified: 73% of them violated some compatibility rules concerning actual changes in the main activity 19% were caused by feedback from statistical surveys 8% came from profiling on big enterprises For 2 thousands of enterprises the employment was modified: mainly coming from responses from statistical surveys

Differences between the two 2002 releases 20 thousand units (only 0.5% of the total number of active units) and about 8 thousand persons employed (0.05% of the total employment) Differences between 2002 and 2003: increase of 0.3% in the number of active enterprises using BR04 Increase of 0.7% in the number of active enterprises using adjusted BR05 (2002 revised release)

The impact of changes is much higher in some particular cells of the structure: Section E “Electricity, gas steam and hot water supply”  4% decrease in the number of persons employed (using BR04 or BR05)

The impact of changes is much higher in some particular cells of the structure: NACE class 40.12 “Transmission of electricity” high decrease in the number of persons employed (‑90%) when looking at the BR04 or the SBS published data the decrease in size is only -2.6% when using the revised BR05 data

The impact of changes is much higher in some particular cells of the structure: NACE class 40.13 “Distribution and trade of electricity” high increase in the number of persons employed (‑692%) when looking at the BR04 or the SBS published data the decrease in size is only -4% (stable) when using the revised BR05 data

 Re-organisation of the energy sector the re-structuring affected key characteristics such as size and main activity of the enterprises working in this Section  Delays in the registration more than 35 thousand persons employed were accidentally classified in the NACE Class 40.12 instead of the correct 40.13

The effects of the adjustments are notable even for the whole register different evaluation of the economic cycle (an increase of 0.3% in the number of active enterprises from 2002 and 2003 instead of 0.7% means either that the rise rate is reduced, or that the expansion keep on similar to the previous years)

The impact is not on the register but on published data from the register all the adjustments are placed immediately into the BR at the same time as the information is available Problems: which adjustments can be included which is the proper time to introduce them, and in which way

Consistency or transparency? On one hand, the business register should be structured and maintained in such a way that the correction of errors has a minimal impact on statistical surveys On the other hand, it is necessary not to be ambiguous when disseminating data, let the BR users and the general public know about errors and corrections

Consistency or transparency? The Italian choice is in favour of the transparency in disseminating data retrieved from the BR, rather than the consistency with other published statistics (SBS) and their stability In Italy statisticians must correctly describe the evolution of small enterprises, that it is known to be here a political, social and cultural problem

Transparency Comprehensibility All the adjustments concerning active enterprises are reported and explained carefully so that the users are able to understand through statistics and indicators how big is the phenomenon and which is the actual trend

Future problems: For the moment: rebuilding time series how to estimate the time lag after which the BR data can be considered as stable (Obviously the closer to the time of the update, the more accurate the assessment of impact is likely to be) For the moment: the measure of the correct lag is one year the dissemination of revised data has to be integrated with a complete description of the adjustments and the revisions in favour of transparency toward BR users