The compilation of turnover and wage and salary indices Ms. Suvi Kiema, Statistics Finland suvi.kiema@stat.fi

The use of VAT for STS - The challenges 1) Data sources timeliness of VAT data dependence of administrative data sources responce burden can’t be increased pressure to produce indices faster 2) Estimation of change actual vs. apparent changes: how are startups and closures, changes in activity class or mergers and split-offs treated? 3) Heavy editing process Mini-workshop 8-9.6.2009 2

Main data sources for STS The main administrative data sources for STS are monthly VAT (T+75) and PAYE (T+45) data. Monthly turnover data from businesses with >8500 euro yearly turnover and wages from all regular employers Transmitted from the Tax Administration each month Supplemented by a direct sales inquiry from 2,000 enterprises largest enterprises in each branch of industry Background information for the enterprises is acquired from Business Register Branch (NACE code), institutional sector Mini-workshop 8-9.6.2009 3

Changes in monthy tax return data in 2010 Companies with yearly turnover less than 50 000 euros will no longer be in monthly data. If the yearly turnover is less than 50 000 euros, but more than 25 000 euros, companies will report quarterly. the quality effect of the tax reform is rather small: even though VAT data covers monthly information of only 48,8% enterprises after the tax reform in year 2010, the share of the total turnover of enterprises reporting monthly basis is still high, 99,4% Mini-workshop 8-9.6.2009 4

Simple index calculation Finland has relatively few big enterprises, so direct data collection can be kept small. It covers only 2000 largest enterprises (<1% of the total population) but over 50% of the turnover. Index calculation is simple: Comprehensive data from the previous year makes it possible to estimate the level using only a change estimate Mini-workshop 8-9.6.2009 5

Editing is everything When using a comprehensive administrative data, it is important to consider how change will be measured -> actual vs. apparent changes Treatment of start-ups, closures and changes in activity class Mergers and split-offs jan feb mar apr may jun Turnover 100 110 120 . . . Mini-workshop 8-9.6.2009 6

Effect of productivity The compilation of statistics directly related to the VAT data requires almost 20 man years per year, including chargeable activities This is because the editing is focused on micro level Approximately 60% of the time used for STS turnover and wage sum is used for editing. 30% goes for direct data collection, 10% on data analysis and development Mini-workshop 8-9.6.2009 7

The production process Raw Data (VAT, BR) Index calculation Unit data Adjustment of observations Indices Publication Sybase database - SAS -batch programs (calculation) - Power Buider Application (determination of classifier parameters) - Power Buider Application (adjustments) - SAS -batch programs (re-calculation) Pre- processed Mini-workshop 8-9.6.2009

Effectiveness of micro-level editing Currently it seems that micro-level editing has surprisingly little impact on the final figures When comparing pre-calculated indices to the final (published) indices in one-digit level it was found that editing mostly only affects the latest month over 80% of the revisions were explained by the manual editing made in the single most significant enterprise of the all edited enterprises micro-level editing is inefficient Mini-workshop 8-9.6.2009 9

Plans for the future The project's main goal for the future is to significantly reduce the number of firms selected to the editing list (checked manually) Working name for the new method is: cutting and filtering the sausage 1) Investigate the minimum number of enterprises that has to be checked manually in any case. 2) Develop automated processes for selecting enterprises with abnormal observations that may have to be checked manually. Mini-workshop 8-9.6.2009 10

Mini-workshop 8-9.6.2009