Statistical business registers in the European Statistical System The European Statistical Training Programme (ESTP) European Statistical week, a study visit to Eurostat Statistical business registers in the European Statistical System A. Liotti – Eurostat G1 Luxembourg, 13-17 October 2014

1. What the Statistical Business Registers are? Content 1. What the Statistical Business Registers are? 2. Interaction between Eurostat and Member States Part 1: First and second generation Part 2: Steps forwards: the next generation

Registers in general Registers are necessary for the orderly functioning of any society, e.g.: Registration of vital events (births, death, marriage, divorce) Records of the population, e.g. needed for providing travel documents, creating lists of voters etc. Registration of economic entities, e.g. for recording ownership, taxation, and for statistics  Business Registers Registration of land and real estate, etc. Registration of vehicles, etc. Registration of people and economic entities, or events, or land and real estate, or vehicles, etc. is necessary for the orderly functioning of any society and economy. These registrations are very different in character, and are kept by a variety of custodians, some of them part of the government, some with delegated authority. Without registrations it would for example be difficult to ascertain the legality of a marriage, whether or not a person is entitled to participate in an election, whether children should attend school, etc. It would be equally impossible to provide people with travel documents, to administer taxation, to draft young men for the armed forces, to identify the owner of a vehicle that caused a traffic accident, etc. The registration of businesses is from a statistical perspective one of the most important forms of registration.

Types of business registers (BRs) 1 Administrative business registers (ABRs) 2 Statistical business registers (SBRs) Administrative business registers of various kinds exist in most countries. Registration of businesses with the taxation authorities may be part of the registration system. In some countries registration at the National Statistical Office is also compulsory. Statistical business registers have a different purpose from administrative registrations. A systematically updated statistical business register is a basic tool in constructing an integrated economic information system, serving multiple purposes within its general function in support of survey production and analysis. The statistical business register identifies the universe of active productive entities. For this purpose, the register needs to contain data relating to enterprise identification (name and address), type of activity, variables indicating size, and information that makes it possible to track an entity’s relationships with other entities (for example a parent company), and life history. The register not only plays a key role in the organization of surveys to produce economic statistics, but is also an instrument for studies on business demographics, and e.g. the installed productive base, with breakdowns by size, economic activity and geographic characteristics.

ABRs and SBRs ABRs - normally include information such as: Name of the legal unit, address etc. Names of owner(s) or director(s) Date of legal or administrative birth Legal form Activity code for the unit's primary activity Ancillary activities (if any) Number of employees Date of start of activities Information on local units (if any) SBRs are generally based on one or more ABRs, completed with statistical information necessary to make sampling possible (e.g.: activity code, turnover, etc.)

Rules for business registration The rules for registering economic entities are different from country to country In some countries compulsory registration only applies to corporations Some countries have special rules for the registration of agricultural units, or for crafts, or for private entrepreneurs Some activity categories may not be registered The registration of companies is legally compulsory in most countries but the rules for registration may differ a great deal. In some countries registering is only obliged for corporations. A corporation is a legal entity that is effectively recognized as a person under the law. The word ‘corporation’ in this context does not only apply to businesses, but also to different kinds of non-profit organizations with legal status (e.g. sports clubs, or hospitals, or educational institutions) or even to government agencies and Parastatals that operate as separate legal entities. Some countries have separate registers for ‘crafts’ or local registers for certain self-employed economic actors (e.g. taxi drivers) in case they need a license to operate their business. Ideally, administrative business registers should include all activity categories. However, the scope of the register depends on national legislation. In many countries, for example, the register does not include agricultural units. Other categories that are sometimes missing are independent professionals (doctors, lawyers etc.), public bodies and private-non-profit institutions. In addition to different rule for registration, there are also differences in the institutional organization of the registration process. For example, registration may be one of the responsibilities of Courts of Law, or the Ministry of Justice, or Chambers of Commerce, or local administrations. Registration of agricultural units is often one of the tasks of the Ministry of Agriculture. Tax administrations often have their own registers. For national statistical offices cooperation with the custodians of administrative registers, particularly business registers, is of great importance in order to maintain a complete and up-to-date sampling frame of economic actors. Statistical Business Registers are usually established and maintained with the help of administrative registers.

Using ABRs for statistical purposes Problems that may occur are: Conceptual  Related to coverage Related to updating and timeliness Legal constraints Computer related problems Problems that may occur with the use of administrative registers for statistics are:   -The objects/records registered in the administrative register may not exactly meet the definitions that statisticians use -The coverage of the register is incomplete; units are missing -The register is not sufficiently updated Access of the statistical agency to administrative registers may be hindered by law or indeed by lack of legislation. Administrative registers may furthermore not be computerized and when they are computerized, data formats may create problems for statistical processing. In addition, the expertise of the statistical agency and its IT capacities may be insufficient for effective use of administrative data. A specific problem with administrative registers of businesses is that they include inactive units. Thus, it is vital to find information that indicates whether an enterprise is active or not. For example, if tax registers contains information concerning enterprises required to make payroll deductions on behalf of employees, then the date of the last recorded deduction and the total size of the deductions over the preceding year are good indicators of enterprise activity. No deductions suggest that the enterprise is inactive, at least as an employer.

The general framework Purpose: Main tools: Eurostat and the ESS Coordination of statistical business registers in the ESS Main tools: Regulations and legal acts Working groups and other discussion places Guides and documents

Isolated national SBRs The 1st generation Isolated national SBRs Based on a first EU Regulation, in 1993 national statistical institutes launched the development of SBRs to underpin European business statistics. Notwithstanding efforts to harmonise definitions and methodologies, SBRs developments have mainly reflected national circumstances and needs. Thus, national business registers differ from each other in terms of the sources used, the content, the frequency of updating, the methodology, etc.

The 2nd generation Links via the EuroGroups Register (EGR) Since 2008 the second EU Register Regulation has defined the steps towards a common framework for SBRs and includes the EGR, managed by Eurostat. EGR provides national statistical registers with the information they lack on multinational enterprise groups, thus linking the national with the European level. Based on the cooperation between Eurostat and the ESS, the EGR covers more than 10 thousand multinational enterprise groups active in Europe.

In practise the EGR offers… Business Register information about: multinational groups with an interest in EU their constituent statistical units Can be used in a coordinated manner by all EU statistical authorities for: Identifying survey populations (i.e. Inward and Outward FATS) Supporting EU sampling schemes Linking to other available data sources (admin. and/or statistical) Coordinating classifications (NACE, country of UCI, etc.) Tracking major events (Mergers, Acquisition, etc.) Grossing up …

Documents and information BR Recommendations manual http://epp.eurostat.ec.europa.eu/portal/page/portal/product_details/publication?p_product_code=KS-32-10-216 Very important document to know everything on the Eurostat recommendations regarding SBRs and all related matters (345 pages including a glossary) Annual inquiry NSIs have to provide annually some information on their SBRs according to the type of units in the BR (legal units, enterprises, MNEs, local units): General information on the number of units according to the activity code (NACE) Follow up of the characteristics included in the national BR Allows asking specific questions

Working together: NSIs + Eurostat European Statistical System Committee Business Statistics Directors Group Working Group on Business Registers and Statistical Units Steering Groups (EGR project till 2013, new ESBRs project from 2014) ESSnets Individual grants to Member States

Working together: NSIs + Eurostat EuroGroup Register (EGR) as an example of Networking First time that Eurostat exchange (IN and OUT) micro data with NSI and use them to create ONE SINGLE European product: EGR EGR is available for being used by statisticians in NSIs and about 10 countries already use it for regular statistical production of FATS and FDI statistics NSIs contribute to the EGR data micro-validation Guidelines for coordinating the activity of NSI have been produced Other projects will built on this experience

The "Vision" and the Vision Infrastructure Projects (VIP) Next generation Interoperable system of registers The "Vision" and the Vision Infrastructure Projects (VIP) VIP.ESBRs

The Vision In 2009, Eurostat issued a “Communication to the European Parliament and the Council on the production method of EU statistics: a vision for the next decade”. Main goal: to move the production of European statistics from a traditional “stove-pipe” approach to an integrated, more flexible model. This means “vertical” integration, i.e. usage of joint structures, methods and tools.

The Vision Infrastructure Projects (VIP) To translate the ideas of the “Vision” into reality, the ESS adopted a set of projects, structured in the "Vision Infrastructure Projects (VIP) programme". The ESS.VIP ESBRs is one of these projects working towards a mutually beneficial network of SBRs

The European System of Interoperable SBRs Projects (ESBRs) In 2013, the ESS took steps towards creating a genuine system of SBRs and launched the ESBRs project with the following goals: Strengthen and rationalise national SBRs Integration into an interoperable system Serving national and EU statistical production Efficiency and quality gains for the whole system Improve the EGR (heart of the system) Improved quality of information on multinationals NSIs on-line access, facilitating interaction with EGR Dedicated interfaces for FATS and FDI statisticians Integration of profiling information into the EGR Share statistical services NSI access shared services for register management Services certified by Eurostat against ESS standards

In 2013 ESBRs overlapped with previous projects (EGR and Profiling) 2013-2017 In 2013 ESBRs overlapped with previous projects (EGR and Profiling) EGR/Profiling development/quality Sharing statistical services implementation <-- Investigation -->  Preparation  2013 2014 2015 2016 2017

EGR SBR From disconnected statistical business registers… … to an efficient system of statistical business registers … EGR SBR … trough Business Architecture

Backbone role of SBRs To be strengthened The concept of backbone role is more and more mentioned as an important factor to improve quality, coherence & efficiency of business statistics. The general idea is that SBRs should serve as coordinating mechanism. Business surveys should be linked to national SBRs, in the same way as human beings’ ribs are linked to their vertebral column (also known as backbone).

Towards an ESS backbone role ESBRs' ambition ESBRs aims at achieving significant progress from the present status (Si) towards the future status (Sf) Long term vision Identification of the foreign legal units stored in national statistical business registers. Set up a methodology for the maintenance Describing the national statistical business register using GSBPM, GSIM Applying different aspects of the profiling methodology by performing the following tasks for reference year 2013 and 2014 Applying the methodology of profiling for initial intensive profiling as the country of the UCI. Applying the methodology of profiling for initial light profiling as the country of the UCI. Testing initial profiling as main profiler of a non-EU global enterprise group. Testing the follow-up of profiling Testing the implication of profiling at the national level Confronting current methodology to treat large enterprises with the proposed methodology on profiling Testing a possible organisation of business statistics to include profiling The ambition of the ESBRs project is to open the path towards Sf  backbone for the ESS business statistics.

Any question?