ECONOMIC CLASSIFICATIONS Advanced course Day 4: first afternoon session Classifications by purposes: COICOP, COPNI, COFOG, COPP Zsófia Ercsey - KSH – Hungary Marie-Madeleine Fuger - INSEE – France Hans Van Hooff - CBS - Netherlands THE CONTRACTOR IS ACTING UNDER A FRAMEWORK CONTRACT CONCLUDED WITH THE COMMISSION

Classifications by purposes Defined by SNA 1993 (chapter XVIII), ESA 1995 for EU to describe transactions (expenses) of various groups according the objectives they serve Institutional units concerned with these expenses households; nonprofit institutions serving households (NPISHs); government (administrations); producers (enterprises) Types of expenses individual expenses for consumption (COICOP) expenses for final and intermediate consumption, investment (FBCF), transfers (COFOG and COPNI) expenses for intermediate consumption, investment/FBCF (COPP)

Common purposes / socio-economic objectives

Classifications by purposes COICOP is used to classify the individual consumption expenditures of households, NPISHs and general government; COFOG and COPNI are used to classify a range of transactions made by general government and NPISHs respectively; COPP is used to classify intermediate consumption and capital outlays of companies. Structure Each classification has three levels of detail: Level 1 – Divisions (two-digit numerical code) - 01 Level 2 – Groups (three-digit numerical code) - 01.1 Level 3 – Classes (four-digit numerical code) - 01.1.1

Classification Of Individual COnsumption by Purpose COICOP Classification Of Individual COnsumption by Purpose It is used to classify transactions made between producers and the institutional sector of households. COICOP identifies objects or objectives for which these transactions are made. Structure : 14 Divisions 58 Groups 157 Classes Most of the classes can include goods and services Most classes comprise either goods or services; Classes are specified as „durables“, „semi-durables“, „non-durables“ or „services“.

COICOP COICOP is essentially divided into three parts: Divisions 01 to 12 Individual consumption expenditure of households Division 13 Individual consumption expenditure of NPISHs NOTE: All consumption expenditures of NPISHs are also treated, by convention, as being for the benefit of individual households; Division 14 Individual consumption expenditure of general government NOTE: Some of the consumption expenditures of general government are defined as individual; Divisions 13 and 14 were introduced in COICOP in order to obtain an specific aggregate of 1993 SNA, named “actual final consumption of households ” or “actual individual consumption ”.

Broad structure of COICOP 01-12 Individual consumption expenditure of households 01 Food and non-alcoholic beverages 02 Alcoholic beverages, tobacco and narcotics 03 Clothing and footwear 04 Housing, water, electricity, gas and other fuels 05 Furnishings, household equipment and routine household maintenance 06 Health 07 Transport 08 Communication 09 Recreation and culture 10 Education 11 Restaurants and hotels 12 Miscellaneous goods and services 13 Individual consumption expenditure of non-profit institutions serving households 14 Individual consumption expenditure of general government

COICOP Units to classify Divisions 01 - 12: expenses to purchase goods and services for consumption; These divisions group various goods and services by “consumption function” covering the same need* * this theoretical rule faces some exceptions Divisions 13 et 14: see respectively COPNI and COFOG Multi-functional products – bundles of goods ans services General rule concerning goods and services covering several functions: to be classified in the division covering the main use General rule concerning goods and services grouped together: analyze the various functions concerned then split by function or, lack of anything better, classify in a “grouped function”

COICOP Interpretation Linked classifications Explanatory notes Correspondence table with CPC concerning Divisions 01 – 12 (published by OECD) Correspondence table with CPA 2002 and CPA 2008 concerning Divisions 01 – 12 (prepared by EU member states)    Linked classifications COPNI : Division 13 COFOG : Division 14 ISCED

COICOP Uses of COICOP National Accounts Household Budget Surveys Consumption Price Indexes Purchase Power Parities Food safety statistics or environment statistics. In EU, strong feeling for more detail at national level (for CPI) and in HBS and PPP which led to more detailed classificationS In EU

COICOP: Zoom on the ongoing revision Background features ♦ The UN Expert Group on International Statistical Classifications (EG-ISC) periodically reviews classifications to ensure their relevance for the production of statistics; ♦ The need for a revision of COICOP has been raised by countries and organisations to reflect the emergence of new consumer goods and services and the development in consumption patterns; ♦ UNSD in late 2012 conducted a global survey to evaluate the need for a revision. 68 countries + 4 international organizations have replied to the survey; ♦ The EG-ISC in 2013 discussed the outcome of the survey and did not agree on an immediate need for a revision agreed to form a Technical Subgroup that would look at case law issues

Zoom on the ongoing revision (cont.) COICOP Zoom on the ongoing revision (cont.) Conclusions of 2013 EG meeting: did not agree on an immediate need for a revision agreed to form a Technical Subgroup that would look at case law issues TSG-COICOP report at 2015 EG meeting: Decision to proceed with a revision of COICOP Submission of a draft at the 2017 EG meeting Approval is expected at the UNSC in spring 2018

Main characteristics of the draft project COICOP revision: Main characteristics of the draft project Introduction of a fourth level Few changes at division level Better correspondence between COICOP and CPC Systematic split between goods and services Deep extensive revision of divisions 08 and 09 Split of division 12 into two new divisions Renumbering of former divisions 13 and 14 to 14 and 15

Structure of the draft project COICOP revision: Structure of the draft project

COICOP: What is the situation in EU? Task Force launched 2010 Classifications section HICP PPPS HBS Food safety statistics Environment statistics Draft revised five-digit level COICOP that could be used in all domains Based on the version produced by the COICOP classification/HICP Task Force in 2005

COICOP: What will be done in EU? The ESS now has a single harmonised COICOP classification at five-digit level: ECOICOP (may 2011). Structure and explanatory notes have been released in december 2013 Structure : 12 Divisions 47 Groups 117 Classes 303 Categories Roadmap for implementation Discuss in the different relevant working groups Revision of legal basis of HICP and PPP Level of detail of transmission of data for all three domains Impact on data collection at national level Timetable of implementation The basis of these discussions should provide a common implementation plan.

COPNI Classification Of the Purposes of Non-profit Institutions serving Households SCOPE: It is used to classify expenditures of NPISHs by purpose. COPNI serves to classify a whole series of operations (the spending of final consumption, the intermediate consumption, gross fixed capital formation, capital transfers and current transfers) made by non-profit institutions serving households. Structure : 9 Divisions 26 Groups 30 Classes 01 Housing 02 Health 03 Recreation and culture 04 Education 05 Social protection 06 Religion 07 Political parties, labour and professional organisations 08 Environment protection 09 Services n.e.c.

COPNI Classification Of the Purposes of Non-profit Institutions serving Households Uses of the classification National accounts for the aggregate “actual final consumption of households”; COPNI can be used to facilitate international comparisons of the activities of NPISHs. Units of classification In principle, COPNI classifies individual outlays of NPISHs according to the purpose they serve; In practice, the NPISHs themselves will usually constitute the units of classification.

Classification Of the Functions Of Government COFOG Classification Of the Functions Of Government SCOPE: It is used to classify the government expenditures according to the purpose for which the funds are used. COFOG distributes the expenses of general government in ten categories according to their purpose. Structure : 10 Divisions 69 Groups 109 Classes 01 General public services 02 Defence 03 Public order and safety 04 Economic affairs 05 Environmental protection 06 Housing and community amenities 07 Health 08 Recreation, culture and religion 09 Education 10 Social protection

COFOG Uses of the classification Units of classification A major use of COFOG is to identify consumption expenditures that benefit individual households and that are transferred to Division 14 of COICOP; COFOG is used for making inter-country comparisons of the extent to which governments are involved in economic and social functions.. Units of classification in theory: individual transactions of government in practice: units => outlays First, the COFOG codes are assigned to the government units (agencies, offices, programme units, ministries and similar units of government); Second, all outlays, made by a unit, will be coded to the COFOG code assigned to that unit.

Classification of the Outlays of Producers according to Purpose COPP Classification of the Outlays of Producers according to Purpose SCOPE: It is used to classify the intermediate consumption and the capital expenditures of companies. Structure : 6 Divisions 22 Groups 23 Classes 01 Outlays on infrastructure 02 Outlays on research and development 03 Outlays on environmental protection 04 Outlays on marketing 05 Outlays on human resource development 06 Outlays on current production programmes, administration and management

COPP Uses of the classification Classification Unit: Transactions COPP can inform about the “outsourcing” of activities of companies: provide information about trend to buy outside services they used to produce themselves Classification Unit: Transactions In principle, COPP classifies outlays of enterprises by purpose; Outlays of enterprises by purpose may be divided into: ▪ current expenditures outlays on intermediate goods and services; ▪ capital expenditures investment in produced fixed assets; investment in non-produced fixed assets; outlays of enterprises, for instance, to develop software, to construct roads or to carry out major repairs or improvement of capital goods.

Thank you!