13-Jul-07 NACE: How the revision of a classification can affect quality of statistics Ana Franco

13-Jul-07 Name of the presentation NACE a tool for comparing statistics at world level The European Classification of Economic Activities (NACE) is the European reference framework for the production and the dissemination of statistics related to economic activities. NACE is identical with, or an extension of, the ISIC (International Standard Industrial Classification of all Economic Activities - classification developed by the UN as a standard way of classifying economic activities). Also, the coding systems used in both classifications are, as far as possible, the same. The main principle in ISIC and NACE is to code together enterprises if they produce the same type of goods or service or if they use similar processes (i.e. the same raw materials, process of production, skills or technology).

13-Jul-07 Name of the presentation NACE: The revision process At its thirtieth session in 1999, the United Nations Statistical Commission agreed that the ISIC should be revised every five years, thereby keeping the classifications relevant while avoiding major disruptions in time series. NACE has followed this revision round and NACE Rev. 2 entered into force in The purpose and rationale for these revisions is to repair weaknesses in the classifications, to reflect changes in technology or economic organization, to respond to new and permanent demands for data and to achieve greater comparability or convergence among different classifications. Focused work on the revision of ISIC/NACE started in 2001 and the regulation establishing the statistical classification of economic activities NACE Rev. 2 was adopted on the 20th December of 2006.

13-Jul-07 Name of the presentation NACE: The revision process (stakeholders) UN Statistical Commission Technical Subgroup Statistical Programme Committee NACE/CPA Working Group Task force UN Expert Group UNEUROSTAT

13-Jul-07 Name of the presentation Revision of NACE: an opportunity to improve quality Relevance Accuracy Timeliness and punctuality Accessibility and clarity Comparability and coherence Cost and Burden

13-Jul-07 Name of the presentation Relevance During the process of revision of NACE/ISIC the opinion of the users was carefully taken into account. NACE Rev. 2 UN World-wide consultation: How: 3 rounds of questionnaires To whom: 235 countries and international organizations worldwide When: from 2001 EU Large consultation: -National Statistical Institutes (NSI’s) - European trade associations (FEBI’s) - European Commission - Eurostat - European Central Bank - And anybody else using the classification FAO Working Party on Indicators of the Information Society Association of Southeast Nations Workshops in different regions of the world Afristat UN Technical Subgroup NAICS/NACE convergence project

13-Jul-07 Name of the presentation Relevance As one could expect in such a large operation of identification of user needs, it has been impossible to take all wishes into account. Nevertheless, some general concerns were identified and the result is a revised classification with: New groupings –Information and communication sector –water supply, sewerage, waste management and remediation More tabulation categories for services –professional technical, and business services –administrative and support services –real estate, rental and leasing services –art, entertainment and recreation More divisions ( to increase international comparability) –for new groupings and growing services –in manufacturing and construction –human health services

13-Jul-07 Name of the presentation Accuracy Correspondence between NACE Rev 1.1 and Rev.2 Rev 1.1 Rev Rev 1.1 Rev.2 a b c 1 d e 86 AutomaticAutomatic Rev 1.1 Rev.2 a 1 b c Rev 1.1 Rev.2 a e b f c g h ManualManual Good occasion to correct errors!

13-Jul-07 Name of the presentation Timeliness and punctuality 2001 Start of revision Adoption of regulation End Business registers updated Business register -Labour Force Survey -Road freight survey - Structural Business Surveys - … - Labour Cost Index - Job Vacancy survey - Inform. Soc National Accounts

13-Jul-07 Name of the presentation Accessibility and clarity A dedicated web page which would contain all available information on NACE Rev.2: 1.1 the structure of NACE Rev. 2, 1.2 the introductory guidelines, 1.3 the explanatory notes for each code 1.4 the text of the Framework regulation 1.5 the Implementation regulation. 1.6 the correspondence tables between NACE Rev. 2 – NACE Rev. 1.1 and NACE Rev NACE Rev. 2 in different formats 1.7 Five Handbooks to help National Statistical Institutes during the complex project of the implementation of NACE Rev. 2 - Setting up an implementation plan for NACE Rev. 2 - Implementation of NACE Rev.2 in Business Registers - Handbook on methodological aspects related to sampling designs and weights estimations - Handbook on back-casting - Rules for classification of units outsourcing their production A paper publication which will regroup the elements mentioned under 1.1 to 1.5.

13-Jul-07 Name of the presentation Accessibility and clarity A CD Rom containing the same information can be created at request A general paper informing on the main changes brought by the new classification has been prepared. This information will be visible in the Eurostat web site and will contain a link to the dedicated web page above mentioned. The SDDS files, detailed metadata files presented in a common format which are associated with the data base New Cronos containing all EU data published by Eurostat, will be revised informing the users on the changes in the activity classification and on the specific impact for the statistical domain.

13-Jul-07 Name of the presentation Comparability (between geographical areas) Among EU countries… Use of NACE is mandatory within the European Statistical System: Regulation (EC) No 1893/2006 of the European Parliament and of the Council of 20 December 2006 Although national versions allowed… And there are also: –Explanatory notes –Introductory guidelines

13-Jul-07 Name of the presentation Comparability (between geographical areas) But also with the rest of the World:  Agreement signed by the heads of the statistical agencies of Canada, the European Union and the United States concerning a project on the convergence of NAICS and NACE  A taskforce consisting of experts from the participating parties have drawn up a list of changes to NACE and NAICS which may improve the convergence.  In addition, ISIC had taken into account these revisions to other major national industry classifications such as ANZSIC (Australia and New Zealand), JSIC (Japan) and NatSIC (China). ISIC NACE NAICS (USA, Canada, Mexico)

13-Jul-07 Name of the presentation Comparability between statistical domains Data is published by Eurostat according to NACE in 33 different statistical domains Solutions: –Dual coding –Back casting

13-Jul-07 Name of the presentation Comparability over time Discontinuity in historical statistics is to be expected in many statistical domains, both at European and national levels Solutions: –Dual coding –Back casting –Correspondence tables NACE Rev 1.1 NACE Rev.2 Sections1721 Divisions6288 Groups Classes to 1196 n to to n18 n to m214 Correspondences: 282

13-Jul-07 Name of the presentation Coherence ISIC NACE National versions of NACE CPC CPA National versions of CPA PRODCOM National versions of PRODCOM HS CN SITC Economic Activities Products Goods World level EU level Nat. Level

13-Jul-07 Name of the presentation Cost and Burden The revision of NACE will imply several operations in the Member States:  The setting up of the implementation plan  The recoding of the Business Registers according to the new NACE (or its national version)  The adaptation of the statistical surveys (samples and estimation techniques)  The reconstruction of time series (double reporting, back- casting)  The changes of the reference database and related dissemination issues  The elaboration of the national version of NACE and the adaptation of national legislations following the adoption of the Regulation establishing NACE 33%! 32%!

13-Jul-07 Name of the presentation Conclusion The revision of a classification, although a costly and heavy operation is absolutely needed and is a good opportunity to improve the quality of the date produced using it. Relevance is for sure the quality component which more benefits in such a revision. It is a good opportunity to improve geographical comparability Accuracy can also be improved in the operation of updating of the register A revision of a classification always entails breaks in the series, Not all the statistical domains are able to use the new classification at the same time In the transition period timeliness can undergo. The information of the users shouldn't be neglected and it is important not only to provide information on the new classification but also on its impact for the data in the different statistical domains.