United Nations Economic Commission for Europe Statistical Division The Revision of ISIC and NACE: Implications for National Accounts Joint EFTA/UNECE/SSCU Seminar July 2007 Presentation by Tihomira Dimova, UNECE

UNECE Statistical Division Slide 2July 2007 International Family of Economic and Social Classifications  Integrated system of statistical classifications developed and approved as guidelines by UN SC or other intergovernmental body;  The International Family of Economic and Social Classifications includes: Classifications for economic activity (ISIC), products (CPC, HS), expenditures according to purpose, employment (ICSE), occupation (ISCO),….; Derived or related classifications used for regional or national purposes;  Comparability of statistics at world level.

UNECE Statistical Division Slide 3July 2007 Activity classifications  Reference classification ISIC (UN, Global level) 17 Sections, 62 divisions, 161 groups, 298 classes  Derived classifications NACE (EU level) 17 Sections, 62 divisions, 224 groups, 514 classes  Related classifications NAICS (US, Canada, Mexico) 20 Sectors, 103 Sub sectors, 328 Industry Groups, 728 industries, national industries ANZSIC ( Australia and New Zealand ), JSIS ( Japan ), etc.

UNECE Statistical Division Slide 4July 2007 Revision of ISIC  The revision of the whole system ISIC, CPC and HS started in 1999;  UN SC adopted ISIC Rev. 4 in March 2006;  Objectives: Relevance – address the economic changes; International comparability – convergence of NAICS, NACE, ANZSIC; Continuity;  Consider the larger frame of revised international standards (SNA, BoP).

UNECE Statistical Division Slide 5July 2007 Main changes in ISIC Rev.4  The number of detail has significantly increased especially in services (9 to 13 Sections);  Specific categories for “support services” close to the corresponding activities;  Integrated activities - units should be classified according to their principal activity defined by value added principle and a top-down method (or substitutes based on gross output, sales, inputs).

UNECE Statistical Division Slide 6July 2007 Main changes in ISIC Rev.4 (cont.) ISIC Rev. 3.1ISIC Rev. 4NACE Rev.1.1NACE Rev.2 Sections Divisions Groups Classes

UNECE Statistical Division Slide 7July 2007 Main changes in ISIC Rev.4 (cont.)  Agriculture “Agriculture, hunting and forestry” and “Fishing” are combined into a new section A “Agriculture, forestry and fishing”.  Industry “Mining” and “Construction” are restructured; “Publishing activities” and “Recycling” are moved out from Section C “Manufacturing”. Other activities have been regrouped; “Electricity gas and water supply” is split; A new section E “Water supply, sewerage, waste management and remediation activities” is combining activities from the previous sections “Manufacturing” and “Electricity, gas and water supply”

UNECE Statistical Division Slide 8July 2007 Main changes in ISIC Rev.4 (cont.)  Services “Repair of personal goods” is moved out of G “Trade”; “Transport, storage and communication” is split and communication goes to the new section J. Travel agencies are also removed; A new section J “Information and Communication” combines activities previously classified in “Manufacturing”, “Transport, storage and communication”, “Real estate, renting and business activities”, and “Other service activities”; Of relevance for NA is the more detailed structure of section K “Financial and insurance activities”. New groups have been created for “Activities of holding companies”, “Trusts funds and other financial vehicles” and “Fund management activities”. Insurance, reinsurance and pension funding are separate groups;

UNECE Statistical Division Slide 9July 2007 Main changes in ISIC Rev.4 (cont.)  “Real estate, renting and business activities” is divided into 3 sections: L “Real estate activities”, M “Professional, scientific and technical activities” and N “Administrative and support service activities”;  Section Q “Human health and social work activities” has been restructured and additional breakdown is added. Veterinary activities are moved to the new section M;  “Arts, entertainment and recreation” becomes a separate Section R. It excludes radio/TV activities (moved to J);  S “Other service activities” includes repair of computers and household goods.

UNECE Statistical Division Slide 10July 2007 Specific aggregation levels  Two specific SNA/ISIC aggregation levels have been developed for worldwide reporting of NA data: a top- top level A*10 and an intermediate level A*38;  At the EU level A*66 level will also be introduced;  In NA other characteristics of producing units are also important in addition to ISIC Groupings: type of producer, type of ownership, institutional sector;  Alternative aggregations for other specific needs could also be developed: informal sector aggregates, ITC sector, etc.

UNECE Statistical Division Slide 11July 2007 Implementation of ISIC Rev.4 The 38 th UN SC reviewed the following timetable for implementation of ISIC Rev.4 :  Adaptation of national classifications by 2009;  Adaptation of business registers by 2010;  Use of revised ISIC and CPC in statistical programmes starting in 2011;  Use of revised ISIC and CPC in national accounts by 2015;  Use in population census, and so forth, as soon as possible. Flexibility, allowing countries to speed up the process.

UNECE Statistical Division Slide 12July 2007 Implementation of ISIC Rev.4 in UNECE region  Implementation process will be more advanced in some UNECE countries as compared to the global level  Three groups of countries: Eurostat coordinated group (27 EU + 4 EFTA) Operation programme for implementation of NACE Rev.2 North America (US, Canada) Implementation of NAICS 2002 and NAICS 2007 Western Balkans and CIS Different classifications in use – ISIC/NACE, CBNE

UNECE Statistical Division Slide 13July 2007  1 January 2008: units in BR should be classified in NACE Rev.2 (double coding at least for 2008);  2008: First reference year for structural business statistics;  2009: Short term statistics (M and Q1 2009) and Labour cost index;  September 2011: reporting of National accounts in NACE Rev.2;  2011: Balance of Payments and Agricultural statistics,  2012: All community statistics will be produced according to NACE Rev.2. and CPA EU countries – NACE Rev.2 and CPA

UNECE Statistical Division Slide 14July 2007 EU countries –NACE Rev.2 Level A3 Level A6 Level A17 Level A31 Level A60 Discontinued Replaced by A*10 (quarterly and regional accounts) Replaced by A21 Replaced by A*38 (annual accounts) Replaced by A*66 (supply/use and IO tables)

UNECE Statistical Division Slide 15July 2007 North America – NAICS  OECD questionnaire in 2006;  Canada will implement the revised NAICS in business surveys in National accounts will be reported in the new classification in 2010;  US will also provide national accounts in the revised NAICS in 2010;  Both countries will provide levels A*10 and A*38.

UNECE Statistical Division Slide 16July 2007 Western Balkan and CIS countries  In spring 2007 eight countries provided to UNECE information on their plans to introduce the new ISIC;  Some countries are currently switching from CBNE to ISIC Rev.3;  Armenia, Moldova, Serbia and the former Yugoslav Republic of Macedonia are translating the classification and developing national versions and explanatory notes;  Armenia, Moldova and Serbia plan to introduce ISIC Rev.4 in business statistics in 2008, and Ukraine in 2011;  National accounts will be reported in ISIC Rev.4 in 2011 by Serbia and in 2012 by Ukraine.

UNECE Statistical Division Slide 17July 2007 Implementation of ISIC Rev.4 in UNECE region  About 50 of UNECE member countries (out of 56) are regularly producing and reporting national accounts data in activity breakdown;  UNECE expects that by 2012 between 35 and 40 countries will introduce the revised ISIC/NACE in their statistics.

UNECE Statistical Division Slide 18July 2007 Useful links  Eurostat, Operation 2007: Revision of NACE and CPA  Eurostat, Metadata Server RAMON _PUB_WELC  UNSD, Economic and Social Economic Classifications