1. Statistical unit, Profiling and Prodcom in France

2. Statistical unit, Profiling and Prodcom in France
Part I
General considerations
Part II
Situation in France
Part III
Consequences on Prodcom
(view from France)

3. General considerations
Part I
General considerations

4. Economic and political context
Entreprises are all the time changing.
The current enterprise is no more the one we used to study years ago, because some specific kinds of organisation have emerged
(groups, outsourcing, internationalization…).
At the same time there is a growing social and political demand for a better diagnosis on our production system.

5. Statistical consequences
 As statisticians, our duty is to adapt regularly our statistics to the world in evolution in order to give the best description of our economy for people, for policy makers, for national accounters, for business and worker unions, for corporate managers in order to provide them with the best tools to understand what is going on and to take the best decisions.

6. Statistical unit in Business statistics
Statistical unit in business statistics often means « the enterprise ».
In Prodcom regulation, survey population is enterprises.
But « enterprise » is a term that needed to be specified at European level.

7. Enterprise: a need for a European definition
Definition of what an enterprise is has been discussed for years at European level.
Topic is still under discussion with a FRIBS Task Force on statistical units.
Anyway, before that, an important step has been reached in 1993, with the definition of the enterprise provided by the European regulation 696/93.

8. Enterprise: definition from European regulation 696/93
“The enterprise is the smallest combination of legal units producing goods or services, with a certain degree of autonomy in decision making especially for the allocation of its current ressources”.

9. Enterprise in European countries
Countries might have their own definition of what an enterprise is.
Some countries might assimilate enterprise to legal unit, using the statistical units of their business register.
Legal units are usually specified on criteria that follow (only) administrative or fiscal concepts.

10. Enterprise versus Legal Unit
When a legal unit is not under control of another legal unit, then it is an enterprise.
But when a legal unit is controlled by a group, then it may not be an enterprise: the enterprise is more probably the gathering of several legal units.

11. What does profiling mean?
Because legal units inside groups don’t fit the 1993 definition of an enterprise which is an economic concept…
…for groups, you need to find all the gatherings of legal units that constitute an enterprise (profiled enterprise).
 This means profiling a group
(using the 1993 European enterprise definition to determine enterprises inside each group).

12. Exemple: from 15 legal units…to 5 enterprises
Paris, 17 octobre L’Observatoire des enterprises 12

13. Part II
Situation in France

14. Some figures about groups in France
In France 94% of legal units are outside groups
But they weigh only 36% of employees
And 30% of the value added (market sectors excluding farm and finance).
Therefore groups are very important
6 % of legal units but around 2 thirds of the main economic indicators.

15. Slow changes
France started to use the 1993 European definition of Enterprise mainly in 1999 (France started to profile groups in 1999).
Anyway, profiling groups is a complicated process.
Profiling is a step, but collecting and disseminating data according to profiled enterprises are other steps.
So in some cases, 1993 European definition is still not followed.
But in a few years it should be OK…

16. Profiling in France started in 1999 with Peugeot
The initiating event: the changes in PSA in (Peugeot, car industry).
Before 1999, PSA was a single legal unit.
After 1999, we began talking about PSA group.

17. A new legal organisation for PSA group
In 1999, PSA decided to create a legal unit for each of its factories:
From one day to another, each plant producing cars became a legal unit with its own accounts
If Insee had based in this case its statistics on legal units, most of the economic indicators (monetary flows, some production aggregates…) of the sector would have increased…
… while actually nothing had changed!
At that time it was decided to refer to the 1993 European definition and to profile PSA Group.

18. A team dedicated to the profiling of groups
Insee has created a team dedicated to profiling.
The profilers have
technical skills on business statistics
knowledge on legal and accountancy subjects
abilities in communication as they have to negotiate with entreprise groups and to share information with other business statisticians and business statistics users.

19. Cooperation on profiling with other services
A dedicated working group has been created with representatives of:
the national accounts statisticians
the team in charge of profiling
the team in charge of the elaboration of structural business statistics (used by national accounts).
Exchanges between the producers of business statistics and the economists: Insee, French National Bank, statisticians in Ministries…

20. Profiling state of progress in november 2013
63 groups profiled in novembre 2013: the largest ones.
They cover:
200 profiled enterprises (1993 European definition)
5 100 legal units.
“France's economic fabric more concentrated than it seemed, new definition and new categories of enterprises”

21. Consequences on Prodcom (view from France)
Part III
Consequences on Prodcom
(view from France)

22. Changes only in groups When a legal unit = an enterprise
 no changes for Prodcom
When inside groups, several legal units are gathered to compose an enterprise
 changes for Prodcom

23. Real impacts on Prodcom sold aggregates
Sales between legal units belonging to the same enterprise are no longer counted
= for sold production, all intra enterprise trade disappears.
So figures about sold aggregates (sold value & sold quantity) will rather diminish:
Total of sold aggregates of several legal units belonging to the same enterprise, will be the same or will be more than sold aggregate of this particular enterprise
a product may even be sold between legal units belonging to the same enterprise without being sold at all outside this particular enterprise
In this case sold aggregate for this product and this particular entreprise will disappear from Prodcom sold aggregates.

24. More subtle impacts on total production aggregates
In theory, it seems there should not be any direct impact on total production aggregates
If a product is manufactured, it should be counted whatever it is used for, and whatever the definition of the enterprise is.
Anyway, there might be indirect consequences.

25. Indirect consequences on total production aggregates
If a product is transformed along different legal units belonging to the same enterprise,
in a way that, at different steps and in different legal units, the product can be classified in same Prodcom heading or very close Prodcom headings,
 then some kind of double countings or mistakes might be streamlined when asking directly information to the enterprise.
If no more sold aggregate exists for the product, then there is risk that total production (and the whole heading) might be totally forgotten by the enterprise.
Respondent at enterprise level will probably be more distant from the plants than the ones at legal unit level.
There should be more situations where total production is bigger than sold production.

26. Impact on data collection
Even if profiling mainly aimed at improving the quality of disseminated data, we understand easily that it is better to collect at profiled enterprise level (especially when profiling is promoted through burden reduction).
This can raise issue on each step of the data collection.

27. Impact on data collection: sampling
Sample database comes no more directly from the Business register but rather from a statistical register that needs to be built.
But then:
What is the main activity of each profiled enterprise then?
What are the changes in pre-existing branches?
How to follow the changes? (every year some legal units leave or enter the perimeter of already existing profiled enterprises)
Be sure to avoid double counting between the profiled enterprise and its legal units.

28. Impact on data collection: adapted questionnaire/estimation
In order to personnalize questionnaire, you need to know which products to write down (and for some countries, figures), but it is more fragile when you survey a profiled enterprise for the first time (and at the same time profiled enterprise data are very useful).
You need to follow perimeter changes every year.
Same problems arise when you need to estimate or check data for a profiled enterprise that is new or whose perimeter has changed.
 each situation is unic and is time-consuming for each profiled enterprise, and at the same time these are usually firms important for the data: difficult to automatize the process.

29. As a conclusion
We are so used to employ Business register and legal units that using a new definition for enterprise is a big change.
New situation appears whith profiling: it concerns only groups.
It is easy to understand the theory, but more complicated when you need to adapt it to data collection, as it raised numerous practical issues.
Anyway, European enterprise definition and profiling go in the good direction in order to better assess economic trends: so it is an evolution we should accept.

30. Statistical unit, Profiling and Prodcom in France
Thank you for your attention!
Insee
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75675 Paris Cedex 14
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Contact :
M. Grégory Salmon
Courriel : 30
22/09/2014