NACE: How the revision of a classification can affect quality of statistics

1
NACE How the revision of a classification can
affect quality of statistics

• Ana Franco

2
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).

3
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 2008.
• 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.

4
NACE The revision process (stakeholders)
UN
EUROSTAT
UN Statistical Commission
Statistical Programme Committee
NACE/CPA Working Group
UN Expert Group
Technical Subgroup
Task force
5
Revision of NACE an opportunity to improve
quality

• Relevance
• Accuracy
• Timeliness and punctuality
• Accessibility and clarity
• Comparability and coherence
• Cost and Burden

6
Relevance

• During the process of revision of NACE/ISIC the
  opinion of the users was carefully taken into
  account.

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 (NSIs) - European trade associations
(FEBIs) - 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
Afristat
Workshops in different regions of the world
UN Technical Subgroup
NAICS/NACE convergence project
NACE Rev. 2
7
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

8
Accuracy

• Correspondence between NACE Rev 1.1 and Rev.2

Rev 1.1 Rev.2 1 1
Rev 1.1 Rev.2 a 1 b c
Automat ic
196
18
Rev 1.1 Rev.2 a b c 1 d e
Manual
Good occasion to correct errors!
86
Rev 1.1 Rev.2 a e b f c g h
214
9
Timeliness and punctuality

• Labour Cost Index
• Job Vacancy survey
• Inform. Soc.

Business registers updated
Start of revision
National Accounts
End-2006
2001
2008
2009
2010
2011
Adoption of regulation

• Business register
• Labour Force Survey
• Road freight survey
• Structural Business Surveys

10
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. 1.1 - 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.

11
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.

12
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
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)
14
Comparability between statistical domains

• Data is published by Eurostat according to NACE
  in 33 different statistical domains
• Solutions
• Dual coding
• Back casting

2008 21
2009 3
2010 6
2011 3
15
Comparability over time
282
NACE Rev 1.1 NACE Rev.2
Sections 17 21
Divisions 62 88
Groups 224 272
Classes 514 615
Correspondences
1 to 1 196
n to 1 86
1 to n 18
n to m 214

• 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

16
Coherence
Economic Activities
Products
Goods
ISIC
CPC
HS
SITC
World level
NACE
CPA
PRODCOM
CN
EU level
National versions of NACE
National versions of CPA
National versions of PRODCOM
Nat. Level
17
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!
18
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.