ISIC Revision 4: Top-top and Intermediate Aggregation Structures (for SNA data reporting by activity) OECD proposals

1. ISIC Revision 4: Top-top and Intermediate Aggregation Structures (for SNA data reporting by activity)OECD proposals William Cave OECD Statistics Directorate OECD WP National Accounts October 2005

2. What is ISIC? • International Standard Industrial Classification of All Economic Activities (ISIC) • The official activity classification of SNA • To classify economic entities (units) according to activity they carry out • Original ISIC 1948 • Rev 1 1958, Rev 2 1968, Rev 3 1989 • Minor Revision 3.1 2002, • Major Revision 4 planned for 2007 OECD WP National Accounts October 2005

3. Design principles & priorities for ISIC rev 4 • Improve international comparability • convergence of regional classifications • E.g. NAICS,NACE,JSIC,CSIC,ANZSIC etc • engage more countries & regions in ISIC design • target for international comparability at least 2 digit level • Relevance • Information sector, internet , telecoms • OECD ICT definition • environmental services • new technologies • growing business service sector • health services • tourism • agriculture • Continuity – long time series • Level of detail for an international classification? OECD WP National Accounts October 2005

4. ISIC 3 and ISIC 4 top-level OECD WP National Accounts October 2005

5. ISIC rev 4: A Top-top Structure? What are SNA needs? • SNA AEG, OECD and Eurostat national accountants have agreed need for top-top structure to ISIC rev 4 of about 10 categories • OECD national accountants proposed that intermediate aggregation of 30-40 categories useful for international comparison within OECD. SNA AEG in Dec 2004 were undecided. • Currently OECD and Eurostat use A6/A17/A31/A60 aggregations of ISIC rev 3 in national accounts questionnaires OECD WP National Accounts October 2005

6. Proposed set of ISIC 4 SNA data aggregations? • A*10/11 top-top • A*21 = ISIC rev 4 Sections • A*38 = ISIC rev 4 Sections + 17 sub-sections (intermediate) • A*88 = ISIC two digit divisions OECD WP National Accounts October 2005

7. OECD exercise • Autumn 2004 set aim to agree top-top and intermediate ISIC 4 aggregations for reporting national accounts data by activity • Initial proposals from Eurostat, UNSD and France • OECD analysts raised issues: • international comparability, relevance, and continuity for long time series analysis; • the needs of input-output, policy interests, productivity analysis, separately identifying activities that follow different tracks in economic cycle • OECD SNA Industry EDG established to encourage participation • Proposals developed in consultation with Eurostat and UNSD OECD WP National Accounts October 2005

8. Process • First OECD proposal circulated February 2005 • Revised proposal in light of comments 24 May • Set out specific questions on most contentious issues • Sent to all OECD member national accountants, EDG, classifications experts, Eurostat, UNSD • Reviewed by UNSD Expert Group on Classifications June 2005 • Comments received from 15 countries, Eurostat and ECB OECD WP National Accounts October 2005

9. Constraints • Preference for following ISIC structure • ISIC 4 draft was changed in March and August 2005 – now finalised • Some ISIC structural and ordering changes on real estate and public administration made for top-top • Take into account current ISIC 3 aggregations • Consider Eurostat A65 draft & US BEA GDP by industry (~65) OECD WP National Accounts October 2005

10. OECD proposal for Top-top aggregation OECD WP National Accounts October 2005

11. Illustrative v.a. weights for selected countries OECD WP National Accounts October 2005

12. Responses on top-top • i) Group OPQ and RSTU or ii) O and PQRSTU • i) 9 ii) 7 very close but chose option i) • Support A10/11? • Yes 14, No 2 • Two suggested A12 with mining • One favoured A10 combine L with MN • One favoured A6 if to be used for quarterly reporting OECD WP National Accounts October 2005

13. Proposal for intermediate aggregation A*38 OECD WP National Accounts October 2005

14. Proposal for intermediate aggregation 2 OECD WP National Accounts October 2005

15. Proposal for intermediate aggregation 3 OECD WP National Accounts October 2005

16. Issues for intermediate aggregation • Comparable SNA data reporting for Europe, N America and Asia-pacific and preferably wider • Follow ISIC order and hierarchy • Consider analytical relevance and continuity • ICT, R&D, Energy, Distributive trade • Keep approximate A31 level of detail for manufacturing – for continuity and robustness of data • More service activities • Eurostat and US A65 levels OECD WP National Accounts October 2005

17. Responses on intermediate proposal • Not to break out mining of energy materials • Yes 9, No 5 • Combine Section G Trade divisions into one for international comparability • Yes 11, No 3 • Agree split on human health and social work • Yes 12, No 3 • Break out R&D • Yes 13, No 3 • Break out manufacturing at about same level as A31 • Yes 10, No 1 • Keep the group manufacture of transport equipment as in A31 • Yes 9, No 4 OECD WP National Accounts October 2005

18. Questions and Proposed Next Steps • Can these proposed aggregations be accepted for SNA data reporting? In particular: • Do you agree the A*10/11 proposals are suitable for an ISIC top-top aggregation for SNA data reporting • Do you agree the proposed intermediate A*38 is suitable for SNA data reporting? • Any further comments are invited • Subject to delegates views a final OECD paper would be submitted to ISWGNA in November for consideration by the SNA AEG January 2006 • P.S.: Should a standard grouping for service activities be recommended or not? OECD WP National Accounts October 2005

19. Thank you for your attention OECD WP National Accounts October 2005