EU KLEMS project on Productivity in the European Union

1. EU KLEMS project on Productivity in the European Union Presentation for Working Group on National Accounts Eurostat, Luxembourg, 16 May 2005 Bart van Ark (Groningen Growth and Development Centre, University of Groningen) This project is funded by the European Commission, Research Directorate General as part of the 6th Framework Programme, Priority 8, "Policy Support and Anticipating Scientific and Technological Needs".

2. Main characteristics of EU KLEMS • EU KLEMS project is 3-year statistical and analytical research project funded by 6th Framework Programme • Purpose is to create a database on growth accounts by industry (NACE 60+) for EU member states with a breakdown into contributions from capital (K), labour (L), energy (E), materials (M) and service inputs (S) • Full coverage of “old” EU-15 plus 5 new member states (PL, SK, HU, CZ and SI) • Limited coverage of other 5 new member states (CY, MT, LT, LV and EE) • Also comparisons with U.S., Canada and Japan • 1970-2005, with greatest detail for post-revision period • 15 research institutes across Europe, led by GGDC and NIESR • In 2nd phase conduct a number of analytical research projects

3. Setup of project: Workpackages

4. NSI’s have actively contributed to EU KLEMS • Three status positions: • Subcontracting: Statistics Finland, ISTAT, Statistics Netherlands • Participatory status: Statistics Sweden, STATEC (Luxembourg), ONS • Observer status: INSEE, Statistics Denmark, Statistisches Bundesamt, Institute of National Statistics (Belgium), Statistics Austria, Statistics Ireland, INE, Statistical Office Slovakia, Statistical Office Poland, CSO Hungary, Czech Statistical Office, Statistical Office Slovenia • Contacts under development: • Greece, Portugal, Lithuania, Latvia, Estonia, Cyprus, Malta • Also contacts with: • USA (Harvard University, BEA, BLS),Japan (RIETI, Hitotsubashi), Canada (Statistics Canada) • OECD (Statistics Dept., DSTI)

5. EU KLEMS milestones June 05 – May 06 • Activities • Internal Consortium meetings in Helsinki (June 2005) and Valencia (May 2006) • Workshops on WP1 (output and intermediate inputs) in September (Groningen) & WP2 (labour accounts) in November (London) • Project presentations at EU level (NAWG Eurostat, June 2005; EPC, May 2005) and OECD level (Productivity Conference Madrid, October 2005) • Some national presentations of preliminary project results (Sweden, Austria, Netherlands) • Data collection & processing WP’s • Additional data collection and advice from NSI’s • Processing and construction of preliminary database • End of March 2006: release of preliminary analytical database (also available on country-by-country basis for NSI’s) • April: begin of feedback phase from NSI’s

6. The Underlying Structure of the EU KLEMS Growth and Productivity Accounts

7. EU KLEMS Output Data are Defined

8. EU KLEMS Output Data are Defined

9. Statistical vs. analytical modules of database Analytical module of the database • Core of the EU KLEMS database • Uses “best practice” techniques in area of growth accounting • Focuses on international consistency • Aim is full coverage (country * industry * variable) for revision period • Consider alternative or pioneering assumptions (e.g., output and price measurement of ICT goods and non-market services, measurement of skill levels, construction of capital services, capitalization of intangible assets). • Analytical database is a research data base and are not official statistics Statistical module of the database: • Developed parallel to the analytical module • Data consistent with those published by NSIs • Methods according to rules and conventions on national accounts, supply and use tables, commodity flow methods, etc. (SNA 1993, ESA 1995) or at least supported by NSI’s • Statistical module meets statistical standards of NSI's and Eurostat and can eventually be incorporated in their present statistical practices and in New Cronos.

10. Status of Preliminary Analytical Dataset • Present dataset is Preliminary Analytical Module (country output files available to individual NSI’s) • Harmonisation that has been realized (see Sources and Methods documentation) • Industrial classification: A60+ (up to 72) • Aggregation levels: flexible • Reference year for volume measures: 1995 • Price concepts: basic prices for gross output; purchaser prices for intermediate inputs • Solving breaks: splicing method • Labour input concept: total hours actually worked (where possible with breakup in “persons” and “hours per person” • Asset classification: minimum of 11 asset types, incl. 3 ICT breakdown • Capital services input: on basis of endogenous calculation • Multifactor productivity measure

11. Status of Preliminary Analytical Dataset • Harmonisation not yet realized • Coverage: industry detail, years, countries • Correction for FISIM, in particular backwards • ICT deflators for output and investment: U.S. hedonic or national deflators • Labour quality: country-specific approach, with cross-country linkage through university graduation • A large number of smaller issues • System of adequate quality control under development • Consortium EU KLEMS partner checks input data • Central EU KLEMS hubs (Groningen/NIESR) check consistency, concepts, concordances, other sources for EU KLEMS input data • Central EU KLEMS hubs (Groningen/NIESR) check consistency, breaks, outliers for EU KLEMS output data • Consortium partner/NSI/Eurostat: feedback and validation of EU KLEMS output • Consortium: stress testing on plausibility and international comparison

12. Targets are defined for each variable in EU KLEMS database

13. Feedback and validation from NSI’s • Feedback needed on analytical module and validation of statistical module: • Initial overall assessment of the quality of the data presently used • Which series could in principle be included in the statistical module • Which additional series could be used in the statistical module • Which additional series may still be provided for use in the analytical module • What will EU KLEMS publish? • EU KLEMS only publishes end series (see present output files) and not basic data (such as capital-asset matrices or SUT’s) • Consortium decides on publication of end series in analytical module taking into account NSI feedback • NSI’s need to validate statistical modules – and those are only ones used for New Cronos and for Commission analysis • Full integration of Analytical and Statistical modules is ultimate aim, but for many countries not achievable in framework of this project • Discussions on statistical implementation will start after release of first public version of data base

14. Time frame • Local consortium partners will arrange feedback meetings with NSI’s before 30 June • Feedback to Eurostat (Arturo.de-la-Fuente@cec.eu.int) before 16 July • EU KLEMS consortium will process (if feasible) feedback and new data until mid September • First full version available on 31 October 2006 • About three months of quality checks and stress testing (incl. EU KLEMS Data Co-ordination Group meeting) • November 2006: Final discussion at NAWG for preparation of statistical modules • End 2006/2007: public release of EU KLEMS analytical module and subsequent (gradual) release of statistical modules • 2007: development of Statistical Implementation Plan • End of 2007: 2nd release and publication of 2 or 3 volume series on EU KLEMS (methodology, comparative country studies and analytical research)

15. Contact Details • Bart van Ark (project director) Groningen Growth and Development Centre,University of Groningen PO Box 800, 9700 AV Groningen Telephone: +31 50 363 3674 E-mail: h.h.van.ark@rug.nl • Gerard Ypma (project administrator) Groningen Growth and Development Centre,University of Groningen PO Box 800, 9700 AV Groningen Telephone: +31 50 363 4838 E-mail: g.ypma@rug.nl • E-mail: euklems@eco.rug.nl • Website: http://www.euklems.net