Implementation plan

Operation 2007

The basic structures of the classification of economic activities that is currently applied in European statistics date back to the mid-1980s; the classification was passed by the European Council in 1990 and made binding on the member states (NACE Rev. 1; applicable from 1993 or 1995). It was updated in 2002 (NACE Rev. 1.1). Due to the structure of the economy undergoing massive changes during these decades, in particular with respect to services, a major revision of the classifications of economic activities needed to be undertaken. This decision was made in 2001 and a comprehensive work process (“Operation 2007”) lasting a number of years was started. The process has recently been concluded and the new worldwide and European classifications of economic activities, ISIC Rev. 4 and NACE Rev. 2 respectively, are now available.

ISIC Rev. 4 was passed by the United Nations Statistics Division in March 2006. Currently the work is focused on the finalisation of the publication of ISIC Rev. 4; a version of the explanatory notes is available on the website of the United Nations for a long time. NACE Rev. 2 came into force by an EU regulation at the end of November 2006, and publication in the Official Journal followed on 30 December 2006. Important aspects of the NACE Rev. 2 regulation were negotiated in the first half of 2006 under Austria’s EU presidency.

The revised classifications of products – the CPC Version 2.0 by the United Nations and the CPA 2008 by the European Union – are also finalised but not published so far. The CPA 2008 regulation (No. 451/2008 of the European Parliament and of the council of 23 April 2008) was published in the official journal L 145/65 on the 4. June 2008.

National versions of the European classifications have been compiled and applied In Austria in the past. ÖNACE 1995 corresponded to NACE Rev. 1 and ÖNACE 2003 to NACE Rev. 1.1. A national version of NACE Rev. 2 (ÖNACE 2008) is also being compiled and will be completed in the first quarter of 2008. The Austrian national version of CPA 2008, ÖCPA 2008 will be finalised in the first half of 2009.

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Transition to a new classification

The transition to a new classification is normally a very complex process as it involves virtually all aspects of the compilation and presentation of the relevant statistics. This is even more true of the transition to a new classification of economic activities, since classifications of this kind are used in a myriad of statistics and a high level of coordination is therefore required. The transition to a new classification is therefore associated not only with the advantage of data being available according to an up-to-date classification with an improved depiction of current economic structures, but also with disadvantages, in particular – from the perspective of many data users – the associated breaks in the time series. Back-casting is necessary in order to minimise these problems. In addition, not all statistics can be transferred to the new classification at the same time, which means that for a certain period of time, some statistics are already published according to the new classification while others are still published according to the old classification, and this has a negative impact on the desired coherence of the whole system. To minimise this problem, certain statistics will need to be compiled according to both the old and the new classifications in parallel. The reasons for this are the different references of the individual statistics, and also the interdependencies between particular statistics. This is illustrated most clearly by the National Accounts, which will only be able to switch over to the new classification when all the base statistics required are available under the new classification. The transition itself is thus a process lasting in 2011.

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Coordination of activities

Coordination activities begin at European level as the member states need to switch over to the new classification at the same time; otherwise, European aggregates cannot be calculated. It is not only the time of the transition that needs to be coordinated but also the transition and back-casting methodology to be applied to the transition so that harmonisation and comparability of statistics can be maintained between the member states. The key parameters for the implementation of NACE are therefore specified at European level. Essentially, the following principles will apply:

The first year of implementation will be 2008. When first implementation can only take place later, corresponding back-casting must be performed.
In addition, back-casting that goes further back in time must be available for certain statistics.
Certain statistics must be compiled according to both the old and new classifications for one reporting period (2008).
All transitions must, without exception, be carried out by all member states at the same time.
Methodological approaches to the transition should be harmonised as far as possible.

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Legal aspects – the NACE regulation

The new NACE regulation provides the legal framework for the implementation of NACE. The NACE regulation not only contains the new classification and designates it as the classification of economic activities to be used in future for all statistics, but also contains key provisions for its application. In addition, the regulation contains changes to a total of ten associated statistics regulations with respect to the NACE transition. These regulations are as follows:

Regulation on the establishment of a Community survey of industrial production
Regulation concerning structural business statistics
Regulation concerning short-term statistics
Regulation on statistical returns in respect of the carriage of goods by road
Regulation concerning structural statistics on earnings and on labour costs
Regulation on waste statistics
Regulation concerning the labour cost index
Regulation on the production of annual Community statistics on the steel industry for the reference years 2003-2009
Regulation concerning Community statistics on the information society
Regulation on statistics relating to vocational training in enterprises.

The NACE regulation does not include the areas of National Accounts, Regional Accounts and the Economic Accounts for Agriculture or statistics on the balance of payments, international movement of services and direct investments, on which decisions with respect to the NACE transition will be made at a later stage. However, the range of statistics affected is not yet complete since the relevant basic legal framework does not specify the classification to be used for a number of statistics, which may therefore be stipulated by Commission regulations. Accordingly, further additional changes will be made in these statistics by various Commission regulations with respect to the NACE transition.

The most important provisions in the NACE regulation in terms of implementation are as follows:

Statistics that relate to economic activities performed from 1 January 2008 are to be compiled according to NACE Rev. 2.
The statistical units in the business registers are to be classified according to NACE Rev. 2.
Structural business statistics for the reporting year 2008 are to be compiled according to NACE Rev. 2 and NACE Rev. 1.1.
In the context of short-term statistics (including producer and import prices), the first reference period for which all variables are to be provided according to NACE Rev. 2 is January 2009 for monthly data and the first quarter of 2009 for quarterly data. The first base year, which is to be used for time series according to NACE Rev. 2, and the length of the time series before 2009, which are to be provided according to NACE Rev. 2, may be defined in a comitology procedure.
The data for the labour cost index will be compiled for the first quarter of 2009 according to NACE Rev. 2 for the first time; back-casting is to be performed until the first quarter of 2000.

The NACE regulation therefore already contains the basic principles and the time frame for the implementation of NACE, even if certain areas are not included and a number of other areas and details still have to be defined in the comitology method. These provisions thus form the starting point for the development of the national implementation concept for individual statistics. In addition to European requirements, additional national requirements such as those relating to back-casting or double reporting may also need to be taken into account. Moreover, there also needs to be coordination with other national providers of statistics and owners of administrative data.

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The national implementation concept

The national implementation concept should be based on the same principles as the European implementation concept:

The starting point is the recoding of all statistical units in the business register according to NACE Rev. 2 (ÖNACE 2008) by autumn 2007 so that the new sampling plans for the relevant statistics can be drawn up in time.
Since it is still necessary to report certain statistics according to the old classification, all units in the business register will, at least in 2008, be coded according to both ÖNACE 2003 and ÖNACE 2008.
The units coded according to ÖNACE 2008 will also be made available to the administrative registers to make the transition to the new classification easier for them and to ensure that it involves only minimal time and effort on their part.
Transition to the new classification will take place for all statistics during the 2008 reference period with the exception of short-term indicators, which will only be transferred in 2009, and National Accounts which, as matters currently stand, will probably not be transferred until 2011.

The transition concepts developed will be discussed in detail in the relevant advisory committees (special advisory subcommittees and working groups), for which each individual specialist area is responsible. A range of national regulations also need to be changed.

In 2005, Statistics Austria set up an internal project group for the coordination of all questions relating to the implementation of NACE. As shown, the transition to the new classification is a complex project involving many different areas, and it will be a key activity in the work programme for a number of years.

A task force is still in existence at European level, and is primarily concerned with methodological issues relating to the implementation of NACE (e.g. back-casting methods). Content-related issues will also be discussed in the various Eurostat working groups.