ESA/STAT/AC.75/4

30 November 1999

UNITED NATIONS

DEPARTMENT OF ECONOMIC AND SOCIAL AFFAIRS

STATISTICS DIVISION

Meeting of the Expert Group

on International Economic and Social Classifications

New York, 15-17 November 1999

FINAL REPORT

Expert Group on International Economic and Social Classifications

New York, 15-17 November 1999

INTRODUCTION

The Meeting of the Expert Group on International Economic and Social Classifications was convened in New York on 15-17 November 1999 at the request of the United Nations Statistical Commission at its 30th Session [1] .  Participants at the meeting included statistical classifications experts from fifteen countries and nine international organizations.  A list of participants is attached to this report as Annex I.

The Expert Group meeting was opened by Mr. Hermann Habermann, Director of the United Nations Statistics Division (UNSD).  The meeting was chaired by Mr. Alan Mackay of Australia.   Ms. Rosemary Marcuss of the United States of America, in her capacity as rapporteur, assisted in the drafting of the main conclusions and recommendations.  The discussions at the meeting of the Expert Group followed the Provisional Agenda, contained in Annex II.  The List of Documents of the Meeting is contained in Annex III.

At the opening session, the Director of the United Nations Statistics Division asked the Expert Group to take the larger perspective and make practical proposals to bring about the convergence of classifications.

The Chairman, in his opening statement, emphasized the urgency for a rapid and significant progress in classifications work. He pointed out the critical role of the United Nations Regional Commissions in informing the UN of priority needs, for providing technical assistance and training in classifications, and planning for future classifications-related work.  He also noted the key impetus of population census rounds in setting the need for further development and implementation of classifications. As a priority, he expressed the need for the further development and revision of ISIC, and to attain this goal, the need to manage the work through preparation of action plans and follow-up mechanisms for implementation.

The main goal of the meeting was to formulate actions addressing the mandate of the Expert Group as a central coordinating body for implementing the proposed work programme on the family of international economic and social classifications.  Under this broad mandate, the proposal for a Technical Subgroup was discussed and its terms of reference agreed, in line with the need to define specific tasks which include classification revisions, practical proposals to bring about convergence, and a strategy for orchestration and timing of revisions for a core group of international and multinational classifications.  

The experts decided that the Expert Group should be a body that offers a neutral, and open forum on classifications that has the authority of setting strategic plans on classifications work into action. 

Its role and functioning should:

·        be results driven, leading to pragmatic undertakings with specific assignments to individual members or groups;

·        offer a balanced approach between historical continuity and current relevance;

·        maintain focus on identifying clusters of classifications that have some commonality and align their interpretation, updating and revision

The Expert Group approved the creation of a Technical Subgroup whose first priority is to further the work and implementation of ISIC and CPC. Details of the proposed tasks and timetable was assigned to the Technical Subgroup based on the discussion of the general guidelines on the proposed updating and revision of ISIC and CPC.  It was also proposed that the Expert Group should hold regular consultations with stakeholders to adequately address and represent both economic and social concerns.

The Experts agreed that ISIC, with its extensive use in a range of data collection activities, should continue to be a major classification that countries should adapt and implement through the use of available and newly developed tools to facilitate its use.  They however affirmed that the basic rules and conceptual underpinnings of ISIC need improvement and clarification, and that they should be re-examined and/or new ones created when necessary, to ensure relevance to current economic structures.

In line with the proposed revision plans for ISIC, underlying issues on harmonization and convergence of activity classifications were discussed. To accelerate this process towards convergence and harmonization, the Expert Group requested the Technical Subgroup to examine the strategies, approaches, and orchestration plans for the proposed ISIC revision, taking into consideration the other major groupings of derived and related activity classifications.

The deliberations also included the progress on implementation and further development of the Central Product Classification Ver. 1.0, planning and coordination of training programmes and workshops on classifications, and mechanisms to further upgrade the electronic communication and information dissemination on classifications. 

Given the role of the Expert Group meeting as a regular forum for coordination and feedback for the family of international economic and social classifications, presentations were made by representatives of UNESCO on current activities concerning the development of ISCED, ILO on training activities for ISCO and ICSE, and IAPSO (Inter-Agency Procurement Services Office), with regard to current activities concerning the maintenance of the UNCCS (United Nations Common Coding System). The United Nations Statistics Division (UNSD) presented the existing coordinating tools and mechanisms available at the UN Classifications Hotline, Classifications Registry and UN Classifications Website, as well as the Trial International Classification of Activities for Time-use Statistics.

Following these introductory highlights are the Main Conclusions and Recommendations.


Conclusions and Recommendations of the Expert Group on

International Economic and Social Classifications (15-17 November 1999, New York)

A.                 Conclusions and Recommendations of the Expert Group

I.          Progress in work

1.                  Of the total 142 countries currently using ISIC, there are 93 countries using national classifications based on ISIC Revision 3, while the remaining 49 countries use national classifications derived from ISIC Revision 2.   The Experts were pleased to learn that the implementation of ISIC Rev.3 has further progressed.  Since the preparation of the last Expert Group report one year ago, 45 additional countries have moved to ISIC Rev. 3.

II.        International family

2.                  The experts approved that a Technical Subgroup of the Expert Group beestablished, and its terms of reference agreed.  The Technical Subgroup is asked to take action on the implementation of the proposed programme on ISIC Rev.3 and CPC as a first priority and report back to the Expert Group on progress, through UNSD.

3.                  With respect to ISIC as a member of the family of international economic and social classifications, the experts offer the following conclusions.

4.                  The experts:

(a)    Recognize the heavy burden placed upon ISIC owing to its historical importance in describing the whole of industry and the absence of other more specific classifications;

(b)   Acknowledge the significant improvements to the potential for economic analysis that have occurred through the agreement on 1993 SNA, an international economic framework;

(c)    Note how important it is for statistical offices to implement the full set of internationally approved economic classifications of the 1993 SNA that support the study of industry (for example, the classifications of the institutional sectors, economic activity (ISIC), products (CPC), and classifications of expenditure according to purpose);

(d)   Acknowledge the increasing demand upon statistical offices to provide statistics for economic and social policy and to further develop and implement the full set of required classifications of the international family;

(e)    Recommend that prior to setting the goals for further research and development of ISIC, timetables should be established with cut-off points and firm dates for making each decision on whether to proceed with a component of the programme proposed, and a firm date for completion of each component undertaken;

(f)     Recommend that ISIC be further refined while recognizing that there is a well-identified bundle of classifications available to describe the necessary characteristics of industry.

 

III.       Implementation of ISIC

5.                  The Expert Group agreed that ISIC should continue to be a major classification for country implementation.  In that regard, countries' capacity to implement ISIC should be strengthened and more tools provided to facilitate its use, such as the  simplified introduction, the alphabetical index, and elaborated explanatory notes.  Emphasis should be placed on adapting ISIC to national or regional use as distinct from adopting ISIC.

6.                  The Expert Group affirmed that the basic rules and conceptual underpinnings of ISIC need improvement and clarification and request that they be reexamined and/or new ones created where necessary to ensure relevance to the current economic structures.

7.                  Improved use of the existing ISIC might resolve a number of implementation problems.  However, Revision 3 of ISIC is based upon ideas from the 1970's, created in the 1980's and now implemented in the 1990's.  Guidelines for fitting service activities into ISIC as it now stands are necessary, using the existing explanatory notes and category descriptions, and improving them as needed.

 8.                  Agriculture and fishing need to be further elaborated for operationalizing ISIC, Rev.3 for some countries; and both ISIC and CPC need to be reviewed for their treatment of organic agriculture. The Expert Group expressed the view that organic farming, based on the inputs into the process, should be considered as a different agricultural activity from farming using chemicals.

9.                  The Experts noted the extensive use of ISIC in a range of data collection activities, including in direct statistical surveys from businesses (where detail can sometimes be obtained about the precise nature of the activity and the products) and in household surveys, and from administrative processes which are increasingly becoming an important source of statistical data. The experts agreed that ISIC and the tools to enable its use need to ensure that such data collection activities can be well supported. This may require significant work and additional resources by UNSD in order to collect and review national experiences, to establish guidance on effective procedures, which lead to reliable statistics.

10.              The Experts stressed the need for and usefulness of alphabetical indexes for ISIC Rev.3.  In this regard, specific commitments were made by the experts from Afristat, Canada and France to work on the development of the French index; by Botswana and India for advice on the specific problems which they experience, leading to the further elaboration of the English index; and by Argentina and Mexico to contribute to the development of the Spanish index.

I.                   Strategies for harmonization and convergence of activity classifications

11.              In response to the request of the Director of UNSD that progress should beaccelerated in the convergence, harmonization and relevance of classifications, the Expert Group requested that the Technical Subgroup examine the following possibilities:

(a)    As a first step in 2000, to consider the feasibility of improving ISIC regarding “information”, by adding detail to it, perhaps using the NAICS approach, and by considering an optional alternate aggregation elevating information to the two- digit level;

(b)   That such an improvement be regarded as a first step towards a greater convergence among the activity classifications to be formalized as part of a more comprehensive improvement or revision of ISIC targeted for implementation in 2007;

(c)    To consider other high priority areas for improvement, for example, wholesale trade, business services, transport and construction;

(d)   As in any future improvements/revisions to ISIC, the needs of the users, in this case of activity information, should be given particular importance.

12.              It is especially important that the Technical Subgroup examine what would be theoptimal levels for international standardization and for regional and or national customization/adaptation of the classification.

13.              The experts requested that the work to be undertaken for ISIC focus on two goals:

(a)    preparation of an update of ISIC Rev.3 in draft by the end of 2000, for approval by the UN Statistical Commission and submission for publication in 2001; and

(b)   the revision of ISIC in draft in 2004, for approval by the UN Statistical Commission in 2005, prepared for publication in 2006 and published in 2007.

14.              The work on the update is intended to make ISIC more operational and includes a revised introduction, revised and extended explanatory notes and recommendations for alternate aggregations. In the same time period, work on the alphabetical indexes for ISIC Rev.3 will be conducted.

15.       Work on the revision of ISIC (for publication in 2007) requires a thorough study of the conceptual basis for ISIC.  Proposals from users should be evaluated for decisions on possible changes to the detail or structure of ISIC.  The proposed optional alternate aggregation elevating “information” to the two-digit level for the update published in 2001, will be evaluated for possible inclusion into the structure of ISIC itself.

16.       The following points also bear on the above.

(a)    The majority of the experts found that there were no compelling reasons to justify a major change in the next 2 –3 years, nor was there time to do the preparatory work to vary the currently approved timing;

(b)   In examining strategies for harmonization and convergence of activity classifications, the Expert Group took note of a number of approaches, such as an agreed two digit link for international comparison with a further three to five digits generated at the regional and/or national level according to regional and national needs.  To enable consideration of the level required for international comparison, the Expert Group requested UNSD to verify the level of ISIC detail currently requested by UN agencies;

(c)    The Expert Group observed that with respect to convergence, there were two major groupings of derived or related classifications: the ISIC/NACE/ANZSIC related grouping and the NAICS related grouping.  The experts believed that the proposed preparation of greater detail and alternative aggregations of ISIC would begin to serve this need for convergence.

(d)   The experts noted that ISIC continues to be overburdened with some of the requirements put on it, i.e. uses for which it is not intended.  It is largely recognized to be the only fully operational classification of economic activity.  The 1993 SNA framework and system of classifications can and should address some of the applications to which ISIC is now being applied inadequately.  Strategies explaining how best to do this should be prepared by members of the Technical Subgroup and presented at the next expert group meeting.

(e)    For the longer term, the Group should look at the larger issues.  For example, experts must determine whether or not each statistical unit should be identified with a vector of values instead of using a single activity classification for its description.

(f)     Attention should be paid to countries that are in transition and to those having fewer resources.

(g)    Experts agree that within the context of the 1993 SNA, both the establishment and the enterprise should be readily identifiable in statistical collection activities.  Both statistical units are very important for ISIC and its derived analysis.

II.                Update on implementation and further development of the Central Product

            Classification

17.              The work plan approved by the Statistical Commission in 1999 will be supported by the work of the Technical Subgroup to the Expert Group. In this context, the World Customs Organization indicated that it would support UNSD in updating the correspondences of SITC and CPC with the Harmonized System (HS).

18.              The Experts noted that action should be taken for the classification of Broad Economic Categories (BEC) in the twenty-first century. A study of the building blocks and recognition of the CPC for definitions will be needed steps.

19.              Experts noted that further consideration could be given to the possibility of a consolidation of the purpose classifications in the future, recognizing the important matrix relationship that Classifications of Expenditure According to Purpose has with the 1993 SNA classification of the Institutional Sector, and with the product classification (CPC).  UNSD indicated that it would discuss the matter further with the Inter Secretariat Working Group for National Accounts (ISWGNA).

20.              The Experts are being provided by UNSD with the draft manual on statistics of international trade in services prepared by the Task Force of the Statistical Commission on Statistics of International Trade in Services, for their review and comment before the end of January 2000, as part of the world-wide mail out of the draft manual.  Of critical importance to classifications experts, is the Annex to the manual on classifications, showing the newly prepared extended Balance of Payments Classification of Services (EBOPS) and the correspondence table between EBOBS and CPC.

21.              The Harmonized System remains an important factor in the orchestration of classification updates and revision.  Both CPC and ISIC are now integrated with the schedule of updates and revisions planned by the World Customs Organization for HS, namely 2002 and 2007.

VI.              Planning and coordination of training programmes and workshops on Classifications

22.              Classifications are an important factor in the development of economic and social indicators such as those presented in the general data dissemination standard (GDDS).  Given the important need of some countries and regions to catch up in the area of classifications, they should be considered as an important aspect of indicator development requiring urgent attention.

23.              The Expert Group recognized the importance of continuing United Nations workshops covering classifications and asked that work to collaborate with important users of classifications in the conducting of Workshops continue, including increased attention to the classifications of industry (activity) and product, classifications of expenditure according to purpose, employment, occupation, education and health.

24.              It was recommended that the conceptual and practical aspects of classifications (e.g. in the form of case studies) continue to be incorporated in United Nations workshops, as they have proved to be very effective and important tools for learning the techniques of coding and to collectively gain an understanding of concepts underlying classifications.

25.              Experts noted the importance of the implementation of the 1993 SNA and the national rounds of Population Censuses and related household surveys as driving forces for classifications work. United Nations Workshops covering the SNA and Population and Household Censuses and surveys should increasingly be utilized for covering classification issues required of specialists implementing these large systems.

26.              Materials prepared for United Nations Workshops will be made widely available through the Classifications Website.

VII.     Electronic communication and information dissemination on classifications

27.              Experts approved the proposal for the implementation of the Classifications Discussion Forum by UNSD, and to prepare an organized way to manage the information that is covered by the Forum so that it is completed collaboratively with the Classifications Hotline and the Registry.  All Workshop participants and custodians using the Classifications Hotline and experts will be open to participation in the discussion forum, as well as other interested users.

28.              The Experts recommended that an informal subgroup be formed to discuss the different options, such as XML and the EDIFACT standard, for electronic exchange of classifications to report back to the meeting of the Expert Group.

29.              The Experts welcomed the work completed on the Glossary and its usefulness and agreed that it should be widely circulated for trial use by others.  They asked that an edited version of the short Glossary be posted by UNSD on its classification website to make it more widely available.

30.              The Experts commended the extensive work that had been completed by UNSD on the UN Classifications Website, the Classifications Hotline, the system of interpretation and rulings, the classifications database development and registry and asked that this work be continued and strongly supported.

VIII.        Progress and update on classifications of education, occupation, time use and procurement

31.              Presentations were made by the representative of UNESCO with regard to current activities concerning the development of ISCED, the representative of UNDP with regard to current activities concerning the maintenance of the United Nations Common Coding System (UNCCS), by the representative of ILO with regard to training activities for ISCO and ICSE and by a representative of UNSD with regard to time use.

32.              The Expert Group agreed that it would be helpful if the development of the Trial International Classification of Activities for Time-Use Statistics be put on the agenda of its next meeting and be reviewed more thoroughly by the Expert Group in the context of its important relationship with other members of the International Family of Classifications, most notably ISIC.

B.                  Summary Action Plan of the Technical Subgroup

33.              At its meeting on 15-17 November 1999 the Expert Group on International Economic and Social Classifications decided to establish a Technical Subgroup. This Technical Subgroup was asked to take action on the implementation of the proposed programme on ISIC and CPC as a first priority and report back to the Expert Group, through UNSD, on progress.

34.              Based on the programme guidelines set out by the Expert Group, the Technical Subgroup at its first meeting on 18-20 November 1999 discussed and prepared for action the following projects:

ISIC Update

35.              The update is intended to make the current version of ISIC easier to apply and to reflect important changes in the general economic structure. The action items for this project include:

April 2000

(a)    Preparation of an alternate aggregation for the Information Sector (as defined in NAICS), including the proposed breakdown of ISIC group 722 as the only structural change to ISIC itself;

July 2000

(b)   Draft of the alphabetical index (English) for ISIC Rev.3

August 2000

(c)    Revised and extended explanatory notes, especially for the services sector

(d)   Elaborated definition of high level categories

(e)    Alternate aggregations for Energy, Environment, Tourism, Information and Communication Technology (ICT as defined by OECD)

Ongoing discussion in 2000

(f)     Elaboration of detail for agriculture and fishing

(g)    Treatment of households for Labour Force Surveys and its reflection in ISIC

February 2001

(h)    Presentation of final draft of updated ISIC Rev. 3 to the United Nations Statistical

(i)      Commission

2001

(j)     Publication and dissemination of ISIC Rev. 3 update

ISIC Revision

36.  The work on the next revision of ISIC, to be published in 2007, has already begun. This includes identifying problem areas and possible solutions and a general review of the underlying principles of ISIC. The established timetable for this project includes:

2004

(a)    Finalization of draft of revised ISIC, circulated world-wide for comment

February 2005

(b)   Presentation of final draft of revised ISIC to Statistical Commission

2006

(c)    Preparation of publication (editing and translating in all UN languages)

First quarter 2007

(d)   Published version of revised ISIC

 

Current work on CPC Ver.1.0

37.              Detailed correspondence tables between CPC Ver.1.0 and the provisional CPC will be final in December 1999.

38.              The proposal for definition and breakdown of the new CPC group 733  (Of non-financial assets) is under final review. Correspondence issues with the provisional CPC have been resolved.

CPC update

39.              The following have been identified as action items for the next meeting and relate to completing an updated version of CPC by 2001:

a)      The proposal to remove non-produced assets (Divisions 51 and 52) and the reconsideration of the positioning of buildings/construction (Division 53) will be discussed at the next meeting;

b)      Review of the correspondence between the Extended Balance of Payments Services Classifications (EBOPS) and the CPC by September 2000;

c)      A decision on the proper treatment of “wired”, “wireless” and “satellite” communications and its implications for the EBOPS -CPC correspondence;

d)       The proper treatment of “bundled products” (e.g. combined payment for different types of transport), a problem that came out of the CPC-COICOP correspondence.

Other

40.              The group agreed on the need for the Balance of Payments Manual (BPM5) to have a set timetable for change, with the goal of improved correspondence with the CPC by 2007. Close cooperation between the BOP Manual project team of IMF and the custodians of the CPC is necessary.

41.              The need for an EBOPS-ISIC correspondence has to be discussed further.

42.              The next meetings of the subgroup are scheduled for May 2000 (Luxembourg) and October 2000 (Ottawa, Canada). 


                                                            ESA/STAT/AC.75/1Add  1.

United Nations

Department of Economic and Social Affairs

Statistics Division

Expert Group on International Economic and Social Classifications

New York, 15-17 November 1999

Annotated Provisional Agenda

Monday 15 November

Morning

10:00 a.m. – 12:30

Item 1.             Opening of the meeting

                        Mr. Hermann Habermann, Director of the Statistics Division

Item 2.             Progress in work since the Fourth Meeting of the Expert Group and the thirtieth session of the Statistical Commission

 Review of work completed based upon the recommendations of the Fourth Expert Group and according to actions taken at the thirtieth session of the Statistical Commission

Documentation: 

Background Documents: United Nations E/CN.3/1999/16, E/CN.3/1999/17, E/CN.3/1999/18, E/CN.3/1999/L4.

Item 3.             International Family of Economic and Social Classifications

Strategies for making the Preamble (ESA/STAT/AC.63/18) more operational, while taking into consideration the existing coordinating mechanisms of classification custodians.

Documentation:

Mandate and Organization of the Expert Group on International Economic and Social Classifications (ESA/STAT/AC.75/15); 

Proposal for a Technical Subgroup to the Expert Group (ESA/STAT/AC.75/9)

Making the Preamble of the International Family of Economic and Social Classifications Operational: Some Proposals (ESA/STAT/AC.75/5).

Monday 15 November

Afternoon

2:00-5:30

Item 4a.            Implementation of ISIC, Rev. 3

Review of progress made and proposals for actions to improve the current version and implementation of ISIC, while taking into consideration an orchestrated timetable for updating and revising derived and related classifications.

Documentation:

ISIC Rev. 4: What Options do we Have? (ESA/STAT/AC.75/16);  Reviewing and Redeveloping the International Standard Industrial Classification (ESA/STAT/AC.75/14); Background Documents: United Nations, E/CN.3/1999/16, E/CN.3/1999/17, ESA/STAT/AC.68/4;

Item 4b.           Strategies for harmonization and convergence of activity classifications

Formulation of strategies and action plans for convergence of major economic activity classifications and development of an orchestrated timetable for conducting the work.

Documentation:

Paper on Progress made in detailing the relationships among activity classifications: Report of a meeting of custodians of ISIC, NACE, ANZSIC and NAICS, Canberra Australia 5-6 October 1999 (ESA/STAT/AC.75/10).

Tuesday 16 November

9:30 a.m. – 12:30

Morning

Item 4c.            Update on implementation and further development of the Central Product Classification  (CPC, Version 1.0).

Report of the progress made since the official publication of CPC Version 1.0 and proposals for further work.

Documentation:

Background documents: United Nations, E/CN.3/1999/16, paras. 41-53 Background Paper to E/CN.3/1999/18

Item 5.             Actions regarding the International Family of Economic and Social Classifications

Documentation:

The Updating and Revision Process of the Harmonized System (ESA/STAT/AC.75/6).   Background Document: Handout on time line of classifications of the family.

Item 6.             Planning and coordination of training programmes and workshops on classifications

This session explores various ways to increase effectiveness and coordination of training programmes on classifications 

Documentation:

Classifications Training: An Update (ESA/STAT/AC.75/11), Statistical classifications in ILO's training activities for labour statistics (ESA/STAT/AC.75/12)

Afternoon

2:00-5:30

Item 7.             Setting the agenda for future work on electronic communications and information dissemination on classifications

Setting directions for the work on Classifications Hotline, UN Classifications Website, Classifications Newsletter and the on-line UN Virtual Expert Group discussion forum. Plans and initiatives of other custodians in the family

Documentation:

Proposal for Creation of a Virtual Classifications Forum (ESA/STAT/AC.75/13); Glossary of Classification Terminology (ESA/STAT/AC.75/8a and 8b);  Background Documents:   A Mechanism for the Exchange of Classifications for Development Purposes – The Use of XML; (ESA/STAT/AC.75/BKG.4);  (ST/ESA/AC63/4, paras. 6,7,8; and UNSD background report to the thirtieth Session of the Statistical Commission);

Wednesday 17 November

Morning

10:00 a.m. - 1:00 p.m.

Item 8.             Progress and update on classifications of education, occupation, tourism, procurement and international trade in services.

New developments and possible areas for collaboration and coordination among the members of the family.  This session will consider how the unique attributes of one classification may be exchanged and shared with other classifications through coordination of the work of custodians. 

Documentation:

Background Papers to be numbered as received.

Item 9.             Review of conclusions, recommendations and future actions of the Expert Group

Afternoon

2:00 -

Item  10.          Final review and adoption of recommendations



[1] See Official Records of the Economic and Social Council, 1999, Supplement no. 4 (E/1999/24), Chapter VII