Paris; 27 September-1 October 1999
Session No7
Paper No2
Germaine Brudieu, INSEE, France
Teminology of Business Statistics in the French Statistical System:
Statistical units, Analytical units and related concepts
TerminologY of BUSINESS
statistICS in the french statistical system
statistical units
Analytical units
RELATED concepts
This memorandum strives to crystallise the statistical-unit-related terms that have surfaced during the discussions taking place at meetings of the Statistical Units French Working Group which took place from january 1997 till may 1999. It is an attempt to construct the french terminology of business statistics while remaining consistent with European regulations.
To that end, definitions will be offered for the units regarded as important to the French Working Group’s work. These are not, as we shall see, restricted solely to «statistical» units. An introduction will be given to the concept of analytical units.
The ultimate goal was to have a solidly-based body of working-party-ratified definitions available, so that the fruit of the French Working Group’s work might be made available to all corporate statisticians as a whole.
These efforts were supported by benchmark meetings with some foreign partners ; Netherlands, Canada, Australia.
Members of the Statistical Units French Working Group
(january 1997-may1999)
Chairman : Mr Grandjean Reporter and Coordinator : Mrs Brudieu
Miss Moyne (Mr. Camus) (sessi), Mr. Teurlay (SCEES), Mr Muller, MrKérihuel, Mr Gallais, Mrs Falco (SES), Mr Franceschi, Mr Grolier, Mrs Schuhl (DARES), Mr Boéda, Mr Christine, Mr Rasolofoarison, Mr Combier, Mr Mariotte, Mr Quaglia, Mr Rivière, Mr Thollon-Pommerol, Mr Picard, Mr Lainé, Mr Pentinat, Mrs Richard, Mrs Bobin, Mrs Bernard, Mrs Cases, Mrs Paris, Mrs Casset-Hervio, Mrs Berthier and Mrs Lemaire (INSEE)
Contributors : Mrs Demotes-Mainard (SCEES), Mrs Parent (DR), Mr Poulos (DR) and Mr Bocher (SESSI).
TABLE OF CONTENT
I) PRELIMINARY DEFINITIONS...... 4
1. STATISTICAL UNIT...... 4
2. COLLECTION UNIT...... 4
3. ANALYTICAL UNIT...... 4
4. FIELD OF STATISTICAL UNITS AND BUSINESS STATISTICS ANALYTICAL UNITS 5
5. TERRITORIALITY OF STATISTICAL UNITS AND BUSINESS STATISTICS ANALYTICAL UNITS 6
6. LEGAL UNIT...... 6
7. LOCAL LEGAL UNIT...... 7
8. ANCILLARITY...... 7
8.1 ancillary activities...... 7
8.2 ancillary legal unit (alu)...... 9
9. DEPENDENCY...... 9
9.1 dependent activities...... 9
9.2dependent legal unit...... 9
II) DEFINING STATISTICAL UNITS...... 11
1. ENTERPRISE...... 11
2. LOCAL UNIT...... 11
3. KIND-OF-ACTIVITY UNIT (KAU)....... 12
4. LOCAL KIND-OF-ACTIVITY UNIT....... 13
5. ENTERPRISE GROUP...... 13
III) DEFINITION OF ANALYTICAL UNITS...... 16
1. EXTENDED FIRM...... 16
2. ENTERPRISE NETWORKS...... 16
3. INTEGRATED LOCAL COMPLEX...... 17
IV) A FEW EXAMPLES...... 18
V) LINKS BETWEEN THE VARIOUS UNIT LEVELS...... 19
I) preliminARY definitions
1. statistical unit
ISIC (International Standard Industrial Classification of all economic activities) defines a statistical unit as «the entity for which information is sought and for which statistics are ultimately compiled».
According to the GUS statistical units Working Group, such a unit must satisfy the following three conditions:
1) the statistical unit for which information is gathered needs to be as homogeneous as possible with regard to the theme being studied in the statistics in question;
2) one requisite condition—albeit insufficient in itself—for delimiting and characterising a statistical unit is its potential for amassing thesought-after information;
3) managed in a register, the statistical unit must be accepted without omissions and double counting.
So the statistical unit is the basic building block for compiling and tabulating statistical data.
The chief characteristic feature of the statistical unit thus resides in the fact that it applies exclusively to the «outcome» side of the statistical process; it is the cornerstone for calculating statistical aggregates.
The statistical unit is the unit for which one seeks to obtain information. It is an aid for measuring the economy from every angle. Several statistical units exist to cater to the phenomena to be observed. So they are observation units which must provide the means to grasp the true economic situation.
Note: Statistical units are not necessarily concomitant with the collection units from which information is requested. At present, some confusion often remains between collection units and statistical units.
2. COLLECTION UNIT
A unit from which one collects the information required for statistical production is known as a collection unit.
Information may, for example, be collected from an enterprise on behalf of its local legal units: in which case, the enterprise is the collection unit and the local legal unit is the statistical unit.
3. ANALYTICAL UNIT
An analytical unit is an economic unit of particular interest for economic analysis: a network, for instance, is an analytical unit. The «analytical unit» concept is defined independently of the «statistical unit» concept.
Unlike statistical units, the analytical unit should be considered at microeconomic level and over what may be a highly partial field. It does not represent the cornerstone of a construction, an aggregate: it requires analysis per se, independently of any compilation per se.
4. FIELD OF STATISTICAL UNITS AND BUSINESS STATISTICS ANALYTICAL UNITS
Statistical and analytical units falling under business statistics belong to the market sphere. This is especially true in the case of statistical-unit enterprises.
«Market sphere» is a concept defined with reference to accepted national accounting principles. According to those principles, enterprises fall under the institutional sectors of non-financial or financial firms (insurance included) or constitute sole proprietorships in the institutional households sector.
By definition, they include all private law entities regardless of their legal status (limited liability companies, co-operatives, sole proprietorships,...) or tax system. Such entities are always held to belong to the market sphere. Also regarded as enterprises are the public law bodies whose resources come chiefly from the market: state-owned enterprises, public institutions, local authorities, council housing offices, ...
Non-profit institutions—especially in the shape of associations—will also be counted as enterprises when the bulk of their resources come from the market. Further distinctions may be drawn between, for example, non-financial enterprises and financial enterprises (insurance included), or between private law enterprises and public law market enterprises.
As for non-market units forming part of institutional sectors, public administrations and non-market units serving households, none of these enter the field of business statistics. Neither do households which are involved in production yet not regarded as sole proprietorships.
Note 1: When the French activities classification (NAF) was adopted in 1993, a MARCHEN code was created for SIREN units in the SIRENE register’s management base, along with a MARCHET code for SIRET units. These codes serve to identify the institutional sector of the National Accounts to which SIREN and SIRET units belong. A SIREN (or SIRET) unit is regarded as a market unit when more than 50% of its current resources are generated by the sale of its output: in which case the MARCHEN (or MARCHET) value will be « 0 ».
So these two codes make it possible to pinpoint in the SIRENE register the units considered in national accounting terms to be market and non-market units.
Note 2: Local unit, KAU and local KAU type units belonging to market enterprises generally perform market activities. They therefore belong de facto to the market sphere. Some market-enterprise local units, KAUs and local KAUs can, however, be non-market in nature insofar as their activity involves own-account production of capital goods or goods for final consumption.
In order to preserve their linkage with the enterprise unit, and for the sake of simplicity, such units are nonetheless regarded as belonging to the field of statistical units.
On the other hand, market type local units which belong to non-market enterprises such as municipal camping sites are excluded from the field of statistical units. Accordingly, characterising the enterprise unit really is the best way of determining which units fall within the realms of business statistics.
5. territorialitY OF STATISTICAL UNITS AND BUSINESS STATISTICS ANALYTICAL UNITS
For statistical and analytical units, the information being sought applies to the operations they carry out on the national territory (metropolitan France and the French Overseas DÈpartements). This is in strict accordance with the principle of territoriality. As regards the statistical unit enterprise, therefore, only its activities on the national territory are taken into account. Its local units abroad are disregarded and viewed as non-resident «quasi-enterprises».
French-based local units of foreign enterprises are accordingly taken to be resident «quasi-enterprises».
Note: The European Regulation on statistical units does not explicitly specify the field to which each unit should be applied. They merely make plain that observation units and analytical units are both «defined in such a way as to permit data first to be determined for each Member State and these data to be combined to give figures for the Community as a whole or for larger areas.»
6. Legal Unit
The legal unit is the basis for all declaratory obligations and the medium through which one must pass in order to collect information from administrative sources.
It is above all a legal formality recognised by the Companies Registration Office (CRO), a unit which figures on the Register of Trades (RT). It may be a tax revenue-generating « event », for example. It can, as a rule, own property and bring legal proceedings.
The legal unit is the entity which serves as the basis upon which to construct a production system. Along with the local legal unit, it represents the cornerstone of our inter-administrative register or SIRENE, in which it is identified by a SIREN.
Legal units include:
- legal persons whose existence is recognised by law, independently of their owners or members (individuals or institutions);
- natural persons performing an economic activity as self-employed workers;
- quasi-legal persons (de facto companies, ...);
- government institutions and services, territorial authorities.
Legal units are mostly filed on the SIRENE register once the regional offices of INSEE have received a declaration form completed by the enterprise or its representative at a centre for registering new businesses (CFE) (Decree 73-314 of March 14 1973, amended).
Note 1: The legal-unit enterprise, or legal unit, is therefore first and foremost an entity which has a legal capacity. It does not necessarily cover an enterprise’s potential economic and statistical representations.
Note 2: In a good many cases, legal units are statistical units, collection units and analytical units all at the same time.
Note 3: Statisticians should not take all legal units as a whole into account. They should use variables as a filter to select the legal units they need.
7. LOCAL LEGAL UNIT
« Local legal unit » is a concept defined by two characteristic features:
1) It is localised, attached to a place or defined over a territory;
2) It is dependent upon a legal unit.
It «reifies» a legal unit’s geographical location(s).
It is (they are) the legal unit’s geographical hub(s): the local legal unit is the legal unit’s local unit.
A local legal unit is entered on the SIRENE register once a CFE—or other administrative source—has transmitted a declaration form to the regional offices of INSEE.
SIRENE identifies a local legal unit by means of a fourteen-figure SIRET, the first nine characters of which identify the legal unit (SIREN) upon which it depends, with the last five (NIC) identifying the local legal unit within that legal unit.
It is (or they are) not necessarily the place (or places) where an economic activity is performed.
Note 1: «Local legal unit» is the English word for what the French call an «établissement». French into English translation has been known to be somewhat problematic on account of the fact that «établissement» can literally be translated as «establishment», and the ISIC term for the Anglo-Saxon concept of «establishment» is «local kind-of-activity unit» (Local KAU).
Note 2: Statisticians must use variables as a filter in order to select the local legal units they require.
8. ANCILLARITY
In order to fully grasp this concept, one needs to refer to the statistician’s definition of the term «activitY ». ISIC, in its introduction, suggests that: «the term activity should be understood to mean a process, i.e. the combination of acts resulting in a given set of products ... An activity can be said to take place when resources such as equipment, labour, manufacturing techniques (…) or products are combined, leading to the creation of specific goods or services. An activity is characterised by an input of products (goods or services), a production process and an ouput of products. »
Statisticians draw a distinction between the types of activities performed by an economic entity: principal activities, secondary activities and ancillary activities. Principal (or secondary) activities correspond to production processes geared to the entity’s desired market. The entity’s ancillary activities serve to support those processes. «Principal and secondary activities can thus be carried out only if backed up by a certain number of so-called ancillary activities such as accounting, transport, storage, purchasing, sales promotion, cleaning, maintenance and repairs, safety ». These sorts of activities can, of course, be carried out on a principal (or secondary) basis by units offering such services on the market.
Ancillary activities need to bedefined and pinpointed for the following reasons:
- a unit’s principal activity is determined on the basis of ordinary activities, once ancillary activities have been discarded;
- when ancillary activities are not performed by the beneficiary units, they are included in the costs of those enterprises (or KAUs) which benefit from them;
- ancillary activities are not valorised on the market and raise the need for investigation into the possibilities of consolidation between service-provider and beneficiary units.
8.1 ancillary activities
Definitions for ancillary activities may be found in theEuropean Regulation onstatistical units and the introduction to NACE. Modelled on and akin to ISIC definitions, they are as follows.
« An activity must be regarded as ancillary if it satisfies all the following conditions:
a) it serves only the unit referred to: in other words, goods or services produced must not be sold on the market;
b) a comparable activity on a similar scale is performed in similar production units;
c) it produces services or, in exceptional cases, non-durable goods which do not form part of the unit’s end product (e.g. small implements or scaffolding);
d) it contributes to the current costs of the unit itself, i.e. does not generate gross fixed capital formation ».
« The following activities must not be considered as ancillary activities:
a) the production of goods or work carried out which forms part of fixed capital formation-in particular, construction work for own account, (…) (which is) classified under the building industry if data are available;
b) production, a significant part of which is sold commercially, even if much is used as consumption in connection with the principal or secondary activities;
c) the production of goods which subsequently become an integral part of the output of the principal or secondary activity: e.g. production of boxes, containers, etc. by a department of an enterprise for use in packing its products;
d) the production of energy (…) even where this is consumed in its entirety in the principal or secondary activity of the parent unit;
e) the purchase of goods for resale in unaltered state;
f) research and development. These activites (…) do not produce services which are used in current production (…)».
In more concrete terms,an ancillary activity is a service activity whose role is to back up other activities. The criteria for defining ancillary activities can be specified and reformulated (in any order) as follows:
1) ancillary activities are not market regulated;
2) they frequently support other activities in:
- logistics;
- management;
- factor marshalling;
3) they are service activities which form part of intermediate consumption, thus ruling out immobilisable services such as research;
4) these service activities must be of a kind normally found in the industrial sector: canteens, staff transport and retail sales are regarded as secondary rather than ancillary activities (since providing them is a matter of an individual enterprise’s own choice).
Note 1: In the SIRENE documentation system, the activity field of the so-called «ancillary» local legal units identified in the SIRENE register is defined by data sheet C-ACT.AUX. It draws on memo 8527/D230 of April 14.
Note 2: Activities in the field of logistics are «favourite» ancillary activities. In cases where enterprises develop these kinds of activities for the market, they are not regarded as ancillary activities.
Note 3: When a truly market-oriented organisation develops, the sale (retail and wholesale) of the unit’s manufactured output can be regarded not as an ancillary, but as an ordinary activity; at which point it can only be secondary (not involving sales); meanwhile, marketing its own production remains an ancillary activity because it is not possible to produce without sales.
8.2 ancillary legal unit (alu)
The ancillary legal unit is a legal unit exclusively performing ancillary activities. It does so for a single legal unit under the same control.
Note 1: One example of an ancillary legal unit would be the legal unit acting as a legal base for factors of production.
Note 2: Some statisticians consider that the restriction «for a single legal unit» leads to a definition of the enterprise which makes it highly sensitive to its reorganisation.
9. DEPENDENCY
The following definitions have been built symmetrically to what has been written on the subject of ancillary activities. «Dependency» is the responsibility of the Statistical Units Working Group, whose «dependent activity» and «dependent legal unit» concepts help to outline the «extended enterprise».
9.1 dependent activities
Unlike ancillary activities, dependent activities are part of a productive process geared to the production, processing or marketing of goods.
An activity should be regarded as dependent when it simultaneously satisfies the following conditions:
- goods produced or processed are not valorised on the market and are not immobilisable;
- marketed goods have not been purchased on the market;
- a comparable activity on a similar scale is performed in similar production units.