/ EUROPEAN COMMISSION
EUROSTAT
Directorate C: National Accounts, Prices and Key Indicators

Eurostat C1/NAWG/854

Draft MINUTES OF THE NAWG MEETING ON 25-26 November 2014

For approval

Item 2 on the agenda of the Meeting of the National Accounts Working Group

Luxembourg, 21-22May 2015

Draft Minutes of the National Accounts Working Group Meeting 25-26November 2014, Luxembourg

Item 1:Introduction and approval of the agenda (Doc. N° 834)

  1. Ms Silke Stapel-Weber, Director of Directorate C "National Accounts, prices and key indicators" opened the meeting and welcomed the participants.
  2. Mr John Verrinder, Head of Unit C1 “National Accounts methodology; Sector accounts; Financial indicators” chaired both parts of the meeting;part 1, devoted to methodological issues; and part 2, devoted to data issues.
  3. The agenda of the meeting was approved.

Item 2:Approval of the minutes of the NAWG meeting on 22-23May2014 (Doc. N° 835)

  1. The minutes of the NAWG meeting on 22-23May 2014were approved by the NAWG.

Item 3:ESA 2010 implementation and communication activities (Doc. N°836)

  1. Eurostat informed the NAWG Members about the activities that were performed in order that the implementation of the ESA 2010 guidelines and transmission programme would be as smooth as possible. Eurostat producedvarious manuals and handbooks with the purpose to provide guidance to users. Several papers and articles were prepared, a set of explanatory videos was launched, meetings, webinars and conferences relating to the implementation of ESA 2010 were organised. In addition, Eurostat’s dedicated website provides a large amount of information: links to legal and explanatory documents, manuals and guidelines. The ESA 2010 website will remain active in the future but should be adapted to the post implementation phase.
  2. Eurostat paid special attention to the press briefing on 17 October 2014. At that date the first ESA 2010 based release of the European main aggregates took place. In the press briefing Eurostat explained that the ESA2010 revision was a world-wide exercise that shifted EU GDP upwards by 3.7%, but hardly impacted on EU GDP growth rates.
  3. During the discussion, the OECD announced that it would publish a Statistics Brief on the ESA implementation. Member States indicated that illegal activities and research and development proved to be very important elements of their communication. Germany suggested to develop a common revision policy. Other members of the NAWG supported this idea.
  4. The NAWG took note of the implementation and communication activities undertaken by Eurostat. The NAWG thanked Eurostat for its efforts related to the introduction of ESA 2010 and complimented Eurostat onthe clear and successful press briefing on 17 October.

Item 4:Towards ESA 202x – European needs for a new standard (Doc.N° 837)

  1. The question of research work for revising international standards for national accounts is starting to be raised in international fora. A special IARIW/OECD conference on the future of the SNA was scheduled for 16-17 April 2015.
  2. In this context, it was considered important to have a reflection on European needs for such work.Eurostat proposed criteria to prioritise research items, a preliminary list of major topics, and the launch in early 2015 of a European Task Force on the European needs for a future SNA.
  3. Member States indicated that the implementation of ESA 2010 had created important challenges, for instance on quarterly GDP, backwards series and goods sent abroad for processing. This would require examining inconsistencies, sharing experience and good practices, and integrating various national accounts frameworks.
  4. The NAWG welcomed the establishment of a European Task Force on this topic. Member States considered it important to develop a European point of view, and in a second step, to share it with our international partners. Practical implementation aspects should be one of the major criteria for prioritising the items.
  5. A wish to participate in the Task Force was expressed by the Netherlands, Germany, United Kingdom, and the OECD.
  6. It was agreed that a draft mandate for the European Task Force on the European needs would be circulated for countries' comments, together with a request for expressing interest for participation.

Item 5:Foreign trade reported by non-residents (Doc. N° 838)

  1. During the meeting in May 2014 the detailed results of a questionnaire on countries' compilation practices on foreign trade reported by non-residents were presented to the NAWG. In their March meeting, the DMES had already agreed that there is a need for additional practical recommendations in order to improve comparability. To prepare such a set of recommendations, an expert group with a limited number of Member States should be set up.
  2. The meeting of the expert group was organised on 11 November 2014 in Luxembourg. Seven countries participated: CZ, DE, IE, MT, NL, AT, SK. From Eurostat, Unit C1 (National Accounts Methodology), Unit C2 (Balance of Payments and Input-Output tables) and Unit G5 (International Trade) participated.
  3. The expert group worked on a first draft for practical recommendations. This work would be continued by written procedure. After reporting to the NAWG, the BoPWG and the GNI Committee, the recommendations would be presented, for approval, to the DMES in June2015.
  4. Discussions in the expert group demonstrated that every Member State, to a greater or lesser extent, is affected by the phenomenon of foreign trade reported by non-residents.
  5. Furthermore, it was stressed that foreign trade reported by non-residents should be distinguished from goods sent abroad for processing. Although discussions on the first topic started in the Task Force on Goods sent abroad for processing, it concerns two different issues.
  6. Several Member States emphasised the importance of this work; not least to reduce asymmetries. At the same time, concerns were expressed regarding the implementation of changes. Immediate revisions after the major revision should be avoided and the national accounts and the BoP data should be consistent. Another related issue is the need for recalculations for the GNI Questionnaire which is still based on ESA 95.
  7. The NAWG confirmed that there is a consensus regarding the conceptual treatment but the implementation of changes needs further attention. The same goes for the coordination with the balance of payments and foreign trade statistics. Finally, a request for a renewed project on asymmetries was noted.

Item 6:Pensions in ESA 2010: Report from the workshop(Doc. N° 839)

  1. The treatment of pension entitlements has been updated in the context of 2008 SNA and ESA 2010. Both improve the current recording of pension schemes and provide for a new supplementary table on pensions: The European 'Table 29' on accrued-to-date pension entitlements in social insurance is included in the transmission programme attached to ESA 2010.
  2. The data transmission for table 29 will start on a voluntary basis in December 2014. The first obligatory data transmission is scheduled for 2017. Member States were invited to inform Eurostat whether they intend to transmit and publish data already in 2014 (none indicated so in the meeting). Eurostat will inform NAWG members in case of foreseen national publications before the obligatory transmission in December 2017.
  3. Eurostat organised the 2014 pension workshop in order to facilitate the implementation of table 29. The workshop covered institutional arrangements in Member States, data sources and major assumptions, issues while filling in the supplementary table, sensitivity analysis for pension data, further guidance, the communication strategy regarding pension entitlements and the design of a pension fact sheet.
  4. The NAWG discussed the set-up of the sensitivity analyses for pension data of unfunded pension schemes of government (Columns G and H of table 29).In particular, the parameters for the two required sensitivity analyses for unfunded government pension schemes were debated. Life expectancy, wage growth and the discount rate had been identified as possible candidates. However, finally cost/benefit considerations and the issue of notional defined benefit schemes led to the decision to base the sensitivity analyses on the discount rate. There was agreement to use the discount rate assumption of the working group on ageing populations (AWG) for the baseline calculations; at the moment 3% in real terms. The two sensitivity analyses for the discount rate should be based on 2% and 4% (plus and minus 1 percentage point compared to the baseline).
  5. Regarding pension schemes for civil servants some countries stressed that calculations from other institutions are already available and their assumptions may deviate from AWG assumptions. Additional calculations for these schemes can be costly and may lead to confusion amongst the public if different figures are published.
  6. The pension workshop proposed to develop pension fact sheets in order to provide background information on pension schemes. The NAWG supported the proposal and the structure of the fact sheet. The fact sheets should provide concise information on the most important national pension schemes. The OECD suggested to include additional information regarding the funding status of the schemes; pay-as-you-go or funded.

Item 7:Mandate of an expert group on price and volume measures (Doc. N°840)

  1. Eurostat presented the background and the draft mandate for a task force on price and volume measures in national accounts.The NAWG broadly agreed to the draft mandate.
  2. Several delegates made proposals for additional items to be included in the scope of the task force, namely: telecommunication services, merchanting, internet purchases, repair and maintenance services, research and development, internet purchases and (non-market) social work. Some group members also emphasised the importance of supply and use tables in previous year's prices, which will become mandatory in 2017 and therefore should also be dealt with by the task force.
  3. Some delegates pointed out that price and volume measures for non-market education and health services are different from the approach for market services and difficult to tackle with market-based approaches. Concerns were mentioned that the schedule of the work might be too ambitious. Furthermore, the practical working arrangements of the group should be clarified in more detail.
  4. The OECD informed about its activity on price and volume measures in the area of non-market health services. The OECD is preparing a questionnaire to collect some basic information on the matter, and this would be coordinated with Eurostat.
  5. Eurostat concluded that it will update the mandate taking on board comments made by the NAWG. The updated amended mandate will be presented to the DMES in December for approval. Telecommunication services and merchanting will be added to the scope of the task force's work. Further items should not be included to the groups mandate at this stage due to the more horizontal nature of these services and the limited time available at this stage. The matter of supply and use tables in previous year's prices will not be specifically dealt with by the task force but a close cooperation with experts in this field should be assured, including presentations at a future NAWG. Similarly, price statisticians should be integrated in the work of the group. Eurostat will elaborate in more detail on the practical working arrangements.
  6. The following countries or organisations expressed their interest to participate in the task force: CZ, DE, DK, ES, FR, IT, NL, SE, SI, UK, the ECB and the OECD. Further interests to participate could be communicated after the meeting via email.
  7. The updated mandate will be circulated to the DMES for its approval.

Item 8:Treatment of quasi corporations, unincorporated businesses and sole proprietorships: Practical delineation rules between households and corporations (Doc. N°841)

  1. Eurostat presented practical guidance on the delineation of quasi-corporations between households and corporations.The guidance provided is an outcome of the discussionsand investigations of national practices by the Task Force on Quarterly Sector Accounts (jointly chaired by Eurostat and ECB).
  2. The delineation of producer units between corporate sectors and other sectors of the economy is of particular relevance in the context of sector accounts compilation. It appeared that most difficulties in identifying quasi-corporations relate to the allocation of producer units between non-financial/financial corporations and households sectors.Therefore, practical guidance and the harmonisation of classification criteria are needed to foster transparency,data comparabilityand the consistent recording of relevant units in the accounts.
  3. The document summarises the general principles underlying the identification of quasi-corporations as stipulated by 2008 SNA and ESA 2010. In addition, national practices and main practical difficulties are described. Finally, practical decision trees for the allocation of producer units between corporate and households sectors are proposed.
  4. The NAWG confirmed that the proposed decision trees are useful for guiding delineation decisions. It was agreed that quantitative thresholds should be applied for the delineation of sufficiently autonomous units as quasi-corporations. The identification should be based on individual country characteristicsand allow for the consistent treatment of quasi-corporations. It was also pointed out that metadata should be made accessible to users when due to practical reasons there is a presence of non-salaried workers in corporate sectors as a consequence of the delineation of quasi-corporations. Such information would contribute tocross-country comparability of corporate profit shares calculated from sector accounts aggregates across countries and support further economic analysis.

Item 9:State of play regarding statistical units (Doc. N°842)

  1. Between 15 May and 15 June 2014 an ESS-wide consultation on the proposed revised definitions and operational rules for statistical units was carried out via the Business Statistics Directors Group (BSDG).BSDG members were explicitly invited to share the documents with all colleagues concerned and in particular with national accountants. The comments of the Member States highlighted a need for further discussion.
  2. A seminar with business statisticians and national accountants on statistical units was organised back-to-back with theNAWGmeeting in order to investigate a way forward. Eurostat reported to the NAWG that the seminar was able to findsubstantial common ground. In particular consistency and simplicity were identified as important common features. The members of the seminar stressed that the national focus in statistics is still important and that at the same time global enterprises affect national statistics.Straightforward cases should be distinguished from complex cases; large and complex enterprises should be analysed in detail; in this respect profiling was considered as an important tool.
  3. There was agreement that the Task Force on Statistical Units should continue its work. The membership of the Task Force will be broadened and include national accountants and experts from BoP. Key issues for the mandate of the task force were considered to be criteria for the autonomy of institutional units and the treatment of sales to third parties.Finally, the Task Force should prepare a joint position for the DMES and Business Statistics Directors Group, coordinated with central banks, on future implementation steps and timetable.
  4. The NAWG took note of report from the workshop and supported the future work of the enlarged Task Force on Statistical Units.

Item 10:TF on Land: progress report and extension of mandate (Doc. N°843)

  1. Eurostat reported on the work done by the Eurostat-OECD TF on Land and other non-financial assets since the May 2014 NAWG meeting, and summarised the activities that still had to be done to finalise the compilation guide on land estimations. NAWG Members were requested to provide their final comments before 19 December 2014 and to pay special attention to their own country data in section 6.5 of the compilation guide.
  2. Eurostat presented the draft mandate that will enable the TF to continue its work in 2015 and 2016 with the study of other non-financial assets: inventories as the first priority and probably one or two other types of non-financial balance sheet items. The output will be extensive documents on sources, methods and best practices that should provide guidance for the estimation of the respective assets. The TF will be jointly chaired by Eurostat and the OECD and the composition of the TF will approximately be the same as it is now. As before, an active participation of all TF members will be required.
  3. The NAWG took note of the work done by the TF and the work that still has to be done to finalise the compilation guide on land. A few NAWG Members indicated that they will send some written comments – e.g. on the borderline between quality changes and revaluation and on government owned land – by the deadline of 19 December 2014.
  4. The NAWG agreed with the content of the extended mandate of the Eurostat-OECD TF: the purpose to provide guidance on some types of non-financial assets, the proposed output, the composition of the TF and the organisation of the work. The NAWG mandated the TF to continue its work with the study of other non-financial balance sheet items in 2015 and 2016.

Item 11:Task Force Flash t+30: progress report and first estimates (Doc. N° 844)