Short-term business statistics - legal base

This article gives an overview of the legal texts underlying the calculation and dissemination of European Union (EU) short-term statistics (STS). It begins with the current legal base, Regulation (EU) No 2019/2152 of 27 November 2019 (European Business Statistics Regulation, EBSR), and its General Implementing Regulation No 2020/1197 of 30 July 2020. The article also contains an overview of the former legal acts regulating European short-term business statistics. This article is part of a set of background articles treating various methodological aspects of short-term business statistics.

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The 2019 EBS Regulation

After several years of intensive preparation by Eurostat and the National Statistical Institutes the European Business Statistics Regulation (EBSR) entered into force on 17 December 2019 (Regulation (EU) No 2019/2152 of 27 November 2019.) The Regulation applies as of 1 January 2021 (Article 26). On 19 August the Commission Implementing Regulation (EU) No 2020/1197 of 30 July 2020 entered into force. With some exceptions the Implementing Regulation also applies as of 1 January 2021.

The EBSR and the Implementing regulation are the comprehensive base for the majority of European Business Statistics, i.e. for short-term business statistics (STS), structural business statistics (SBs), the statistics on the production of manufactures goods (PRODCOM), the international trade in goods and services, statistics on foreign affiliates, Research and Development (R & D) , innovation and information and communication technologies (ICT) usage and e ‐commerce. The EBSR also provides a common framework for business registers for statistical purposes in the European Union (EU).

Before the EBSR the development, production and dissemination of statistical information on the economic activities of Member States' businesses has so far been based on a number of individual legal acts. (For the former short-term statistics regulation and related acts see below or visit the STS Dedicated Section on the Eurostat website

The EBS-R is a framework regulation, it provides for:

A definition of the subject matter of EBS (article 1)
The scope of EBS (article 2), in particular:

The structure of European businesses
Their activities
Their performance

Numerous definitions of statistical concepts (article 3) such as:

Statistical unit and reporting unit
Market and non-market activities
Statistical domains, topics and detailed topics

Rules regarding the data sources and methods (article 4)
Rules regarding access to data sources (article 5)
General data requirements (article 6)
Rules regarding the exchange and protection of confidential data (chapters V and VI)
Rules regarding the quality of data and the data exchange (article 17)
Procedural issues

As regards the domain short-term statistics the EBSR defines five topics:

Business population (quarterly statistics on business demographic events such as creation of businesses or bankruptcies)
Labour inputs (quarterly or – optionally – monthly statistics on employment, hours worked and labour costs)
Prices (monthly or quarterly import prices and producer prices)
Outputs and performances (monthly, or exceptionally quarterly, data on production volume of sales and net turnover)
Real estate (quarterly or – optionally – monthly data on real estate).

The 2020 General Implementing Regulation

As a framework regulation the EBSR does not contain detailed information on the data to be collected by national statistical authorities and to be transmitted to Eurostat. In addition to the subjects listed above the EBSR does however stipulated the reference period of the data, i.e. if the data are produced every month or only every quarter. It also stipulates that the statistical unit to be used for STS is the Kind-of-activity unit (KAU) with the exception of business demography where the legal unit is used and with the exception of import prices and real estate where the concept of a statistical unit is not applicable.

More detailed provisions for the STS data production are laid down in the Commission Implementing Regulation, No 2020/1197 of 30 July 2020.

According to the General Implementing Regulation (GIR) the following STS variables have to be produced:

Variables

Registrations and bankruptcies
Number of persons employed, hours worked by employees, wages and salaries
Import prices (euro area and non-euro area)
Producer prices (domestic and non-domestic, euro area and non-euro area)
Production
Volume of sales
(Net) turnover (domestic and non-domestic, euro area and non-euro area)
Building permits (number of dwellings and square metres)

Measurement unit – as a rule STS provides indices, exceptions are the registrations and bankruptcies as well as the building permits for which absolute values are collected.
Adjustment – some variables are to be provided in unadjusted form (esp. prices, registration and bankruptcies), in general however data are to be provided in calendar adjusted and in seasonally adjusted form.
The scope of STS is restricted to market activities. The Implementing Regulation also prescribes which activities according to the Statistical classification of economic activities in the European Community (NACE rev. 2) are to be included in STS and in what level of detail.
deadlines for data transmission (from Member States to Eurostat); deadlines range from 30 days between the end of the reference month and the transmission to Eurostat for the volume of retail trade to 90 days for Services Producer Prices.
reference year and base year – the reference year is the year for which STS indices are set to equal 100, generally the reference year is also the base year, i.e. the year from which the weights for the aggregation of indices are taken. The reference/base year is changed every five year.
first reference period, i.e. the first mandatory month or quarter for which time series have to be produced and transmitted. Generally the first reference period for STS series is January/first quarter 2000. There are however STS variables with a later starting point. The legal obligation to produce Service Producer Prices was only introduced in 2005 with Regulation 1158/2005 and the first reference period for these prices is therefore the first quarter of 2006. Naturally, data requirements which were newly introduced with the EBSR and the Implementing Regulation do not apply retroactively.
transition period (see below).

Major changes for short-term statistics

For STS the EBSR entails a number of significant improvements:

Introduction of a new indicator on services production. The indicator will be published with a monthly frequency 60 days after the end of the reference period in unadjusted, calendar adjusted and calendar and seasonally adjusted form. The index of services production (ISP) will cover most market services in the NACE sections transport (H), restaurants and hotels (I), publication and communication (J), real estate (L), professional and management services (M and N). Not covered are financial and insurance services (NACE section K) and public and quasi-public services.
Introduction of new service producer price indices (SPPIs), the new indices will supplement the existing producer price indexes for services which so far covered only around one third of the service industries relevant for STS (i.e. NACE sections H, I, J, L, M, and N). Moreover, SPPIs will be calculated as B2All indices, i.e. covering prices for all service transactions. Under the STS regulation SPPIs were calculated on a B2B basis and thus only covered transactions between service providers and other businesses (and government). As before the indices will be published with a quarterly frequency 90 days after the end of the reference period.
Introduction of new indices on deflated turnover for wholesale trade (NACE G46) and trade and repair of motor vehicles (G45). The currently available quarterly indices for nominal turnover will be supplemented by monthly deflated (price adjusted) indices.

Uniform statistical unit. The Kind-of-activity unit (KAU) will become the statistical unit for all STS indicators (except quarterly business statistics where the legal unit will be used). Under the STS Regulation the KAU was only used for industry and construction data whereas the enterprise was used for trade and service data.

Seasonal adjustment will become mandatory for the majority of STS indicators.

Transitional arrangements

The new and improved data requirements foreseen by the EBSR as regards STS may entail an increase in the burden on businesses (providing data, answering questionnaires etc.) and may also entail higher costs for national statistical institutes (e.g. as a result of a higher frequency of data production and publication). The exact amount of the additional cost and burden is difficult to estimate and also difficult to compare between Member States. It depends inter alia on the possibility to re-use administrative data (e.g. VAT declarations) instead of establishing new surveys or on the methods of data collection (electronic online collection or paper questionnaires etc.)

To facilitate the introduction of the new data requirements and to keep the additional cost and burden for their production as low as possible the Commission Implementing Regulation (EU) No 2020/1197 (Annex VII) foresees a transitional arrangement in case that major adaptations of the national production system are necessary or the new data.

In particular the Implementing Regulation foresees that data for reference periods starting from January/first Quarter 2021 to December/fourth Quarter 2023 can be sent after the general data transmission deadlines. The transitional arrangements end in 2024.

Derogations

Where the application of the EBSR and its implementing regulation necessitates major adaptations in the national statistical system of a Member State article 24 of the EBSR foresees the possibility that the Commission grants derogations from the requirement for a maximum duration of three years. A number of Member States have requested such derogations and the Commission decided on the derogations in Implementing Decision (EU) 2021/1003 of 18 June 2021. Derogations were granted for the following countries: Belgium, Denmark, Estonia, Ireland, Spain, Italy, Cyprus, the Netherlands, Austria, Portugal, Slovakia, and Finland. The implementing decision for the derogations was adopted by the Commission and the European Statistical System Committee in accordance with Regulation (EU) 182/2011 of 16 February 2011laying down the rules and general principles concerning mechanisms for control by Member States of the Commission’s exercise of implementing powers.

The former STS Regulation (1165/98)

Regulation (EC) No 1165/98 outlined as a general aim the establishment of a common European framework for the analysis of the business cycle by collecting information on the supply and demand, on production factors and prices (article 1).

It defined and limited the principal scope of STS by stipulating that STS shall cover market activities of statistical units in mining, quarrying, manufacturing, wholesale, retail trade, services, and several other economic sectors which are identified by reference to the Statistical classification of economic activities in the European Community (NACE rev. 2) (article 2) and how such a collection should take place. In particular it allows Member States to use different sources to obtain the data (article 4).

The Regulation also defined how often data have to be produced (periodicity, article 5) and in what detail (article 6 and annexes, see below). It prescribed that data are to be processed according to common rules to ensure comparability (article 7), how they are transmitted to the EU's statistical office Eurostat (article 8) and how confidentiality of sensitive data was guaranteed (article 9). The Regulation demanded that national statistical authorities ensure the quality of the data (i.e. that they truly reflect real developments, article 10) and that the weighting system of indicators was to be renewed every five years (article 11).

Apart from such strictly statistical issues the STS Regulation also dealt with a number of procedural questions. It demanded the publication of a manual at regular intervals (article 12) and also the presentation of regular reports on the costs and benefits of STS (article 14). It foresaw rules for transition periods (article 13) and that concrete implementing measures had to be decided with a special committee procedure regulating the roles of the European Commission and the Member States (articles 17, 18). The Regulation also ensured coordination within Member States (article 15) and foresees the possibility of pilot studies (article 16). The annexes A – D of Regulation (EC) No 1165/98 (article 3) stipulatd in detail the specific requirements for the production of the statistical variables under the STS Regulation. The annexes provide detailed requirements as regards:

Scope (economic activities);
Oservation unit (statistical unit from which data are collected);
List of variables;
Form (whether data are to be transmitted as an index, as absolute values, seasonally adjusted etc.);
Reference period (monthly or quarterly data);
Level of detail;
Deadlines for data transmission (from Member States to Eurostat);
First reference year;
Transition period.

Historical development of the STS legislation

1998

The evolution of short-term statistics has followed that of European Union policies. For the first 40 years, most Community policies were structural and accordingly EU statistics mainly represented structural facts which also meant that they were in most cases only published annually or sometimes even less frequently. With the gradual development and implementation of the economic and monetary union, short-term statistics were needed in order to manage monetary policy.

Council Regulation (EC) No 1165/98, the STS Regulation, established the legal basis for the production of short-term indicators for manufacturing industry, construction, retail trade and services. The 1998 Regulation already provided most of the basic STS elements described above.

2001

In 2001 two important implementing measures for short-term statistics were adopted:

Regulation (EC) No 586/2001 defined main industrial groupings (MIGs) for the purpose of short-term statistics;
Regulation (EC) No 588/2001 provided more precise definitions for the variables covered by STS, e.g. production, turnover, sales etc.

2005

By the early 2000s, the European Commission and the European Central Bank (ECB) were focusing on short-term developments in the newly-created single market and the euro area. It was clear that better data were needed. In addition, the ever-increasing importance of services in European economies could not remain largely unmeasured. In 2002 Eurostat started to take initiatives towards amending the STS Regulation, with two major objectives: to accelerate the transmission of data and to include output prices for services, missing in the 1998 Regulation. The STS Regulation was amended on 6 July 2005 with Regulation (EC) No 1158/2005 requiring Member States to provide a service producer price index (SPPI) (output price index for services) broken down by type of service, on a quarterly basis, from 2006 onwards (although there longer transition periods were foreseen for smaller countries). In addition to the output price index for services a new indicator for industrial import prices was introduced.

Regulation (EC) No 1158/2005 modified several articles of the 1998 STS Regulation. It also introduced the possibility of European sample schemes as one method to obtain the data for some of the variables under STS. The details for European sample schemes in the framework of STS were later set out more specifically in Regulation (EC) No 657/2007 of 14 June 2007 (see below).

2006

Regulation (EC) No 1503/2006 replaced Regulation 588/2001 (see above) and provided new definitions of STS indicators. For the construction sector (annex B) the new orders received, new orders received for building construction and new orders received for civil engineering were deleted from the list of STS indicators.

Regulation (EC) No 1502/2006 provided new rules with regard to derogations for individual Member States, in order to facilitate the introduction of the changes required by Regulation 1158/2005.

2007

Regulation (EC) No 656/2007 amended Regulation 586/2001 (see above) on main industrial groupings in order to take into account the transition from the classification of economic activities NACE Rev.1 to NACE Rev.2.

Regulation (EC) No 657/2007 implemented rules for the use of European sample schemes in STS. European sample schemes could be used for the indicators industrial non-domestic new orders, industrial output prices of the non-domestic market and for industrial import prices.

2008

Regulation (EC) No 472/2008 specified a number of technical details related to the introduction of the new statistical classification of economic activities, NACE Rev. 2, into short-term statistics. These details included the first base year to be applied (2005), and the features of historical data recalculated in terms of NACE Rev. 2 (level of detail, form, first reference period, reference period)

Regulation (EC) No 1178/2008 introduced further adaptations for European sample schemes with relation to the new economic classification.

2009

Regulation (EC) No 329/2009 introduced hours worked and gross wages and salaries for retail trade and services as new short-term statistics indicators (to be provided from 2013 onwards, with time series going back to at least 2010).

2012

Regulation (EU) No 461/2012 repealed the collection of the industrial new orders index at European level.

Other legal acts impacting STS

Some other Regulations, although not specifically drafted in the context of short-term statistics, nevertheless had important repercussions for their collection and calculation:

Regulation (EEC) No 696/93 of 15 March 1993 on the statistical units for the observation and analysis of the production system in the Community;
Regulation (EC) No 1893/2006 of 20 December 2006 establishing the statistical classification of economic activities NACE Revision 2 and amending Council Regulation (EEC) No 3037/90 as well as certain EC Regulations on specific statistical domains Text with EEA relevance.