ESSPROS Task Force on Methodology November Qualitative information

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1 EUROPEAN COMMISSION EUROSTAT Directorate F: Social statistics Unit F-5: Education, health and social protection Luxembourg, 25/10/2015 DOC SP-TF ESSPROS Task Force on Methodology November 2015 Qualitative information Meeting of the ESSPROS Task Force on Methodology Luxembourg, November 2015 BECH Building (Eurostat) B3/464

2 Qualitative information 1 Overview ESSPROS Qualitative information is collected each year to provide detailed information on the social protection schemes in each country and the benefits they provide. It is intended to provide context to the quantitative data of the ESSPROS Core system and modules on pension beneficiaries and net social protection benefits, enabling an in-depth understanding of the schemes and benefits reported. Appendix II of the ESSPROS manual sets out the specifications of the Qualitative information to be provided by countries in accordance with Regulation (EC) No 458/ of the European Parliament and of the Council and Commission regulation (EC) No 1322/ The Qualitative information for the most recent available year is published annually on Eurostat s dedicated page on social protection 3. 1 of Appendix II describes the purpose of the Qualitative information as providing the following: 1. in-depth information on social protection schemes 2. the means to evaluate the classification of schemes and benefits applied 3. a clear basis for footnotes in publications and for the ESSPROS database in New Cronos 4. a means to respond to questions from users on the data by scheme 5. the basis for the validation of ESSPROS data (Core System and modules on pension beneficiaries and net social protection benefits 4 ) From this it is clear that the qualitative information should be at the core of the validation process and used to ensure that the ESSPROS methodology is consistently applied and that the ESSPROS data are comparable and of the highest quality possible. The recent step to openly publish data by scheme 5 further reinforces the importance of the Qualitative information. Users are liable to turn to this in order to interpret the detailed quantitative data. It is vital, therefore, that the qualitative information is clear, comprehensive and of consistent quality across countries. This will improve the usefulness of the data by scheme and reduce the risk of misuse. Recent work making use of the Qualitative information e.g. links between ESSPROS and other sources (national accounts, ISG data, EU-SILC etc.) and investigating methodological issues (payable tax credits, education related benefits etc.) has identified a number of issues. This document looks at some potential uses of the ESSPROS Qualitative information, the information needed to do so and how the data currently compare with what should be available according to the specifications provided in Appendix II of the ESSPROS manual. The aim is to encourage discussion within the Task An explicit reference to the Net Benefit module should be added, indeed in Appendix II. 5 For the time being, only for the Core System, and only for 28 out 33 participating countries. 2

3 Force on how qualitative information may be improved to better meet the needs of users and producers. 2 User and provider needs and the guidelines There is significant variability between countries in terms of whether the qualitative information follows the specifications set out in Appendix II of the ESSPROS manual. While some countries provide comprehensive information in a consistent manner, others have not provided some of the most basic information. Now that Core System data by scheme 6 is publicly available and users are likely to consult the qualitative information in order to identify which data corresponds to particular benefits and to understand how aggregates are derived, all countries should be encouraged, with the assistance of the ESSPROS validation team, to review their Qualitative information to ensure that all the information required is provided. Further, there are a number of possible uses of the ESSPROS Qualitative information which the current information do not fully allow either because the information specified in Appendix II is incomplete or because it requires information that is not collected: Linking detailed data from ESSPROS with that of other sources: ESSPROS may be used to conduct investigations into particular benefits or types of benefits. Often this is performed by pooling together information available from as many sources as possible. However, doing so requires the means to clearly identify information associated with a benefit in different sources and to establish a correspondence between them. The principle means of achieving this is to use the name of a benefit, either in English or the national language. Typically the latter tends to be more useful as it can be can be used to identify information in national sources (i.e. legislation and government documents) while the former may differ across sources due to different translations. In absence of a correspondence in names between sources, implementation dates, references to relevant legislation, organisations responsible and the description of the benefits may be used to establish a connection. All such information should be provided according to Appendix II. Many countries do provide all the required elements but in others the names of benefits (in English, national language or both) as well as other information mentioned above are missing. For example, in 2014 Eurostat attempted to compare information on income support reported in ESSPROS with that in the EU's Mutual Information System on Social Protection (MISSOC). For a number of countries a correspondence was difficult to establish due to the lack of detail provided in the ESSPROS description of benefits. Note also that clear and comprehensive descriptions of any changes applied to benefits over time may also help to explain discrepancies when compared with other sources. Ensuring correct classification: In order to validate the classification of benefits it is necessary to have descriptions that include all relevant details. This includes information necessary to justify the classification by category of schemes (section 4.2 of Part 1 of the ESSPROS manual), the classification of benefits by function, and by type of benefit (cash/in kind, periodic/lump sum, means-tested/non-means tested). This should be clear from the purpose, delivery method, periodicity and eligibility criteria. However, only the last of these elements is mentioned in the specifications in Appendix II. In fact, there is no explicit requirement to provide information on 6 For the time being, for 28 out 33 participating countries. 3

4 the purpose for which a benefit is granted even though this constitutes the main basis for the classification by function. In practice, the purpose may, to some extent, be interpreted from the eligibility criteria or from the description of the categories of beneficiaries, but this is not always the case. Understanding amounts report in the quantitative data: In certain cases a benefit may be split across classifications (i.e. benefits with bundled objectives) or only partially covered in ESSPROS (i.e. child day care with an education component). Where this is the case, information on the component reported under a given classification, the location of any other components and the characteristics which justify this treatment is vital for a correct analysis by users. For example, such information is useful in the case of disability pensions paid to persons below and above the retirement age to confirm that the approach applied is consistent with the methodology. There is no explicit reference to providing such information in Appendix II although some counties do cover such points in the Qualitative information and other cases may be explained in the national quality reports 7. Validation of net module: In order to validate data provided for the module on net social protection benefits it is necessary to confirm that AITRs/AISCRs have been provided for all benefits that are potentially liable to taxation or social contributions and, equally, that no AITR/AISCR has been applied to a benefit that is not liable. The qualitative information should provide a basis for this assessment: 15 of Appendix II lists information to be included for every benefit and item (e) in this list is: Taxation of benefit (liability to taxes and social contributions). Although the completion of relevant information has improved since the launch of the net module, it remains the case that some countries do not systematically provide this information for all benefits. Cross-validation with national accounts: The list of potential rules to cross validate ESSPROS and national accounts data presented at the ESSPROS Working Group in 2015 included a rule that cannot be applied until it is possible to identify the sector of each ESSPROS scheme (according to the ESA definition) or at least whether the expenditure of the scheme is government expenditure or not. Such a distinction would allow an improved comparison of ESSPROS data with that of COFOG. Note that the classification of schemes does include the classification by decision making ( government-controlled vs not government-controlled schemes), however the split of expenditure of the schemes according to this criterion does not necessarily correspond to the breakdown between government and non-goverment expenditure. 8 9 Understanding data for receipts and non-benefit expenditure: The existing specifications for Qualitative information in Appendix II do not provide the means to describe what is reported under ESSPROS classifications for non-benefit expenditure and receipts. This means that there is 7 Footnotes and flags should indicate where splits are made using estimation. However, the ESSPROS manual provides no formal specifications of what should be reported in footnotes or details of when to apply flags. 8 See as a reference document SP of the last Working Group. See section 4. 9 The development of a mechanism to split ESSPROS data (expenditure and receipts) by sector was discussed during the ESSPROS Conference in November 2014 and then by the Working Group in March 2015 as developments nr 18 (See as a reference document SP Annex). Note that development 18 (breakdown by sector) was identified by the cost-benefit analysis among the top seven developments, together with development 5 (detailed qualitative information). For this, see as a reference, the conclusions of document SP (page 5) 4

5 no information available to verify that the amounts reported adhere to the ESSPROS methodology or to investigate issues associated with this data. Note that there may also be technical restraints imposed by the existing Excel questionnaire for the collection of the Qualitative information. However, these are not considered here. It is, however, worth noting that the introduction of SDMX offers a chance to improve the collection of Qualitative information. For example, there may be scope to subdivide the aspects of the description of each scheme and benefit and implement automatic validation rules which ensure that all the necessary information is provided. 3 Conclusions A number of quality issues have been encountered when trying to exploit the ESSPROS Qualitative information for analysis and research. This document reviews some potential uses of the ESSPROS Qualitative information, the information needed to do so and how it compares with what should be available according to the specification in Appendix II of the ESSPROS manual. In follow-up, the following steps should be taken: During the validation process, countries, with the assistance of Eurostat, should systematically review the quality of the existing qualitative information in relation to the specifications laid out in Appendix II of the ESSPROS manual and take steps to address any shortcomings identified. Task Force to discuss the specifications in Appendix II with the view of improving them bearing in mind the information needed to: o Establish links with other sources o Ensure data are correctly classified o Facilitate cross-validation between the ESSPROS Core and ESSPROS modules o Clarify treatment in cases where only components of a benefit are reported o Implement additional national accounts based cross-validation rules o Clarify data reported under classifications for non-benefit expenditure and receipts 4 Point for discussion by Task Force Do you agree with the above observations? Have you encountered any other issues associated with using the qualitative information that should be considered? Do you have any further proposals for improving the Qualitative information? To what extent does the ESSPROS qualitative information overlap with the MISSOC database and should there be any attempt to improve links between these two information systems? Note that Links between ESSPROS and MISSOC was also discussed at the ESSPROS Conference in November 2014 and then considered in the cost-benefit analysis by the Working Group in March 2015 as development nr