23 rd Meeting of the Wiesbaden Group on Business Registers -International Roundtable on Business Survey Frames. Washington, D.C September 2012

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1 23 rd Meeting of the Wiesbaden Group on Business Registers -International Roundtable on Business Survey Frames Washington, D.C September 2012 Giuseppe Garofalo, Irene Rocchetti, Caterina Viviano Istat Session No.2 Quality, Consistency and Dissemination of Business Register Data A revision of the Italian Business Register: a new methodological and conceptual backbone for a new informative system on employment Abstract The 2011 Italian virtual economic census represented an opportunity for a general revision of methodologies and contents of the SBR. This transition focused mainly on the employment estimation and classification criteria, starting from the integration of a new set of administrative data. The possibility to turn from a traditional business Census to a virtual one depends mainly upon the degree of enhancement done in the statistical use of administrative sources and, on the other hand, on the improvements in terms of quality each administrative body has developed in the business area. In particular the acquisition and introduction of new administrative sources change the way the SBR process is carried out, and add new contents to the system of businesses where information is available not only at firm level but also at an individual level in that each person involved in the business production process is identified. Each unit registered by an administrative source is linked to the BR statistical unit by means of identification codes: persons can be linked to the business in which they assume any ownership share, to the employer for whom they are working, etc. Furthermore this revision also represented an opportunity to face and solve problems of definitions, in terms of better coherence with the international standards, and regarding the translation of such definitions into operational rules. Some estimates concerning the same phenomenon, but produced in different statistical areas (National Account, SBS, BR) could produce some inconsistencies in outputs. The forthcoming benchmark that NA must produce is another element which pushes towards a total revision of the employment classification system in order to guarantee a better coherence for the whole national statistical system. In this paper we describe the major innovations introduced with regards to the different typologies of employment (self-employed, employees and outworkers). Keywords: business register, employment, administrative sources, linked employment employees data 1

2 1. The virtual Industry Census: an opportunity for a global revision of the BR The development of a register-based business Census started with a recent project aimed at reproducing census data entirely from administrative sources. The building up of ASIA (Archivio Statistico Imprese Attive) Business Register (BR) is a process which started in 1996 and consolidated over the years so as to produce an updated BR every year. ASIA was also used during the 2001 Business Census as an important innovation to improve the effectiveness of the survey technique and to achieve an optimal coverage of the observation field. After 10 years, for the first time the decennial Business Census named CIS 2011 aiming at the enumeration of businesses, related persons employed and other typologies of employment, classified by Activity code, size, juridical status and other structural information about the system of enterprises is done without any direct data collection from business but instead it is based exclusively from statistical data obtained from the integration of administrative sources. The virtual Census system is built around a set of basic registers containing comprehensive data on firm units and individual. The core of this system is ASIA BR which is obtained as a result of an integration process of administrative and statistical sources. The acquisition and introduction of new administrative sources change the way the process is carried out, and add new contents to the system of businesses where information is available not only at firm level but also at an individual level in that each person involved in the business production process is identified; in fact each unit inside an administrative source is linked to the BR statistical unit by means of identification codes: persons can be linked to the business in which they assume any ownership share, to the employer for whom they are working, etc. The realization of a virtual Census is a complex task, Census information has to be produced at desk using all administrative and statistical data available. Among the problems involved there are: the need to deal with definitions and their operational rules, the timeliness in the production of data, the treatment and the exploitation of new administrative data, the enlargement of the dataset of information, huge amounts of data linked at the individual level, and so on. To carry out activities a task force has been organized and composed by working groups each formed by researchers from different departments of Istat, working jointly on the project. Decisions about definition, contents and priorities are made on a consensus basis. Proposals and basic decisions that may affect changes in previous or old approaches and definitions, have always been subject to the top management s approval. Two main aspects have been mainly considered: the revision of the BR updating process with the improvement of timeliness; and the production of employment data. As far as latter is concerned the main objectives are: a) to produce more detailed information on employment focusing on the worker s characteristics such as demographic (sex, age, nationality ) and job variables (professional status, type of contract, etc); b) to identify more typologies of workers used in the firm (outworkers, temporary work, labour input); c) to revise the operational rules to measure self-employment; d) to identify different measurement of the employees (number of jobs, number of persons employed and full time equivalent jobs); e) to review the calculation of the yearly employment average. The virtual CIS2011 also represents an opportunity to face and solve problems of definitions, in terms of better coherence with the international standards, and regarding the translation of such definitions into operational rules. Some estimates concerning the same phenomenon, but produced in different statistical areas (National Account, SBS, BR) could produce some inconsistencies in outputs. The 2

3 forthcoming benchmark that NA must produce is another element that pushes towards a total revision of the employment classification system in order to guarantee better coherence for the whole national statistical system. Such a system does not necessarily mean the adoption of exactly the same classification of employment in all statistical domain. Rather it aims at the adoption of a common conceptual framework and harmonized estimation methods in order to have detailed breakdowns in employment classification. In this system discrepancies can be easily identified and better quality and transparency towards users would be ensured. 2. A framework of definitions and the classification of different typologies of employment The purpose to produce a system of definitions (and operational rules) not only for the Census operation but also in order to involve the overall business statistics system, has determined the need to anchor such a system to broader conceptual frameworks and in detail to: the System of National Account SNA 2008 and the International Classification of Status in Employment ICSE 93. With regards to the SNA it is the internationally agreed standard set of recommendations on how to compile measures of economic activity, and at the same time the SNA..serves as a coordinating framework for economic statistics because it is seen as the conceptual framework for ensuring the consistency of the definitions and classifications used in different, but related, statistics and it acts as an accounting framework to ensure the numerical consistency of data drawn from different sources. 1 About the ISCE: The ICSE classifies jobs held by persons at a point in time. A job is classified with respect to the type of explicit or implicit contract of employment of the person with other persons or organizations. The basic criteria used to define the groups of the classification are the type of economic risk, an element of which is the strength of the attachment between the person and the job, and the type of authority over establishments and other workers which the job incumbents have or will have 2. Beside this two classification frameworks the definitions adopted by the European Regulation (EC) n. 250_2009 on Structural Business Statistics is taken into account. Lastly all those definitions have been adjusted to take into account the peculiar Italian economic context. The following definition have been approved: Employees: Persons who, by agreement, work for an enterprise and receive remuneration for their labour in the form of wages, salaries, fees, gratuities, piecework pay or remuneration in kind. The relationship of employer to employee exists when there is an agreement, which may be formal or informal, between the employer and a person, normally entered into voluntarily by both parties, whereby the person works for the employer in return for remuneration in cash or in kind. There is no 1 SNA 2008, Charter 1. 2 Resolution concerning the International Classification of Status in Employment (ICSE), adopted by the Fifteenth International Conference of Labour Statisticians (January 1993) 3

4 requirement that the employer should declare the agreement to any official authority for the status of employee to apply. Paid working proprietors and managers of an enterprise are considered as employees. The number of employees of an enterprise is calculated in terms of number of explicit (written or oral) or implicit employment contracts between a person and the institutional unit which correspond to the jobs full time or part time, regular or irregulars, under permanent or fixed-term contract and irrespective of the hours actually worked. The availability of a new set of information concerning both the contract and the actual paid working time allows the calculation of two different types of jobs: the total number of employees (in term of jobs) and the number of paid employees (in term of paid jobs). While jobs as measured by the contracts (in accordance with the ISCE definition) allow a better analysis of the labour demand and supply, the second definition can became an important input for NA and, on the other side, allows to calculate economic indicators (i.e. labour productivity) in a most accurate manner. a) Total number of employees: i. Jobs held by persons that in a given reference time are receiving a remuneration (wages/salaries, piecework payments, in kind, etc.) by the enterprise (employer) and that in the same period they have actually been at work. ii. Jobs held by persons that in a given reference time are receiving a remuneration (wages/salaries, piecework payments, in kind, etc.) by the enterprise (employer) but they are temporarily not at work (because of illness or injury, holiday or vacation, strike or lockout,etc.) iii. Jobs held by persons that in a given reference time are missing from work even for long time and they are not receiving any remuneration from the employer having however the agreement to come back at work at a fixed date. They may receive compensations or benefits from public or private subjects different from their employer (i.e. short-time work, maternity leave, illness, leave for personal reasons remunerated or not, ) : b) Number of paid employees: they include jobs as defined in points i) and ii). Even though employees represent the most significant component of employment in an economic system, in the Italian business structure, composed by very small enterprises (also organise din partnership and corporation legal forms), self employment is a very important component. An overall revision of the self-employment definition and estimation method was necessary because of the total inadequacy of the one adopted for the production of business statistics in Italy (at least because it is 20 years old). The old approach was based on the concept according to which for running a business it should always be present a coordination and management function. As consequence of this, at least one self-employed has been imputed for each enterprise. The last approach, followed by the BR and structural surveys may in some cases lead to aberrant results; let think to an imputation for enterprises where it does not make sense (for example companies controlled by public or where all shareholders are juridical persons). According to nomenclatures, self-employed persons can assume the role of employers only if they engage workers on a regular basis, but they can carry on their activity without employees (in this case 4

5 they are called own-account workers). According to SNA Self-employed persons are persons who are the sole or joint owners of the unincorporated enterprises in which they work... Persons who work in unincorporated enterprises are classified as self-employed persons if they are not in paid employment. The compensation for self-employment is included in mixed income because it is not possible to observe the return to labour from the return to any capital separately. According to the above definition there are two main characteristics to take into account for the classification of employment: 1) the selfemployment definition is linked to the typology of remuneration for the type of process (mixed income); 2) the presence of the self-employed has to be differentiated according to the legal form of the enterprise (Sole Proprietorships, Partnerships, Limited Liability Company). In the adopted Italian interpretation of the self-employed definition, the main difference with the standards lies in the inclusion of shareholders of a corporation as possible self-employed in addition to the sole owner and to owners of the unincorporated enterprises. The underlying hypothesis is that a shareholder working in the corporation as a member with a position inside it is remunerated by mixed income. The problem of identification of self-employed persons is a relevant issue as also proved by recent studies developed at European level, i.e. OECD (OECD, 2012) introduced conceptual and practical rules to distinguish the entrepreneur and women or men owned enterprises. The project is at a first stage and it is done only for sole-proprietor enterprises. For the other juridical forms the difficulty is the identification of the owner of the shares of the equity in partnerships and limited liability companies. As suggested by law and also by definitions, enterprises can be divided into three broad categories according to their legal ownership: sole proprietorship, partnership and corporate ownership. In a sole proprietorship, the owner is personally liable for his or her business debts and losses, there is no distinction made between personal and business income, and the business terminates upon the death of the owner (unless some specific arrangement is made for someone to inherit the business). A partnership is merely joint ownership, and hence, in terms of personal liability, it is similar in every way to a sole proprietorship. Both categories of business ownership are simple arrangements that can be entered into and dissolved easily. Corporate ownership, on the other hand, is much more complex, because it involves the creation of a legal identity separate from those of its owners. While an individual may own all the shares of a corporation, he/ she is not personally responsible for it. This is because a corporation is, strictly defined, a legal entity which can enter into and dissolve contracts, incur debts, sue or be sued, own property and sell it, as any individual may do. A new set of methodologies to estimate all these types of employed people have been developed thanks to the availability of an informative structure which contains microdata at different levels, i.e. by enterprise, local unit, single person and about relationships between the person and enterprises where he/she works. Self employment Person who carries out its work inside an enterprise, without any formal contracts (not in the payroll), whose remuneration is included in mixed income (capital/labour). Self-employed persons include the following categories: Sole proprietor, free lance and own account workers; Contributing family workers working in the enterprise even if not paid, with paid contributions for social security or insurance against injuries at work; members of partnerships, corporations and quasi-corporation under the condition of an actual working activity carried out in the same enterprise of which they are shareholders 5

6 Operational Rules: a ) For sole proprietorships the self-employed correspond to the owner; if working activities are carried out with the support of relatives, in addition to the owner, family workers are considered selfemployment too. b) For those enterprises with a juridical form of consortium, or for a branch of foreign enterprises, in accordance with the Italian NA 2001 adopted rules, no self-employed is admitted. c) the evidence of contribution payments for social security or for work injuries insurance made by partners identifies, in explicit manner, the presence of a working activity carried out by this person (especially inside partnerships). d) whereas a relationship between a company and its shareholder exists, in particular when the shareholder covers a position, any economic transaction between those two subjects can be seen as an evidence of a remuneration flow for the work done by the shareholder for that company. Outworkers The evolution of the economy in several European countries has given rise to economic subjects characterized for being neither an own account worker nor an employee. They are not own-account-workers because is not possible to recognize an organization and is not possible to compute a complete set of accounts. Furthermore some national legislations, only for fiscal purposes, threat their income as labour income and not as enterprise income. They are not employees because in annual report of the enterprise they work for their remuneration are considered an intermediate consumption and not a wage or a salary. Furthermore their social guarantees (in terms of maternity, disease and pension) are lower than those of an employee. Very often the enterprises use these economic subjects with the objective to reduce their labour costs. The SNA 2008 (and ESA 2010) define this typology of employment as outworker: An outworker is a person who agrees to work for a particular enterprise or to supply a certain quantity of goods and services to a particular enterprise by prior arrangement or contract with that enterprise.. Outworkers have some of the characteristics of employees and some of characteristics of self-employed workers. The way in which they are to be classified is determined primarily by the basis on which they are remunerated. : The person is remunerated directly, or indirectly, on the basis of the amount of work done,.. as an input into some process of production, irrespective of the value of the output produced or the profitability of the production process. This kind of remuneration implies that the worker is an employee. The income received by the person is a function of the value of the outputs from some process of production for which that person is responsible,.. This kind of remuneration implies that the worker is self-employed. 3 For their border line characteristics the risk is that the production of these units is not considered by the business statistics with the result of an underestimation of the value added. 3 United Nations - System of National Accounts 2008, and

7 The decision taken is that the outworkers have to be classified as self-employment and that they have to be considered a pseudo-enterprise i.e. a market oriented unit that cannot be considered as enterprise because it not present the characteristics to be an organizational or/and autonomous unit and for which a complete set of account is not available. Furthermore, the need to better understand the structure and the evolution of the main sectors of the Italian economy, suggests the possibility to simulate what would happen if, at least some of such outworkers, would be put inside the production process of enterprises which makes use of them, in order to propose an alternative approach for the measurement of labour input as well as of related indicators (i.e. labour productivity). In this sense we define a new typology of employment called External Workers of an enterprise which represents all people that, not classified as employees or self-employment as defined above, participate to the productive process of the enterprise. The group of external workers contains also those temporary workers which can be utilized from a temporary employment agency. 3. New administrative data sources and a new employment data structure for BR The possibility to turn from a traditional business Census to a virtual one - that relies on BR -depends upon the degree of enhancement done in the statistical use of administrative sources and, on the other hand, on the improvements in terms of quality reached by each administrative body in the business area. In this process every administrative body behavior in data gathering and maintenance influences any derived statistics; tools, tasks and methodologies that statisticians have to put on the field must change and adapt to a better use of such data. Traditional techniques based on survey approaches must be revised and adjusted in order to take into account a further potential source of error due to a reality reflected by administrative data. Moreover, the increasing needs of more detailed information (i.e. on employment) often met only in the occasion of census, is now feasible thanks to the degree of detail available in data collected by some administrative source. In fact, according to changes in laws and regulations, some administrative bodies have modified their way to gather information, changing contents of their forms often in the direction to better fulfill statistical requirements, timing, way to store data. If on the one hand the increase of administrative detailed information is an advantage for the virtual census scope, it involves the radical revision of procedures, methodologies for the statistical treatment of employment and at the same time a consistency in time series of disseminated information. This new system for the employment measurement makes use of many administrative sources that can be grouped into different typologies: Social security data, fiscal data, Chamber of Commerce data, data from the government agency for the insurance against work-related injuries. The following lists the most important registers used in the new system for the production of detailed statistics on employment: Social Security Sources 1. Starting from January 2010, employers must transmit to the Italian National Institute for Social Security monthly reports related to employees and remuneration information at worker level. Input 7

8 records amount, on average, at over 160 millions monthly data for a given reference year. The main variables are unique administrative identity number, the employer and the employees fiscal codes; in addition monthly detailed variables are available concerning the job qualification like contractual working time (part time/full time), type of employment contract (temporary or fixed time /permanent), dates concerning the beginning/closing working period, gross wages and salaries paid by employers according to social security definitions. Useful to better measure jobs are: the weeks totally paid/partially paid/not paid by employers, the number of paid days in the months and some other variables relevant to measure the employees short-time work (STW) and some other reason of absence from work like maternity, illness status. Links between employer-employees are guaranteed by identification codes (fiscal codes). 2. Another relevant register managed by the Social Security Institute covers a set of workers having contributing regulation different from the employees one (the quasi-subordinate workers ). It is a pension fund financed by compulsory social security contributions that are paid by customers (i.e. an institutional unit) to certain categories of collaborators so-called outworkers such as working people under project contracts, casual workers, beneficiaries of scholarships, associated with participation, company administrators, etc. Moreover the register also those categories of free lance that do not have a proper pension fund or professional register. Links between customer-collaborator are assured by identification codes (fiscal codes). 3. The craftsmen and tradesmen archive registers social contributions paid by the holders of craft or trade businesses; these people use mainly their own work or family workers for carrying out the business activity. The level of contribution they have to pay is calculated on the base of their overall produced income. Information is available at the owner fiscal code level and, where present, for its relatives (family workers). Chamber of Commerce Sources Among the information received from the Chamber of Commerce, there are two archives we mostly use: 1) a special section of the Register of Enterprises that is the register of Persons with Positions in the Enterprise; and 2) the list of shareholders for companies and cooperatives. The first source registers for each legal unit, partnerships and companies, the list of persons covering a position like to be a member of the board of directors, an administrator, a simple partner. The kind of covered position reflects the underlying legal regulation followed by the business according to which, by juridical form, it is possible to understand if the person is in charge of the administrative management or holds a certain degree of liability. The system of links between the administrative legal unit and the individuals is assured by a system of identification codes (also fiscal codes). The shareholders register covers those members belonging to companies and cooperatives that contribute to the enterprise s capital because they hold a percentage of its shares. In addition to the previous register, the integration of both sources allows for each enterprise the knowledge of the information of being persons, members or not, with or without a position. Fiscal Sources Database managed by the Tax Agency represents an important huge source of information on taxpayers, juridical and natural persons. Fiscal declarations are organized according to various models or forms; 8

9 among the others we focus on the income declarations. In specific for the employment classification a specific module of income declaration has been analyzed that is the one covering people (partners) declaring an income deriving from the participation in a partnerships. Income (positive or negative) is attributed to each partner in proportion to the share held. The link between the taxpayer and the participated partnership is rebuilt as a derived information after a complex procedure developed. Another relevant fiscal sources used is the statistics-based Tax Assessment fiscal survey so called Studi di settore. Information is available at firm level and cover those business (with exclusion of some few sectors of activities) having turnover less than 5 million of euro. With regards to employment information, this source records aggregated figures at firm level on the number of members (shareholders, partners) carrying out administrative (or not) functions and/or prevalent labor input (or not). This source is mainly used for benchmarking activities. The government agency for the insurance against work-related injuries (INAIL), supplies a relevant information especially for the identification of the outworker employment component. There are three archives: 1) Temporary workers archive, made up of those enterprises that supplies temporary workers to other enterprises that use them for a limited period (even one day per week or a longer time). A system of three identification codes (the supplier, the user, the worker) are linked to each others to take trace back their movements. 2) Outworkers list that for insurance reasons due to the risk of workinjuries are recorded and declared by the enterprise for which they carry out a project; 3) The archive of territorial insurance position (PAT); it is relevant because it records information with regards to the physical workplace (at an address level) where the outworker is insured. This information will be used in the estimation method to distinguish among those persons located at the same address as the local unit where they work from those working elsewhere (at home or other site). According to the input sources information the new employment data structure for the BR is set up according to a LEED structure (Linked Employer-Employment Database). While in the old BR the number of persons employed represented one of the characteristics associated to a statistical unit (attribute), in the new data structure the employment information is not aggregated but rather each single person is linked to the statistical unit in which it assumes any form of employment according to the conceptual framework of the employment classification. In this new system firms and workers employed are identified by links deriving from an integration and matching process of the several administrative sources. The data structure is based on links i.e. direct relationship between employment identification codes and enterprises together with the basic enterprise attributes, employment composition at enterprise level (e.g. gender and age composition, workplace) and employment attributes that differ according to the type of employment of interest. 4. A global revision of employment estimation From an operational point of views, the classification and estimation procedures used to identify the different components of employment have been organized into three activities flows; in fact each component presents an informative set of variables which need a different approach and different sources for the calculation of statistics feasible to obtain employees, self-employment and outworkers estimations. 9

10 4.1 Employees estimation Administrative archives, held by public or private agencies, recording information on businesses are continuously updated according to their institutional purposes, both in terms of addition (deletion) of new (old) units and of values of already existing records. In the aim of measurement of some statistical information, i.e. employees, Istat acquires the entire datasets in two distinct occasions during the year. As the archive is downloaded in different periods of the same reference year, this may cause misalignments in the reference population. This means that using an earlier supply of the administrative data, with respect to the timing regularly adopted for the realization of the BR, might lead to completeness problems, both in terms of coverage (unit) and in terms of accuracy (variables). In the new system of integrated sources, the employees component derives mainly from the Social security Database (EMENS), managed by the Social Security Authority which records monthly employer declarations on jobs positions for people subject to the payment of social security contributions. EMENS is the main administrative source which identify the universe of enterprises with employees and the number of employees per firm; this source contains information related to monthly employer declarations on job positions and covers all persons with a contract of employment and receiving a compensation. Each record of EMENS thus refers to a single job contract and registers some information concerning to it, such as the type of employment contract of the worker (i.e. fixed-term, permanent,..), the number of worked days per month, etc.. Given that EMENS structure of the data is based on a direct relationship between employees and enterprises, information concerning employment and employment composition at enterprise level can be constructed by summing over the individual information. As first step, great efforts have been put in qualitative and quantitative analyses in order to compare old information on the number of employees, expressed in annual average per enterprise as attributed to each BR s unit, with the new data on the average number of employees obtained by summing-up from the individual-level. Among tasks to deal with, one is the way of computing jobs in annual average which vary as change the unit of measure (number of weeks worked in the year or average based on the months worked); moreover a comparison with the number of employees as recorded in the BR has been considered. According to administrative data, the most detailed level of information concerns the job at week level; however, thanks to the information whether the individual is paid or not in each week, it is possible to compute two measures of employees monthly according to the following formula: Let be the job in the week or part of week in the month where is equal to {1} if the individual is present in that week and month, {0} otherwise, and let the number of days for that week and month ), then at individual level the average presence is: Then the average position in the year 10

11 It is clear that the new way to produce the employees measures may cause a break but on the other hand the labour input information may result much more accurate. After having solved the not trivial issue related to the way of measuring the employees, coverage and completeness problems have been taken into account among the ones of great relevance, both in terms of business units - due to the transition to the new EMENS system - and of worker head coverage level because delay in the Social Security declarations. Moreover comparisons are affected by merger or break-up events involving bigger enterprises, whose information has been generally corrected by looking at other statistical sources. Due to these reasons, the total number of employees (considered in terms of jobs in annual average ) could be different from the number of jobs as registered in the EMENS dataset. As far as merger or break-up events are concerned, after that involved enterprises have been manually checked, misalignments between social security data and manual checked data have been solved by letting moving the eventual employee record from an enterprise code to another one (according to the check rules decision) and assigning it to the correct enterprise it belongs to. When misalignments cannot be ascribed to events related to enterprises, but rather to either administrative archives completeness problems or delay in the Social Security declarations, a total imputation of missing employees per enterprise needs to be considered. Statisticians often have to deal with problem of missing data due to unit non response (complete non response); in this case different forms of imputation (deterministic or stochastic) are often used A very well-known imputation technique is the hot deck imputation (see Ford (1983)), a method for handling missing data in which each missing value is replaced with an observed response from a similar unit, called the donor, which is chosen among the available data A first step consists of identifying the donor matching the missing record; the identifying process is based on some considered variables, called filter (strata) variables: records match if they have the same values on the filter variables. The second step consists on selecting randomly the donor from the set of potential donors, which we call the donor pool; we call these methods hot deck methods. In case of missing data due to delay in the Social Security declarations, the donor pool consists of employees belonging to enterprises having similar structural characteristics - similar value of the filter variables, i.e. the same NACE and the same size class - to those enterprises having missing units. External administrative sources reporting some worker characteristics ( i.e. gender, age, etc.) have been considered as containing auxiliary information useful to choice a donor under some constrains such as the percentage distributions of those workers characteristics. 4.2 Self-employment estimation With respect to the identification and classification of self-employed persons inside each firm, we can formalize the statistical framework as formed by the following elements: units, links, variables and classification criteria. The first level unit is the enterprise (Ui, where i=1..,n) and the second level unit is the person (Pj, where j=1,..m); given a i-th enterprise the link with the j-th person is assured by the integration process of administrative sources based on a system of identification codes (i.e. fiscal codes). In such a way each person Pij is assigned a vector of variables whose components are the so-called 11

12 signals of presence/absence, and relative specific variables, in each Administrative Sources previously statistically treated. The classification criteria of Pij according to different typologies of employment i.e. self-employed - is done using different statistical methods that differentiate rules and methods according to the enterprise legal form, as suggested from the conceptual framework, and the information vector s structure. The method for classifying each person as self-employed is performed in two steps: 1) the initial deterministic classification rules are mainly based on particular combination of the vector s component and; 2) a stochastic approach that estimates the self-employed characteristics for a particular sub-population of units remaining without self-employed after step1. The following description will explain the method of identification of self-employed persons in the case of corporations, as it is considered quite trivial the case for sole-proprietorships and it is similar but simpler the case of partnerships. A) The deterministic method The requirements that a person must meet to be identified as a self-employed in a corporation can be summarized in the following conditions: he/she must be a member of the company (shareholder) with an office (or position) and working in it (with a mixed-income), with the last one being the most complex requirement to assess. Using administrative data means to choice some proxy variables with the aim of measuring any flow of remuneration from the company going to its members; these links are recorded into specific administrative sources like the Social security archive, the fiscal data and concern declared remuneration made by the person for the work done (payment of contribution by a person as Craftsmen and Trader, as professionals) and/or contributions declared by the employer for the worker remunerated for the activity carried out as administrator or under another type of contract. These criteria are monitored at firm level or at enterprise group level. By definition, for a specific structure of information, it is conceivable the absence of the self-employed person such as for enterprise groups when the group head is foreign or public, or it is a sole proprietorship or a partnership (i.e. those kind of units already having self-employment); while for firms not in groups when the company is participated only by juridical persons, or the structure of management is not formed by shareholders or shareholders are remunerated as employees. However at the end of this identification process, only about 48% of the total population of companies have a self-employed person identified; for the rest of the units we can differentiate among motivated zero self-employment enterprises because in groups (about 29%), and a remaining percentage of 71% of companies, not in groups, with zero self-employment that we can split into three different sub-populations: 1) a motivated one that covers about 21% of firms not in groups having motivations like the ones as described before; 2) one with a problem of undercoverage in the administrative source on shareholders by the Chamber of Commerce (around 12%) and this problem will be treated using a statistical methodology ( 3.2) and the last big one (67%) in accordance with the rules as described is composed by firms resulting without self-employment. B) Assessment and stochastic estimation methods The second step of the procedure has two main purposes: 1) to assess the goodness of a number of selfemployed persons estimated by deterministic rules; 2) to implement stochastic models for estimation of zero self-employment in the sub-population of units with undercoverage in the administrative source on shareholders. For both the procedures two sources of data have been used as a benchmark for comparisons: the fiscal data Studi di settore (frame A on employment) - and the SBS SME (small and 12

13 medium enterprises) survey. To assess the goodness of estimates done by the deterministic method we used the statistical Cohen's kappa coefficient as a measure of concordance of the degree of agreement among raters. The analysis shows a good concordance among sources taken pair by pair and it was calculated for those enterprises with self-employment assigned. After a preliminary exploratory analysis done on the enterprises without any self-employment assigned, it was decided to adopt a zero-inflated Poisson regression model (ZIP) to estimate the number of shareholders. This model is used to model count data that has an excess of zero counts. The theory suggests that the excess zeros are generated by a separate process from the count values and that the excess zeros can be modelled independently. Thus, the zip model has two parts, a Poisson count model and the Logit model for predicting excess zeros. The final estimate was predicted by applying maximum likelihood estimates of parameters founded from the ZIP model to the variables available in the subpopulation with undercoverage. After a sensitivity analysis a zero-count of shareholders was fixed by choosing for p0>=threshold; moreover, when p0<threshold shareholders were predicted by considering the Poisson estimated process. Then the final step applies the same criteria used for the deterministic rules to identify self-employment. 4.3 Outworkers estimation According to the concept of external workers, as defined in 2, the estimation method aims to identify those contracts between the firm and the person, formal or informal, which are characterized by a work that is carried out within and for the production of the business. On the contrary, it tends to exclude those contracts for which people supply services which are auxiliary to the production process and generally supply more than a single customer. As the only administrative source that registers such information is the Social Security archive on quasi-subordinate workers, any operational rule for a plausible classification should take into account the typologies of contracts covered by this source, characterized by high heterogeneity of items. The first step of the procedure is to discriminate among those contracts affecting the firm s production process. Then to identify the economic activity of external workers more in line with the firm s one, a re-classification procedure uses administrative information available after an ad hoc re-coding process. For most types of contracts, administrative activity is not specified, in this case the methodology is based on checks both to asses the uniqueness of the relationship between the worker and the customer (i.e. the firm), approximated by the identification of a sole link of the contract during the reference year, and, at the same time, detect whether the workplace at address level is coincident with the address of the local unit of the firm. The second component of external workers covers temporary workers that have been identified by the enterprises side for which they actually work. 5. Results: comparison of 2010 figures between the BR and the new system on employment The introduction of new administrative data sources and the revision of definitions and adopted estimation criteria for employment has an impact on business statistics. In the following, some preliminary results on 2010 employment data are presented and compared. 13

14 Employees. In the 2010 BR, the number of employees amounts to ab0out 11,741 thousands 4. In the new system the number of employees, in terms of annual average positions, has been measured in two different ways: a) a monthly presence is counted if the individual works at least one week in the month; b) a weekly presence is counted if the individual works in that week in the month (at least one day in that week). EMENS dataset has been managed by considering both measures, estimating respectively about 11,728 and 11,404 thousands of employees (jobs). By passing from a monthly measure to a weekly based one, the employees estimated number decreases of about 2.8 per cent. As far as the monthly measures is concerned, the further integration activities as mentioned above led to an increase of total number of employees registered in the new informative system on employment (Table 1). Table 1. Number of employees by Nace BR, EMENS and New system on employment - monthly, weekly jobs NACE n. employees (BR) n. employees (jobs based on monthly presence) n. employees (on weeks) Emens(m) New System Employ.(NSE) var % NSE- Emens(m) var % NSE- BR Emens(w)- jobs based on weekly presence Var % Emens(w)- Emens(m) Emens(pw)- paid jobs based on weekly presence B 31,470 32,748 32, , ,949 C 3,410,824 3,372,412 3,398, ,315, ,227,757 D+E 251, , , , F 1,080,949 1,077,083 1,080, ,032, ,021,448 G 1,977,963 1,970,798 2,007, ,939, ,909,889 H 946, , , , ,028 I 809, , , , ,745 J 459, , , , ,658 K 493, , , , ,089 L 58,207 57,634 58, , ,523 M 456, , , , ,662 N 942, , , , ,017 P 58,397 58,170 58, , ,108 Q 469, , , , ,278 R 97, ,469 96, , ,692 S 197, , , , ,952 Total 11,741,920 11,728,122 11,792, ,404, ,201,346 Self-Employed. According to the new estimation criteria, the new procedure produces an overall reduction of the self-employment component; in fact, while for sole proprietorships and partnerships old and new figures maintain on the same levels; the major impact is registered for corporations where the number of self-employed drops off for the 44%. A similar and even greater reduction would be registered for producers cooperatives, whose members are classified either as employees or as self- 4 This statistics has always been computed as an annual average based on monthly Social Security contributory declarations aggregated at firm level integrated with other statistical sources, the latter mainly used for the larger enterprises. 14

15 employed. The total loss for self-employment amounts to about 500 thousands of individuals with respect to the BR 2010 figures (Table 2). Table 2. Number of enterprises and self-employed by legal form BR, New system on employment Legal form Number of enterprises BR number of self-employed New System Employ. % var. NSE/BR Sole proprietorships 2,890,610 3,237,989 3,216, Partnerships 788,412 1,464,476 1,431, Limited liability companies 774, , , Cooperatives 52,106 90,765 18, Other legal forms 19,223 19, Total 4,525,155 5,690,584 5,157, External-workers. Out of 600 thousands contracts, complying with the concept of pseudo-enterprises, about 259 thousands are classified by the new estimation criteria as the external worker component; a part of them (about 44%) has been classified according to the homogeneity founded between the administrative economic activity and the firm s one, the rest (56%) according to the agreement of addresses between the outworker s workplace and the local unit where the production process is carried out. However, as identification and classification rules are not assessed yet and the work is still in progress, results must be considered very preliminary (Table 3). Table 3. Number of contracts proxy of pseudo-enterprise by Nace of which external workers NACE pseudoenterprise (n. of contracts) Of which: External workers With with homogeneous workplace in economic the local activity unit Total Temporary workers (n. of contracts) B C 56,469 1,781 17,767 19, ,969 D+E 5, ,533 1,533 10,418 F 22, ,754 6,754 18,244 G 69, ,100 20,100 92,185 H 17,631 3,282 3,996 7,278 14,710 I 10, ,756 3,756 37,823 J 61,337 20,490 10,866 31,356 9,714 K 11, ,904 2,019 7,463 L 11,292 5,465 1,481 6,946 1,513 M 104,297 21,674 23,370 45,044 13,266 N 110,307 45,173 18,415 63,588 69,936 P 42,362 17,612 5,811 23,423 1,061 Q 46, ,322 16,322 7,475 R 21, ,863 7,863 3,553 S 18, ,741 4,741 6,150 Total 610, , , , ,797 15

16 6. Concluding remarks on opportunities and problems The availability of an informative structure containing microdata at different levels i.e. by enterprise (local unit), by single person and about the relationships between the person and enterprises where he/she works, allows the production of a new estimation for employment. This means an improvement of the quality of the BR and an enhancement in terms of more and more detailed variables. In practice because of the characteristics gained through administrative sources, we can reproduce estimation methods every year to obtain information previously known only thanks to traditional Census. The second aspect to stress is the detailed level of data we can produce, in fact figures can be broken down by economic activity, by territorial level, etc. The availability of such data allows us to analyze the labour market characteristics both at a territorial level and according to a longitudinal approach. This structure provides instruments to analyse the relationship between business performance and work force compositions, longitudinal studies can be done to monitor workers flow statistics inside the same enterprise and among different enterprises, to understand the evolution of jobs (transition from employees, employers, outworkers, etc.), the demographic characteristics of self-employed persons, any parental leave, redundancy payment, etc. The opportunities of such an approach are clear, on the other hand to use administrative data means to manage new kinds of problems: i) several problems being longitudinal and person-oriented databases, as individual level uses raise very serious privacy concerns; ii) the use of identifiers must be taken into consideration with care, as a unit may change identifiers over time then to track down such changes is important to ensure proper temporal data analysis; iii) the change of adopted definitions and classification rules will have an impact on employment statistics and are based on administrative data. Changes or loses of these data means being not longer able to produce these statistical data. For example the way different forms of employment are classified may have an impact on the collection and processing survey data, on the measurement of labour input, value added and labour productivity. These final remarks have two main different impacts for statisticians: i) to have a stricter link with the agencies that produce the administrative figures used for statistical purposes, to better coordinate changes in administrative archives; ii) to develop new statistical instruments and to manage with new problems raising from the use of figures gathered not for statistical purposes. 16