Redesigning Economic Statistics at Statistics Finland

1(9) Redesigning Economic Statistics at Statistics Finland Introduction Statistical description is challenged by the changes in the economy and the growing demand for more and better statistics with less costs. Statistics Finland decided to assess these challenges by drawing a strategy for economic statistics. The strategy for economic statistics is founded on customer orientation. Interest groups have been heard through a user survey and a seminar. In addition the actions and demands of international operational environment have been screened and the strengths and weeknesses of economic statistics have been evaluated by the experts of statistics production at Statistics Finland. The strategy for economic statistics is congruent with and expands the strategy of Statistics Finland. Firstly, this strategy for economic statistics is expected to enhance the relevance of statistics by launching development of new, necessary statistics and by increasing the value of statistics for customers as well as by systematising co-operation and communication with users of statistics. Secondly, this strategy for economic statistics is expected to bring more coherence to the statistics and their production process by specificly targeted development programmes, by encouraging unifying data collections and both unified collection and production methods as well as increasing co-operation between experts at Statistics Finland. The plans described in this paper are yet to be finalised by October 2007 (paper written in July). The relevance of economic statistics needs to be strengthened in order to keep up with the extensive, long-term pressures for change that can be seen in the operating environment of statistics. The focus in economy will shift from industrial production towards services and, at the same time, from trade in tangibles (goods) to trade in intangibles (services, patents, rights). These issues, together with globalisation, challenge the statistical description. In the 1990s, the growth of the information needs stemming from the Economic and Monetary Union and the Stability and Growth Pact necessitated the development of shortterm statistics in the European Statistical System. During the current decade, and as a consequence of the Lisbon strategy, among other things, the focus of the development work on economic statistics has been more and more on structural statistics, science, technology and innovation statistics as well as on energy and environmental statistics. The EU Commission has named globalisation, jobs and immigration as the focus points for the year 2008. The goal is to develop the relevance of the European Statistical System by consulting the users of statistics. According to Eurostat, the ability of enterprise statistics to describe entrepreneurship, competitiveness, productivity and growth must be developed. The challenge is to fulfil new statistical needs to a sufficient degree without adding to the response burden and by utilising the growth in productivity. In the coming few years, resources will be required by the revision of the industrial classification and the next extensive revision of the national accounts (SNA/ESA). These new challenges have exacerbated further the discrepancy between the resources of the field of statistics and the growing needs for statistical data. Within the European Statistical System this has lead to efforts to re-prioritise statistical needs, simplify statistics legislation and reduce enterprises response burden. At the European level, efforts are being made to solve the

2(9) relevance and productivity challenges in the MEETS programme (Modernisation of European Enterprise and Trade Statistics). These goals require more uniformity between the productivity of production and processes. A statistical service financed with national funds must serve also the information needs of domestic customers. The limit between national and EU information needs is vanishing as the EU policy interests are reflected also in domestic information needs. In addition, national information needs concern, to a large degree, internationally comparable statistics. The development of economic statistics is to a significant degree done as international co-operation. In the past few years Statistics Finland has invested also in the development of the general operational framework with the aim of increased customer orientation. Products and services are developed on the basis of customers' information needs and there is active cooperation with the key stakeholder groups As regards product development, co-operation with researchers and the academic world is especially important. In order for our statistics production to meet the needs of users, there needs to be close co-operation with stakeholder groups and in-depth knowledge of economic statistics and economic phenomena must be strengthened. The process of making a strategy for economic statistics The tasks of the working group The working group for planning strategy for economic statistics was appointed in October 2006. The draft proposal for the strategy for economic statistics was already discussed at Statistics Finland and with its main customers in May-June 2007. The final document will be ready in September 2007. Identifying the main development goals for economic statistics involved many phases. 1. A work plan for the working group 2. An internal survey among the experts of economic statistics at Statistics Finland 3. A review of the operational environment of Statistics Finland 4. A survey among the main users of economic statistics 5. A review of the international actions and demands concerning economic statistics 6. A seminar for the users of economic statistics as well as for the experts of economic statistics at Statistics Finland 7. A wide discussion at Statistics Finland and with the main customers on the draft version of the strategy for economic statistics 8. Final report and document - strategy for economic statistics The internal survey among experts was carried out in January 2007 and analysed the strengths and weaknesses of economic statistics. The survey also helped to discover the scope of development work that had already been done, that is going on, or that should be undertaken in the future. The survey was constructed along the principles of the European Statistics Code of Practice in order to cover all important areas of work. The survey resulted in a SWOT-analysis of economic statistics in Finland.

3(9) A review of the operational environment of Statistics Finland was conducted with the help of Statistics Finland s strategic intelligence tools and the expertise of strategic experts atstatistics Finland. After this review it was decided that a more comprehensive study of the international environment was needed. In this review the data sources were the Community Statistical Programme 2008 to 2012, other EU development programme papers, papers from many international meetings and seminars as well as travel reports. Much of the information was gathered from Statistics Finland s intelligence tools and from the Internet pages of many international organisations. The UNECE s (United Nations Economic Commission for Europe) DISA-database (Database on International Statistical Activities) was widely utilised. In addition, the working group made a summary of the work done, or the work to be done, at Statistics Finland in order to fulfil the requirements of international recommendations or legislation. A survey was sent to 150 most essential customers of Statistics Finland in March 2007. Around 50 answers were received and processed by the working group. The results of the survey confirmed many of the findings of the internal review and the reviews of national and international operational environments. Some new important points of view were also raised by the customers and the importance of different development goals was revised. A seminar was held in April with the heading The Role of National Statistics on the Monitoring of Globalised Economy. The seminar was organised to launch a more systematic co-operation with the main users of economic statistics as well as to enhance the dialogue between statisticians and users of statistics in Finland. These phases of work resulted in roughly 150 pages of reports, but they are incorporated with a short summary and conclusions. The final strategy will be short and a more detailed operational plan will be annexed to it. A discussion on the draft version of the strategy for economic statistics produced responses from both experts of economic statistics and users of economic statistics. These responses were considered during the summer. The final draft for the strategy of economic statistics will be discussed in October and will enter into force immediately and just in time for the planning of work from year 2008 onwards. The establishing of a strategy for economic statistics has been timed together with the updating of the strategy of Statistics Finland. This was a very useful method of work for both working groups. The responses from the users of economic statistics The conclusions on the need of the users concerning economic statistics have been drawn mainly on the basis of the economic statistics user survey (49 respondents) conducted in 2007. In addition, the 2005 ROSC (Report on the Observance of Standards and Codes) survey aimed at the users of macro statistics (46 respondents), the Statistics Finland customer survey 2005 (455 respondents), the image survey and the VIP business image survey (523 respondents) and the business communications survey (211 respondents). The responses from the economic statistics user survey were received from official agencies, banks, associations, universities, municipalities and other regional authorities and research institutes. The survey evaluated co-operation between users and producers of statistics, timeliness, reliability, detail, coherence, methodology, analysis and metadata as well as future demand on statistics. In the ROSC survey, users were asked to evaluate the

4(9) coverage, detail, periodicity, timeliness, dissemination practices, accessibility, and overall quality of the official statistics. Customers thought that the production of economic statistics is fairly comprehensive. However, many new information needs were expressed: short-term data on investment and profitability, more information on the service industries, the globalisation of enterprises and enterprises of different sizes. A more detailed description of enterprises foreign activities was requested from enterprise statistics. More detail was requested also from price indices. According to the survey, labour statistics and national accounts were used the most, income statistics and price statistics came third and forth and after them public finance statistics and short-term business statistics. Most of the development needs were aimed at labour statistics. The second most development needs were found in both regional statistics and national accounts. Most of the development needs were aimed at the improvement of timeliness, especially concerning regional statistics. In the internal review at Statistics Finland, timeliness was considered fairly good. It seems that most of the acceleration of production time should be done in regional statistics, were the data mostly comes from administrational sources, which aren t often fast enough for the users. The coherence of statistics was seen to have the second strongest need of development. Improved coherence is needed in labour market statistics but also in national accounts, short-term business statistics, price and cost statistics as well as in foreign trade statistics. The respondents stated that clearer communication and analysis of statistics would improve the users' understanding of the differences between statistics. The users also stated that coherence should not be pursued in the cost of accuracy or other aspects of quality, sometimes more transparent and comprehensive metadata would be enough. The third most expected improvement would be increasing the amount of detailed data in the publications of regional statistics, labour market statistics and statistics on foreign trade. Table 1. Summary of the development needs in economic statistics mentioned by respondents Timeline ss reliability of data level of detail in data content compatibi lity of different statistics statistical methods analysing phenome na with statistics communi cating about changes metadata (methodolo gical description, descriptions of concepts and classificatio ns) Regional statistics 13 5 8 5 0 6 3 5 45 Government Finance 8 4 5 6 1 5 4 3 36 National Accounts 8 6 5 7 3 3 8 5 45 Labour market 9 7 8 12 2 3 3 4 48 Statistics on foreign trade 3 5 6 7 0 2 2 1 26 Business trends statistics 5 6 3 7 1 3 3 2 30 Business structures statistics 4 1 3 3 1 3 2 2 19 Price and cost indices 3 3 4 7 2 2 4 3 28 Other fields of statistics 5 1 2 1 0 2 2 1 14 Total 58 38 44 55 10 29 31 26 291 According to the users of statistics, the demand for economic statistics will continue to grow. Also in Statistics Finland s customer survey, 40 per cent of the respondents Total

5(9) believed co-operation would increase. This, with the new information needs, is a great challenge to official statistics battling with efficiency demands and the need to lower response burden on businesses. The goals of redesigning economic statistics More relevant economic statistics Increasing the relevance of describing the economy More regular assessment of relevance measured by the use of statistics and defined at Statistics Finland need to be done. Relevance is to be improved especially in the following statistical areas: - service sector statistics, - short term statistics, - entrepreneurship and enterprise demographics and - statistics on assets. To further develop statistics on the service sector, the volume index of service production will be developed within the development programme of the price- and volume statistics system. Additionally, there is a need to improve the measurement of quality change and for example prices of international trade. There are some deficiencies in the statistics depicting the service sector, such as the cost structure of services, service commodities, industrial services and compilation of statistics on intangible commodities and investment. There are also pressures to measure supply and use of services produced by the public sector. The current discussion about the measurement of productivity increases the need to improve statistics. The scope of service industries covered by different statistics will be developed. For the development of short-term statistics (including the short-term statistics of national accounts), co-operation with users has already increased. There is a need to anticipate the development of GDP monthly, with a lag of only 40 days. Users also stated that financial statements statistics are too slow (even with a lag of 6 months), which is why the methodological development possibilities for new short-term indicators will be investigated (investments, profitability). Plenty of discussions are ongoing concerning, whether and when a turn is expected in economic development. Research should be encouraged to find out if the data sources of statistics contain any signals of such a turn. Since it has been said that the economy is becoming more dependent on entrepreneurship as a consequence of globalisation, more indicators on entrepreneurship need to be developed. More relevant information on start-ups, closures, survival and growth of enterprises is needed. Statistics on household assets have been compiled rather irregularly in Finland. The users expressed a need to have regular statistics on household assets. Assets accounts are also anticipated to become a part of national accounts. Nowadays an international comparison of assets development is not easy to accomplish. The European Central Bank is active in developing this area of statistics.

6(9) Making statistics more easily available There is also a growing demand for easier access to micro data for research purposes and a demand for wider self-service possibilities in using the databases of Statistics Finland. Statistics Finland s online service has been developed and the amount of information in the online service has risen remarkably during the last years. Easier access through a remote login to the research laboratory at Statistics Finland is needed, especially for researchers. Even wider self-service possibilities are expected from Statistics Finland. Increasing value to users of statistics Users expect more analysis of different statistics brought together to depict a phenomenon. The second most common purpose of using statistics came out to be international comparisation of countries. However, comparisons between countries are seldom a part of publication of statistics except for printed publication. There is a need to increase the value of statistics as end products. The amount of analysis between different statistics needs to be increased. The amount of international comparison data will be increased in national press relieses and other publication of statistics. Activating co-operation and communication with interest groups The users of statistics emphasised the importance of metadata and informing users in advance of the upcoming changes. Some also highlighted the need for discussing development plans with the users of statistics. The constant development of relevance necessitates active co-operation and customer orientation. The transparency of production methods needs to be increased even further. More co-operation with economic life and research institutes is needed. Closer cooperation with university students and professors can contribute to the development of the relevance, quality and value of statistics. Meetings or seminars with the users need to be arranged more systematically in the future. More coherent economic statistics Enhancing the coherence of description of the economy The coherence of statistics needs to be improved especially in the following statistical areas by launching a development program: - labour markets, - price and volume statistics system, - impacts of globalisation in Finland and - regional statistics (coherence and scope). The coherence of these statistical areas will be developed in development programs. Statistics Finland has a long tradition of utilising the project format in developing its activities. Projects are an effective means of solving or eliminating individual problems or deficiencies. To maintain and improve coherence, Statistics Finland has decided to use development programmes. The development programme creates a forum for discussion as well as procedures and practices for disseminating knowledge and for implementing

7(9) common solutions. A programme is a method for uniform implementation of jointly agreed issues. The development programme of labour statistics would especially target labour force accounts, working hours and labour cost index as well as other labour market information needed in the improvement of productivity measurement. The possibilities of developing reliable regional statistics on the labour markets, of handling the international movement of labour in statistics and of depicting rented labour force are investigated. The most criticism concerning coherence and quality was aimed at labour market statistics. More statistics on the changes of labour markets (loss of jobs, knowledge needs etc.) are expected by the customers. The quality of price and volume indices are being developed in the price and volume statistics system development programme. The amount of value data collected for the volume indices is increased, which is expected to improve somewhat the coherence between primary statistics and between them and the national accounts. The measurement of quality change and coverage of price information are planned to be improved. The aims of the development programme on internationalisation of enterprises are to improve the relevance and coherence of economic statistics describing internationally operating enterprises and to increase knowledge about internationalisation among those involved in the production of these statistics. The aims of the development programme on regional economic statistics are to harmonise the scope and methods of regional statistics. One goal is to unify the supply of regional statistics at least to some extent and to improve availability of regional data, where possible. The programme also develops the quality and timeliness of regional data. Unifying and automating data collection Statistics Finland has done a lot in developing web-based data collection. Automated data collection is in use in some statistics, which means that data is derived directly from enterprise s data systems. The service to respondents needs to be improved, since they are a target of perhaps well planned, but very different and independent data collections with their very own passwords and definitions. We have a common technical framework for web-based data collection, but we do not have a harmonised system for data collection. Data collections have been developed rather separately for individual statistics. Measures into this more unified direction are already being made in our starting development programme: programme for developing data collection from businesses. The use of new electronic data sources should be advanced (such as credit card data) and the use of automated data collection should be increased. Some of our individual data collections should also be merged to cut costs and increase the coherence of data. Managing the respondent relations and the use of the data of the largest enterprises would have significant effects on coherence. Unifying statistics production process The production structure at Statistics Finland is rather decentralised. Traditionally tailormade systems have been developed and implemented for individual statistics by the IT department or by statistics departments. During the last ten years, a uniform production model has been developed and implemented in every production system that undergoes updates of the information system. The uniform production model mostly concentrates on

8(9) Conclusion IT-technology and the number of different systems in Statistics Finland is more than one hundred. There is a need to redesign the production process of economic statistics with a goal to achieve a more integrated production process for statistics. More integrated tools are needed especially in the phases of production of statistics and handling of data. The same tools could be used by many similar statistics, which is why the number of individual production systems should be decreased. The role of the business register will be further enhanced in the production of business statistics in order to increase coherence of data. Increasing co-operation and communication between statisticians Due to the decentralised expert organisation in place at Statistics Finland, the knowledge of statisticians is very deep but sometimes narrow and limited to one or a few statistical areas. Broader knowledge of economic statistics as a system needs to be promoted. The distribution of work between national accounts and other economic statistics needs to be reassessed. Co-operation and change of information is already increasing, but information does not travel easily and the needs of national accounts are not always taken adequately into account. Broader knowledge of economic statistics and the economy as well as the system of national accounts needs to be developed within the education programme of Statistics Finland. The knowledge of economics should be enhanced by closer cooperation with universities. The information flow between primary statistics and national accounts needs to be improved. A co-operation group of experts in different economic statistics will be formed. Primary statistics knowledge of national accounts will be enhanced by education, job circulation and carreer planning. The plans described in this paper are preliminary, and will be in their final approved form in the autumn 2007. This paper has been written in July 2007. The goals of the strategy for economic statistics will be implemented by different statistics departments, which have taken part in the drawing up of this strategy. The development projects of economic statistics will be prioritised according to the strategy of Statistics Finland and more specifically according to the strategy for economic statistics. Challenges will be met in the implementation of this new strategy for economic statistics. Current methods of work need to be changed and processes must be re-evaluated. Changes are costly to make, even if they are aimed at leading to cuts in operation costs and better quality. More unified methods lessen work load, but are laborious and costly to achieve. More co-operation is needed at Statistics Finland and with users of statistics - how to execute this effectively? Operational environment is constantly changing, but statistics are stabile in nature - how to create topical and yet stabile system of economic statistics? Many challenges are in front of us. Timing and means need to be further considered to enable development of relevance and coherence step by step. The changes of environment are challenging for the relevance and scope of statistics taking into account the efficiency requirements facing national statistical offices. This is why it is important to share observations, ideas and plans even in the early stage of development. We have already benefited from the experiences of other countries by

9(9) studying available material. We hope that we may also learn more by discussing similarities and differences of circumstances facing other statistical offices. References: Braaksma, Barteld: Redesign of the Chain of Economic Statistics in the Netherlands. Paper Presented at the Seminar on Registers in Statistics, Helsinki, 21-23 May 2007. Peltola, Rami: Development of Statistical Description of Economic Globalisation (Development program 2007-2011). Paper Presented at the Seminar, NordStat 2007, Reykjavik, June 2007. Savolainen, Aki and Vertanen, Ville: Statistics Finland s measures to reduce enterprises response burden. Paper Presented at the Seminar, NordStat 2007, Reykjavik, June 2007. van Tuinen, Henk K.: Innovative Statistics to Improve our Notion of Reality. Paper presented at an OECD Seminar on June 2007. What Counts in the Future - Challenges of Official Statistics. Statistics Denmark, Finland, Iceland, Norway and Sweden, Helsinki, 2001.