Appendix I-Statistical Issues
Statistics for the euro area (and the EU-27) are produced by Eurostat,1 in conjunction with national statistical agencies within the European Statistical System (ESS), and the ECB, working with national central banks within the Eurosystem/ESCB. 2 These statistics are of sufficient quality, scope, and timeliness to allow effective macroeconomic surveillance, thanks to major progress made since the introduction of the euro. However, the financial crisis has generated a number of challenges for official statistics. Recent ongoing developments and desirable improvements include:
ESS governance: The new statistical governance structure for the ESS was put in place in 2009. The Regulation on European Statistics3 strengthens the European Statistical System Committee (ESSC), which acts as an umbrella committee of the ESS, the European Statistical Advisory Committee (ESAC), and the European Statistical Governance Advisory Board (ESGAB). The new regulation strengthens Eurotat’s role as a coordinator of statistical activities at EU level and National Statistical Institutes at national level.
Impact of the crisis on official statistics: In addition to statistics related to the financial crisis at national and EU level, the Interagency Group on Economic and Financial Statistics with the participation of the IMF, BIS, Eurostat, ECB, World Bank, and UNSC has started the process of setting up a set of global indicators building on the European concept of PEEIs (Principal European Economic Indicators). Discussions at the international level center on the extension of the PEEIs, the improvement of techniques to identify turning points and the development of an integrated view of business cycles, growth cycles and acceleration cycles. At EU level, an ESS Action Plan on the accounting consequences of the financial crisis was created to ensure the consistency across time and countries of the statistical treatment of bank and other support operations in full respect of the ESA95 rules.
Public finance statistics—actions to tackle statistical and governance issues in Greece: Efforts focus on the improvement of fiscal and other public sector reporting by Greece. Working closely with Eurostat, the government has started to take measures to prevent the recurrence of under- and misreporting problems and designed jointly with the European Commission an action plan to address outstanding statistical issues. Full independence has been granted to the Greek Statistical Office and its resources increased to improve statistical systems and seek appropriate technical assistance to ensure rapid progress. To that end, the measures in the joint Greek government and European Commission Statistical Action Plan will be fully implemented. Since January 2010, timely monthly central government budget reports on a cash basis have been published. The General Accounting Office (GAO) will also start publishing monthly data on expenditures pending payments, including arrears. Efforts will also be intensified to improve the collection and processing of general government data compiled according to ESA.
Public finance statistics—Audit powers by Eurostat over EDP-related statistics: The problems faced in Greece go well beyond what can be tackled using only the statistical monitoring tools available to the Commission, which according to the Council Regulation 479/2009 does not have audit powers4. To remedy this, the ECOFIN Council agreed legislation to give Eurostat audit powers over Member State’ national finances. In specific cases where significant risks or problems with the quality of data have been clearly identified, Eurostat officials will have the right to see data from every level of government on execution of national budgets and the accounts of corporations, non-profit institutions and other bodies that are part of the general government sector. It is now essential that Member States take all necessary measures to facilitate the Eurostat officials’ work.
Public finance statistics—statistical consequences of the European Financial Stabilization Mechanism (EFSM): From a statistical perspective, it will be important to analyze the treatment of the special purpose vehicle that will be at the center of this mechanism, in light of the international methodologies. The potential impact of the activity of the EFSM on the fiscal data of both the Member States and the European Aggregates (EU-27 and Euro Area) should also be assessed.
Public finance statistics-stock-flow adjustment (SFA): the main factors contributing to changes in government debt other than government deficits are being closely monitored by Eurostat in the context of regular quality checks of the EDP data. A considerable increase of SFAs was observed in the EU in 2008 and 2009, reflecting the reactions of Member States governments to the financial crisis. However, in Eurostat’s view, SFAs have generally legitimate explanations and the fears that governments may have an incentive in underreporting their deficits to comply with the EDP by reporting transactions under the SFA, seem unjustified. Moreover, the deficit revisions that would result from a reclassification of operations on financial derivatives would be limited.
Long-term sustainability and quality of public finances: Member States and Eurostat should further step their efforts in the provision and dissemination of detailed data on government expenditure by function (COFOG level II data), especially in those areas relevant to the analysis of the quality of public finances and the allocation of Structural Funds. In the area of pension schemes, one novelty of the 2008-SNA concerns the comprehensive recording of pension entitlements accrued by households. A revision of ESA to include a specific chapter on social insurance systems is underway that will show the pension entitlements and the related transactions for all pension schemes including for social security contributions schemes. In the absence of legal regulations, a fully-fledged release of data is only targeted by 2014. Regarding demographic projections, as requested by the ECOFIN Council, comparable population projections should be available by autumn 2012, as requested by the ECOFIN Council. These projections will be used by the Economic Policy Committee (EPC) to estimate the budgetary implications of ageing.
Labor market statistics: A major quality review of the European LFS was conducted in 2008-09 resulting in improvement recommendations. It is now important that Member States follow up on this work; implementation plans are being discussed with them.
While the relevance of the ILO concept is confirmed, there is agreement on the need for supplementary indicators of underemployment and labor potential outside the labor force to supplement the ILO unemployment rate.
The timeliness of the EU-LFS survey can be improved. This would further enhance its relevance for short-term economic analysis. For this purpose, it is essential that the twelve-week deadline in the Regulation (Council Regulation 1897/2000) is considered to apply for the final data transmission.
Regarding the coherence between LFS and national accounts employment estimates, the key priority in this regard is to distinguish between differences in coverage, scope and definitions from inconsistencies that can be ascribed to the accuracy of the different statistics. For this purpose the Task Force recommended the use of reconciliation tables between LFS and National Accounts estimates.
The PEEIs of the labor market include monthly unemployment, the Labor Cost Index (LCI), quarterly employment (National Accounts) and quarterly job vacancy statistics. Member States are encouraged by Eurostat to explore options to derive monthly unemployment estimates exclusively from the LFS, as well as to move to quarterly rotational designs in the LFS with a view to facilitating the release of information on transition processes. Although a version of the LCI without bonuses would be welcome this is not conceived as a priority for the time being.
Productivity data: the EU KLEMS project is meant to evolve from a research driven project to an ESS project. Eurostat has set up actions (grants) to co-finance projects for the implementation of statistical modules for EU KLEMS in Member States. At the same time, Eurostat has started to explore the possible synergies between national accounts, labor market statistics and productivity data. For instance, additional resources are being devoted to the compilation of Input/Output tables for the euro area. Furthermore, in line with the greener and sustainable objective established in the Europe 2020 strategy, avenues to reorient the project to a broad multifactor productivity perspective with an environmental dimension are being explored. Member States should continue to enhance their efforts to improve the statistical basis for multifactor productivity analysis.
Short-term business statistics (STS): the changeover to NACE rev. 2 is proceeding as planned. The adoption of the new classification will nevertheless result in shorter series for services activities for which data are not available at the required level of disaggregation. Efforts are being stepped up to coordinate the release calendar for STS to improve the stability of EU aggregates. Concerns remain about the application of conventional seasonal adjustment techniques at turning points. Regarding the Service Producer Price Indices (SPPI), only 12 out of the required 17 series are available for EA16 at this stage, with some big euro-area members being behind schedule. Timeliness of STS statistics improved in the last years, in particular for PEEIs-related STS. Nevertheless some releases still lag US dissemination dates.
Housing indicators: the crisis has shown that the need to develop housing indicators. Pilot projects with the National Statistical Institutes currently underway should provide the necessary data for a possible inclusion of owner-occupied housing into the HICP and harmonized house price index data at the European level. Eurostat is preparing a legal act to insure the continuation of the project beyond its pilot phase and lead to the inclusion of quarterly House Price Indices in the list of PEEIs.
International trade statistics: The new Intrastat Regulations reduce the reporting burden for traders, strengthen quality requirements and introduce new statistics by business characteristics. The revised Extrastat Regulations adapt the compilation of external trade statistics to the new Customs environment and introduce new data elements (e.g. nature of transaction, Member States of destination/actual exports, currency of transaction with countries outside the euro area, etc.). A new concept of “economic ownership” will bring in line External Trade statistics with Balance of Payments and National Accounts and improve the recording of specific goods and movements.
Europe 2020: Eurostat is involved in the methodological work around the EU headline targets of the Europe 2020 strategy (employment rate, R&D investment, climate and energy, education and social inclusion). Ongoing discussions center on the choice of relevant indicators to measure social inclusion-by combining indicators of relative and absolute poverty and the measurement of innovation to complement the R&D indicator under Europe 2020.
Cross-cutting issues: The implementation of the revised ESA based on the System of National Accounts 2008-SNA is planned for 2014, requiring a Commission proposal covering methodological issues and a Transmission Program this year. The required improvements include the effective transmission of (financial and non-financial) balance-sheet data and data on pension schemes and R&D. In terms of timeliness, Eurostat is moving toward a “30-60-90” approach: publishing flash data after 30 days, European aggregates and the main income, expenditure and output components after 60 days; and the sectoral and financial sector accounts after 90 days.
ECOFIN Statement: www.consilium.europa.eu/uedocs/cms_data/docs/…/ecofin/114324.pdf.
See IMF 2010: A Fair and Substantial Contribution by the Financial Sector, Interim Report for the G20.
The May 12, 2010, EC communication proposes to reinforce policy coordination in the EU in general and the euro area in particular. All proposals are based on the Treaty and only require changes in secondary legislation and codes of conduct. The communication features: (i) a strengthening of the SGP mainly by stepping up sanctions (including in the preventive arm) and activating the EDP using the debt criterion, (ii) a more intrusive surveillance of external imbalances in the euro area (involving early warnings and recommendations in a wide array of policies), (iii) stronger ex-ante coordination through a “European semester” (involving peer review of budget proposals and policy guidance from the EC and the Council before submission to national parliaments), and (iv) a permanent framework of crisis management along the lines of the European Stabilization Mechanism (ESM).
According to the EC and ECB, the Meroni judgment of 13 June 1958 constrained the sphere of discretion that the EBA could be vested with under the Treaty, potentially affecting its ability to issue supervisory decisions.
See IMF, 2010, “A fair and substantial contribution by the financial sector—interim report for the G-20”, Washington, D.C.
Eurostat has introduced a new, more user-friendly website. See: http://epp.eurostat.ec.europa.eu/. The ECB has maintained a statistical data warehouse for euro area and related national statistics. See http://sdw.ecb.europa.eu/. The division of tasks between both statistical systems has been spelled out in a Memorandum of Understanding (http://www.ecb.europa.eu/ecb/legal/pdf/en_mou_with_eurostat1.pdf).
Notably in the field of national accounts and government finance statistics, a consensus was reached on Eurostat decisions thanks to the work done in common with national statisticians on a regular basis through task forces, working groups and committees (National Accounts Working group, Financial Accounts Working Group, Committee on Monetary, Financial and Balance of Payments statistics, and GNI Committee).
Regulation No. 223/2009 of the European Parliament and of the Council, published in the Official Journal of the European Union on March 31, 2009.
Following the “Greek case” in 2004, and a request by the Council to strengthen the monitoring of the quality of the reported fiscal data, the Commission proposed amendments to the existing framework for the quality of EDP data, in particular, the establishment of in-depth monitoring visits and the requirement for Member States to promptly provide Eurostat with access to the information required to assess data quality of the EDP-related statistics. Council Regulations 2103/2005 and 479/2009 granted Eurostat strengthened control powers, though more limited than initially requested by the Commission.