International Standard Industrial Classification of All Economic Activities (ISIC), Revision 4 32 154. Changes in the classification of units for the purpose of statistical inquir- ies are made not more than once a year, either at fixed dates or as information becomes available. More frequent changes would result in inconsistency between short-term (monthly and quarterly) and longer-term statistics. D. Capturing information about the activity of units and coding it according to ISIC 155. The quality and comparability of the statistics produced according to ISIC will depend largely on the correctness of the codes assigned to the statistical units. In turn, the correctness of the codes will depend on the information available for deter- mining them and the tools and procedures used. 156. To some extent, the quality of the information will depend upon the type of statistical source. The quality of information collected for administrative registra- tions will depend on the extent to which that information has a function in the admin- istrative procedures for which the registrations are being made. It will also depend on what kind of distinctions that function will require, such as, whether tax rules, social security regulations, the rules for investment credits or the services provided by employment agencies will require precise registration of the type of activity under- taken. The statistical offices will therefore frequently need to collect directly from the units the information needed to determine the activity codes of the units, even when the register used as the basis for their surveys is derived from, or developed in coop- eration with, one or more of the administrative agencies. 157. Given the nature of ISIC, the information that is needed to code for the register as well as the surveys will have to describe the main inputs, processes and outputs of the units’ productive activities. For units with a wide range of products, information about them will also be necessary to determine their contributions to the value added or other relevant factors by which to determine their main activity. This information must be obtained from the units and care must be taken to ensure that the individuals who provide the information on behalf of the units understand the type of information needed so that they can obtain it from the records of the units or their own knowledge. Thus, the testing of question formulations is as important for estab- lishment surveys as it is for household surveys. For the registers as well as for the two types of surveys, finding the correct codes on the basis of product information will be greatly facilitated by a well organized and comprehensive coding index.
33 Chapter IV Other topics A. Use of ISIC in establishing related national classifications 158. As an international standard classification, ISIC is the primary tool for collecting and presenting internationally comparable statistics by economic activity. It is therefore of great importance that data collected at the national level, and therefore the classifications used at the national level, are compatible with ISIC. 159. The need for international comparability does not, however, imply that countries must adopt ISIC as a whole, without modification. The intention is rather to have countries use ISIC as a guide in adapting their national classifications to the inter- national standard. Countries may choose to either use ISIC directly for their national purposes or develop their own national classification. Wherever countries lack the infrastructure required to develop and maintain their own activity classification, they may adopt ISIC as their national activity classification with little or no modification. This is often done by extending or collapsing the detail of ISIC while maintaining its general structure. Other countries may have historically developed a classification that suits their particular needs. Those countries should make efforts to adapt their classification in a way that allows for the provision of data according to ISIC without substantial loss of information. 160. In order to attain international comparability, it is suggested that all coun- tries adopt, as far as individual requirements permit, the same general principles and definitions in their industrial classification schemes (for the principles and definitions that were developed for this purpose and are embodied in ISIC, see sect. II above). As a result, it should be feasible to rearrange and combine entire categories of national classifications so that they correspond to one or more categories of ISIC, although this may not always be possible since certain categories at the most detailed level of ISIC may not be distinguished in the industrial classifications of some countries. 161. Adapting ISIC to the specifics of the national economy while maintaining international comparability requires the observation of a number of rules as set out below. 1. Aggregation and disaggregation of ISIC 162. When adapting ISIC to national circumstances, its categories may be aggregated or further detailed to better reflect the structure of the national economy of the country. If a particular economic sector is economically of great importance or has developed important specializations that are not separately identified in ISIC, the relevant part of the classification can be further disaggregated. If some other sector of the economy does not exist or is still undeveloped or unimportant in the economy as a whole, the relevant part of the classification can be treated at a more aggregated level. It is not the intention to suggest data collection for categories, which would require all
International Standard Industrial Classification of All Economic Activities (ISIC), Revision 4 34 kinds of artificial or arbitrary splits of the existing statistical units. The calculation of homogeneity ratios may serve as a tool in determining the feasibility and usefulness of more detailed categories of the classification.20 163. In order to make a national activity classification convertible to ISIC, the categories at the most detailed level of classification in the national scheme should on the whole coincide with, or be subdivisions of, the individual classes of ISIC. In other words, any most detailed category of the national classification should not cover selected portions of two or more classes of ISIC. When national categories have to represent combinations of two or more entire classes of ISIC, the classes should be part of the same group. In this way, the convertibility of the national classification to ISIC would not be affected by the position or the manner of grouping of the categories at the detailed level of the classification in the national scheme. 164. To serve national purposes, categories in the ISIC structure may be dis- aggregated by subdividing the relevant classes into subclasses. This may be done by appending decimal places to the four‑digit code that identifies each class of ISIC. Alter- natively, the subdivision of groups into classes in ISIC may be expanded by replacing the existing classes with a greater number of more detailed categories. In order to preserve comparability with the classes of ISIC, the more detailed classes should be delineated so that they may be aggregated to classes. 165. Extending the four‑digit codes of ISIC may be unnecessary if, to meet national requirements, the only classes to be subdivided are those that are identical to groups. These classes of ISIC are identified by four‑digit codes ending in “0” and may be replaced by as many as nine classes, identified by specific four‑digit codes. 166. ISIC categories may be aggregated, for example, by combining the classes of selected groups into fewer less detailed classes or by entirely telescoping classes into groups. It may even, in certain instances, be desirable or necessary to have categories at the most detailed level of the national classification that combine classes of ISIC. This may be because the kinds of activity segregated by selected classes of ISIC are not important enough in a given country. Or it may be due to a much smaller degree of specialization in the activities of the statistical units than is required in order to use certain classes of ISIC in the national scheme. For example, some countries may not establish categories in their national classifications that are similar to the individual categories of divisions 26 to 28 (Manufacture of machinery), inasmuch as the majority of establishments engaging in activities of class X also carry out the activities of class Y and vice versa, thereby making it impractical to separate these activities in the national classification. They may need to combine some or all of the groups or classes into sin- gle categories at the most detailed level of their national classification. 167. It should be kept in mind that combining classes into higher aggregates, either at the group level or elsewhere, will limit the comparability of data at the inter- national level to that level or to even higher aggregates. The latter can occur if coun- tries decide to aggregate some of the four-digit classes within, for example, group 281. If two countries aggregate classes within group 281, the comparability of their data may not be available at their respective aggregated levels but only at the higher level of group 281. The combining of classes should therefore be carefully considered in respect of its possible impact on the comparability of data compiled according to these new categories. 2. Level of international comparability 168. Ideally, countries would be able to provide data according to ISIC at all levels of the classification for the purposes of international comparability. As men- 20 For a more detailed discussion of homogeneity ratios, see Companion Guide to ISIC and CPC (United Nations publication, forthcoming).
Introduction 35 tioned above, however, not all detailed categories of the classification may be suit- able for all countries and countries may wish to develop national classifications based on their own priorities. Still, the problem of international comparability remains and countries should make effort to use a classification that is as much as possible compat- ible with ISIC and for which data can be collected and reported. 169. At its thirty-seventh session, the United Nations Statistical Commission recommended that countries adapt their national classifications in a way that allows them to report data at least at the two-digit level of ISIC, Rev.4 without loss of informa- tion.21 It is clear that the interest in more detailed internationally comparable informa- tion will remain, especially for specific studies. B. Use of different levels of the classification for the presentation of statistics 170. It may be desirable to utilize less detailed classification categories of kind of economic activity for some types of statistics than for other series, and the number and size of the categories for which reliable statistics are presented may depend on both their source and confidentiality considerations. For example, it may not be feasi- ble to present data on employment gathered in household inquiries in as great detail as data on employment obtained from establishment inquiries. Or it may not be neces- sary to present data according to kind of economic activity in as great detail in national accounting as in industrial statistics. By providing for four levels of classification (sec- tions, divisions, groups and classes), ISIC furnishes a framework for comparable clas- sifications of data at different levels of detail. It is important to note, however, that the fact that a category has been defined at the class level in ISIC will not prevent it from being larger in a particular national economy than a category defined at the group level or even at the level of division or section, as will be the case, for example, for class 8521 (General secondary education) versus division 03 (Fishing and aquaculture) in many countries. 171. Similarly, for specialized surveys on a limited number of industries, the detail provided by ISIC, even at its most detailed level, will often not be sufficient for the required analysis. In such cases, ISIC classes can be further subdivided for specific purposes, as necessary. It is suggested, however, that the new detailed categories still be aggregated to the existing ISIC classes for comparability reasons. C. Relationship with other classifications 1. General remarks 172. At its nineteenth session, the Statistical Commission had requested the Secretariat to prepare a set of classifications that together would form an integrated system for classifying activities, goods and services and could be used in different kinds of economic statistics. Using the Integrated System of Classifications of Activities and Products (SINAP) as a basis, the work resulted in the revision of ISIC and SITC and the development of CPC. These three classifications are strongly interrelated. ISIC rep- resents the activity side of the system, CPC is the central instrument for classifying goods and services and SITC is the aggregated classification of transportable goods for international trade statistics for analytical purposes. Both CPC and SITC use the headings and subheadings of the Harmonized Commodity Description and Coding 21 See Official Records of the Economic and Social Council, 2002, Supplement No.4 (E/2006/24), chap. I, para. 3, item 37/105 (b).