International Standard Industrial Classification of All Economic Activities (ISIC), Revision 4 36 System (HS) as building blocks for their categories. Subsequently, relationships with other classifications that may require a degree of comparability with ISIC have been added to these considerations. 2. Relationship with product classifications: CPC, HS and SITC 173. The relationship between ISIC, on the one hand, and the product clas- sifications HS, CPC and SITC, on the other, is based on the fact that the product clas- sifications in principle combine in one category goods or services that are normally produced in only one industry as defined in ISIC. In HS, this origin criterion was respected as far as possible at the time of its development. In some cases – for instance, when it seemed impossible that a customs officer could make the distinction – the principle was not applied. Still, most headings and subheadings of HS contain goods that are generally produced in only one ISIC category. There are frequent exceptions in some areas, however, where outputs do not enter international trade to a large degree. For instance, raw and processed agricultural products may be combined in HS since the international trade of raw and unprocessed products is negligible. Still, raw and processed products are outputs of distinct industries in ISIC, which makes a strict link between these classifications impossible. In addition, the arrangement of headings and subheadings of HS follows criteria that are quite different from industrial origin and the structure of CPC or SITC. 174. The differences between CPC, HS and SITC result from the fact that they were created for different purposes. HS is the detailed classification for international trade of transportable goods, while SITC is a more aggregated classification for ana- lytical purposes, with the same scope as HS. The scope of CPC exceeds that of HS and SITC, in that it is intended to cover the production, trade and consumption of all goods and services. Both CPC and SITC, Rev.3, regroup HS categories, albeit in dif- ferent ways. SITC follows a traditional order in which the materials used, the stage of processing and the end-use are the main considerations. CPC arranges its categories in groups that are similar to ISIC categories. This does not mean, however, that all goods are grouped according to their industrial origin. 175. Although origin had been an important criterion when developing CPC, it was produced as a classification in its own right – one in which classification is based on the physical characteristics and intrinsic nature of goods or on the nature of the services rendered. For example, while meat and hides are both outputs of slaughter- houses (ISIC class 1010, “Processing and preserving of meat”), they appear in differ- ent sections of CPC. However, each type of good or service distinguished in CPC is defined so that it is normally produced by only one activity as defined in ISIC. As far as practically possible, an attempt is made to establish a correspondence between the two classifications, each category of CPC being accompanied by a reference to the ISIC class in which the good or service is mainly produced. 3. Other derived and related activity classifications 176. The work on the fourth revision of ISIC has been driven by a strong desire to improve comparability among activity classifications around the world. In the proc- ess, the experiences obtained during recent or still ongoing revisions of national and regional classifications have been taken into account. It is clear, however, that needs for detail and structure, especially at the lower levels of the classification, differ from coun- try to country and from region to region. The work of the Expert Group on Interna- tional Economic and Social Classifications has continued these harmonization efforts
Introduction 37 in its work on the International Family of Economic and Social Classifications. The need to converge existing activity classifications has been stressed again by the Statisti- cal Commission and will be a key element in future work on these classifications. 177. The need for convergence does not diminish the need for regional clas- sifications. The work on improved and tailored regional activity classifications, based on the reference classification as the international standard, is an important way to further the application of ISIC. These regional classifications should be derived from ISIC and adjusted to the regional specifics of a group of countries. They will allow for data comparability within the region and serve as more tailored guidelines for the development of national classifications. 178. The preamble of the International Family of Economic and Social Clas- sifications lays out the foundations of these relationships between reference classifica- tions (such as ISIC for economic activities) and derived and related classifications. (a) Derived classifications 179. The revision of the General Industrial Classification of Economic Activ- ities within the European Communities (NACE) has been developed based on the fourth revision of ISIC, continuing the strong relation between these two classifica- tions. Categories at all levels of NACE have been defined to be either identical or to form subsets of single ISIC categories. 180. In addition, the coding systems used in classifications of the United Nations and the European Community are as far as possible the same. As a result, the data of both intergovernmental organizations have become widely compatible. ISIC and NACE are identical up to the two-digit level (divisions) of the classification. At lower levels, NACE has created more detail suitable for European users of the classifi- cation. The additional detail created can always be aggregated to ISIC categories at the three- and four-digit levels, within the same structure. 181. Work to create similar derived classifications is also being carried out in other regions. (b) Related classifications 182. The North American Industry Classification System (NAICS) was developed in the mid-1990s and has undergone some changes to increase compa- rability among the three custodians of this classification. The research work carried out during the development of NAICS has been a major input into the ISIC revision process. The review of the NAICS structure and concepts by other countries has not only resulted in the desire to reflect some of the NAICS top-level categories, such as “Information” in ISIC, but has also initiated reviews of ISIC principles and encour- aged detailed discussions on criteria to be applied for boundary decisions between existing categories. 183. Work on the development of a common top-level structure for both clas- sifications has shown limitations in this effort arising from specific country needs; the desire to maintain continuity in each of the classifications; and the cost/benefit analysis of a complete change of the classifications involved. As a result, the structures of ISIC and NAICS seem substantially different. However, definitions of individual categories have been designed in a way that statistical data collected according to NAICS can be reaggregated into the two-digit divisions of ISIC, Rev.4, ensuring the comparability of data as described in paragraph 168 above. In many cases, more detailed links are possible.
International Standard Industrial Classification of All Economic Activities (ISIC), Revision 4 38 184. The Australian and New Zealand Standard Industrial Classification (ANZSIC) has been revised in 2006 and broadly aligns with ISIC at the detailed level. As for ISIC, the conceptual approach for ANZSIC has been re-evaluated. The revised ANZSIC takes into account activities within Australian and New Zealand economic units. The ANZSIC structure broadly follows the ISIC structure, so that categories at the division and more detailed levels can be aggregated into the two-digit categories of ISIC. 4. Relationship of other international classifications with ISIC 185. The following classifications developed by the United Nations or its subsidiary organs have some relationship with ISIC or make use of parts of ISIC in defining their own scope or categories; whether describing statistics on occupations, employment, expenditures, education, tourism or the environment: the Classification of the Functions of Government (COFOG), the International Standard Classification of Education (ISCED),22 the International Standard Classification of Occupations (ISCO),23 the activity classification of the Tourism Satellite Account (TSA)24 and the International Classification of Non-Profit Organizations (ICNPO).25 186. COFOG, which was developed by the former Statistical Office of the United Nations Secretariat mainly for use in the System of National Accounts, was first published in 1980 and revised in 2000. The criteria of classification—function in the case of COFOG and activity for ISIC—are conceptually rather similar. COFOG is more appropriate than ISIC for classifying government expenditures, however, because the COFOG list of functions is more detailed than the ISIC list of activities, having been drawn up specifically to take account of the range and diversity of government activities. Although there are similarities between the criteria of the two classifications, problems may arise when comparing data collected according to ISIC and COFOG. For instance, COFOG covers not only direct outlays on government-owned schools but also the subsidizing of privately owned schools and outlays on subsidiary services to education, such as school transport, food and lodging for students etc. 187. ISCED was developed by UNESCO as an instrument for assembling, compiling and presenting statistics of education, both within individual countries and internationally, and was last updated in 1997. It is a multi‑purpose classification of educational programmes to be used for statistics on student enrolment and human or financial resources invested in education, as well as on the educational attainment of the population as obtained, for example, from population censuses or labour-force surveys. The statistical unit as classified in ISCED at the lowest level is the programme or programme group. 188. Educational institutions are classified according to ISCED on the basis of the type of programmes that they provide. In principle, these institutions may be con- sidered equivalent to the basic units to be classified by ISIC. The definitions of the ISIC categories for education services have been defined in line with the changes applied in the last ISCED revision. 189. The International Standard Classification of Occupations (ISCO) has been developed by the International Labour Organization (ILO). It provides a basis for comparing occupational statistics for different countries and communicating other occupational information, such as for the recruitment or admission of migrant work- ers. It also serves as a model for countries when they develop their national occupa- tional classifications or revise their existing ones. 190. The primary units to be classified to ISCO are jobs. Jobs are classified to ISCO on the basis of the type of work performed, that is, the task and duties to be car- 22 International Standard Classification of Education (ISCED 1997) (Paris, UNESCO, November 1997). 23 International Standard Classification of Occupations (ISCO-1988) (Geneva, ILO, 1988). 24 Commission of the European Communities, Organisation for Economic Co-operation and Development, United Nations and World Tourism Organization, Tourism Satellite Account: Recommended Methodological Framework, Statistical Papers, Series F, No. 80 (United Nations publication, Sales No. E.01. XVII.9). 25 See Annex A1 of the Handbook of National Accounting: Handbook on Non-Profit Institutions in the System of National Accounts, Statistical Papers, Series F, No. 91 (United Nations publication, Sales No. E.03.XVII.9).
Introduction 39 ried out. Since ISIC and ISCO have entirely different functions and conceptual foun- dations – in other words, they measure very different aspects of the economy – there is no need to harmonize their structures. However, when similarities and differences between certain groups in ISCO are based on the type of distinctions that are reflected in ISIC (i.e., between the type of products, namely, goods and services, that are being produced or sold), the ISCO groups are defined in a manner that is generally consist- ent with the definition of these goods and services in ISIC and CPC. 191. The World Tourism Organization has developed two international rec- ommendations on tourism statistics that are related to one another: the new Inter- national Recommendations for Tourism Statistics 2008 (IRTS 2008)26—a revision of the previous 1993 Recommendations on Tourism Statistics that was approved by the United Nations Statistical Commission at its thirty-ninth session, in 2008; and the updated Tourism Satellite Account: Recommended Methodological Framework 2008 (TSA:RMF2008)27—an update of TSA:RMF2000, presented to the Statistical Com- mission at the same session.28 The concepts, definitions and classifications to be used for basic tourism statistics, which conform with TSA:RMF2008, are described in IRTS 2008. The concept of tourism characteristic products purchased by visitors and the activities that produce them was first introduced in TSA:RMF2000. Tourism charac- teristic activities are defined as activities that produce one or more tourism character- istic products as a typical output of the production process characterizing the activity. Updated lists of tourism characteristic products and activities defined in terms of CPC and ISIC, which are needed to compile basic tourism statistics and TSA, are to be found in annexes 2 and 3 to IRTS 2008. The list of tourism-related activities that appeared in annex II to part two of ISIC, Rev.3 has been superseded by these lists. 192. ICNPO is the classification recommended for delineating the non-profit institutions sector in the Handbook on Non-profit Institutions in the System of National Accounts. ICNPO was developed initially by an international team of non-profit insti- tutions experts because the level of detail available in ISIC, Rev.3 was not sufficient to differentiate important types of non-profit institutions and permit their reaggregation to the classification structure common in treatments of the non-profit institutions sec- tor. ICNPO was subsequently applied in the development of systematic empirical data on the non-profit institutions sector in 40 countries throughout the world as part of the Johns Hopkins Comparative Nonprofit Sector Project; was further verified in a pilot test of the Handbook by 11 statistical offices; and continues to be used by national statistical offices in both data collection and Handbook implementation activities. D. Indexes to the classification 193. Alphabetical and numerical indexes are very useful tools for further detailing classification categories and greatly simplify their application. The indexes are designed to be of assistance in adapting ISIC to the classification requirements of individual countries, comparing national classifications to ISIC and classifying data according to ISIC. They should also provide a guide to the correct classification of statistical units. 194. New interpretations of the classification, usually related to new activities, can be easily reflected in the index, while no change in the classification or its related texts is usually necessary. Indexes for this new version of ISIC will be available in machine-readable form only, published in the Classifications Registry on the United Nations Statistics Division website at http://unstats.un.org/unsd/class. 26 Statistical Papers, Series M, No.83/Rev.1 (United Nations publication, forthcoming). 27 Statistical Papers, Series F, No.80/Rev.1 (United Nations publication, forthcoming). 28 See Official Records of the Economic and Social Council, 2008, Supplement No. 4 (E/2008/24).