Eurostat, the statistical office of the European Union

Eurostat, C1, National accounts methodology. Indicators

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The indicator Compensation of employees sources from the National accounts domain. Under the MIP context it is used for the calculation of the indicator Unit labour cost index.

National accounts are a coherent and consistent set of macroeconomic indicators, which provide an overall picture of the economic situation. They are widely used for economic analysis and forecasting, policy design and policy making. Eurostat publishes annual and quarterly national accounts data. Annual national accounts are compiled in accordance with the European System of Accounts - ESA 2010 as defined in Annex B of the Council Regulation (EU) No 549/2013 of the European Parliament and of the Council of 21 May 2013.

Revisions are reflected in an updated Regulation of the European Parliament and of the Council on the European system of national and regional accounts in the European Union of 2010 (ESA2010). The associated transmission programme is also updated and data transmissions in accordance with ESA2010 are compulsory from September 2014 onwards.

The methodological framework followed in the compilation of the National accounts is defined in the European system of national and regional accounts for the denominator (ESA2010), as defined in Regulation (EU) No 549/2013 of the European Parliament and of the Council of 21 May 2013.

Annual national accounts refer to the whole economy, but breakdowns by sectors are provided by the annual sector accounts.

Compensation of employees (at current prices) is defined as the total remuneration, in cash or in kind, payable by an employer to an employee in return for work done by the latter during the accounting period. Compensation of employees consists of wages and salaries, and of employers' social contributions.
Input data are obtained through official transmissions of national accounts' country data in the ESA2010 transmission programme.

National accounts aim to capture economic activity within the domestic territory. They combine data from a host of base statistics, thus they have no common sampling reference frame. The elementary building blocks of ESA2010 statistics are statistical units and their groupings.  ESA2010 defines two types of units, the institutional units and the local kind-of-activity units (ESA2010, §1.54).

National accounts combine data from many source statistics. The concept of statistical population is not applicable in a national accounts context.

The MIP scoreboard presents national data for each EU Member State.

The data published under the MIP domain are quarterly and annual time series. The lengths of series vary according to country, for details on time coverage see the information note: tipslm13 and tipslm14.

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Data are expressed in million units of national currency.

The reference period is the calendar year.

National accounts are compiled in accordance with the European System of Accounts (ESA 2010) which was published in the Official Journal as Annex A of Regulation (EU) No 549/2013. The European System of Accounts (ESA 2010) transmission programme is covered in Annex B of the Council Regulation (EU) No 549/2013, Commission Decision 98/715 of 30 November 1998 and Commission Decision 2002/990 of 17 December 2002 on measurement of price and volumes in national accounts.

The indicator Compensation of employees is used for the calculation of the MIP Scoreboard indicator Nominal unit labour cost. The MIP Scoreboard has been set up under Regulation (EU) No 1176/2011 of the European Parliament and of the Council.

Data received via the transmission programme are shared with other institutions in accordance with specific agreements, notably with the ECB and the OECD. A Protocol for co-operation between Eurostat and the OECD in the area of National Accounts signed in June 2013 specifies agreed data exchange and data validation arrangements. These data are published in Eurobase in the naid_10 collection.

Regulation 2015/759 of 29 April 2015, amending Regulation (EC) No 223/2009 on European statistics of 11 March 2009 [recital 24 and Article 20(4)], stipulates the need to establish common principles and guidelines ensuring the confidentiality of data used for the production of European statistics and the access to those data.

If Member States transmit data with a confidentiality flag or an embargo date, these data are not disseminated until the confidentiality flag is removed in a subsequent data transmission or until the embargo has expired.

National data become visible on Eurostat's online database usually one to two days after their reception (processing including quality monitoring). 

Annual accounts that are also covered by quarterly accounts are usually updated on the occasion of new quarterly releases (which are released according to a pre-announced calendar published on Eurostat's website); figures for a new year usually become available with the first release of quarterly accounts for the fourth quarter of the reference year.

Eurostat release calendar

The MIP Regulation stipulates that “the Commission shall make the set of indicators and the thresholds in the scoreboard public” (Art. 4, para. 6, Regulation (EU) No 1176/2011 of 16 November 2011 on the prevention and correction of macroeconomic imbalances) and that “the Commission shall update the values for the indicators on the scoreboard at least on an annual basis” (Art. 4, para. 8).

In line with the Community legal framework and the European Statistics Code of Practice Eurostat disseminates European statistics on Eurostat's website (see §10 'Accessibility and clarity') respecting professional independence and in an objective, professional and transparent manner in which all users are treated equitably. The detailed arrangements are governed by the Eurostat protocol on impartial access to Eurostat data for users.

Dissemination requirements for each dataset are defined in the ESA2010 transmission programme. For annual main GDP aggregates: t+2 months and t+9 months. Quarterly variables on GDP and components from output and expenditure side, at current and constant prices are estimated around t+65 days.

News releases on-line

The indicator is used for the calculation of the Unit labour cost index, which is part of the MIP Scoreboard, used to identify emerging or persistent macroeconomic imbalances in EU countries. The Scoreboard is part of an annual exercise, where the first step is the compilation of an Alert Mechanism Report (AMR).

See data availability for the different tables: tipslm13 and tipslm14.

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European legislation and guidelines are explained in ESA2010.

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Quality is assured by a strict application of ESA2010 concepts and by thorough validation of the data delivered by Member States.

Eurostat conducts an annual compliance exercise for all Member States.

The indicator is used for the calculation of the Unit labour cost index, which is one of the MIP Scoreboard indicators. The MIP Scoreboard is used as an early warning system in the context of the macroeconomic surveillance of the EU Member States. The MIP Scoreboard consists of a set of fourteen indicators, covering the major sources of macroeconomic imbalances. The aim of the scoreboard is to trigger in-depth studies, which will analyse whether potential imbalances identified in the early-warning system are benign or problematic.

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Annual national accounts data provide detailed breakdowns on production, consumption, investment and income.

Eurostat publishes Euro area GDP revision triangles with all vintages of quarter-on-quarter growth rates and year-on-year growth rates for the euro area 12 (EA12) seasonally and working day adjusted volume GDP as published by Eurostat since May 2003 until September 2014. Quality reports on national accounts, including revision analysis are also published by some Member States.

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Member States are required to transmit their data to Eurostat in compliance with the European System of Accounts ESA2010 transmission programme, subject to derogations.

Eurostat releases its estimates of European aggregates in line with the pre-announced release schedule. Member states' data are revised according to national schedules, and revisions are applied to Eurostat’s online database as soon as they become available to Eurostat.

Comparability is insured by the application of common definitions (ESA2010).

By using a common framework, the European System of Accounts ESA2010, data are comparable over time. Where series cannot be comparable over time, for example those expressed as a percentage of total EU, then an explanatory note is presented with the series.

In certain cases, data from other domains of economic statistics, i.e. balance of payments statistics, business statistics, household budget statistics or external trade statistics can be used for cross-checking purposes. These economic statistics are also available from the appropriate domains on Eurostat's website.

Most of national data have originally been published by National Statistical Institutes (NSI).

In between Eurostat releases, Member States may revise their figures; Eurostat publishes the new Member States' accounts shortly after reception but does not recalculate EU accounts until next scheduled EU release. Geographical coherence may thus be lost for a brief period. In turn, a certain stability of annual aggregates is assured, and annual and quarterly EU aggregates will by default be coherent.

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Annual national accounts are produced from a large variety of data sources with varying degrees of timeliness, taking up to three years or more in the case of structural sources. As users need national and international data as fast as possible, particularly on certain key aggregates, data are produced using data sources that are more readily available. As more complete source data are obtained, the statistics are updated to incorporate the new information.

Revisions of macroeconomic statistics are necessary to improve data quality. To minimise the inconvenience for data users, the European Statistical System (ESS) and the European System of Central Banks (ESCB) try to strike the right balance between incorporating the necessary statistical revisions and maintaining an acceptable degree of consistency across domains and countries. To this end, the two systems have worked together to draw up a Harmonised European Revision Policy (HERP) for Macroeconomic Statistics issued by the CMFB in October 2017. 

According with the HERP, a distinction should be made between 'routine' revisions and 'major' or 'benchmark' revisions.

• Routine revisions refer to the changes made to the economic data published initially and to its subsequent releases for a particular reference year.

According to the guidelines laid down in HERP, annual estimates are usually revised retrospectively for up to four years to incorporate annual data sources as well as changes following Excessive Deficit Procedure and Own Resources notifications, although the policy allows unlimited revisions for transmissions at t+9 months.

• Benchmark revision is carried out at much longer time intervals. Its purpose is to incorporate the main new data sources and major changes in international statistical methodology (such as ESA 2010 or BPM6). In benchmark revision, many years are open for revision in order to create the longest possible consistent time series.

National Statistical Offices and National Central Banks agreed to gradually implement the HERP. The level of adherence to the guidelines of Member States' revision policies is regularly monitored through the ESA 2010 quality reporting.

Information on HERP and the national revision policies is available at:

https://ec.europa.eu/eurostat/web/esa-2010/esa-2010-implementation-and-data-quality.

National accounts data at country level are subject to continuous routine revisions as new input data becomes available. Countries’ data are revised according to country schedules, and revisions become visible in Eurostat's online database as soon as new data is transmitted to and validated by Eurostat.

Countries’ revisions will typically also entail revisions of the European aggregates, which are derived from these data, but updated estimations of the European aggregates are only released on specific dates. Annual data may be revised twice every quarter with the release of quarterly figures (65 days and 100 days after the end of the quarter). The dates are pre-announced in the release calendar on Eurostat's web-site (see 8.2). On these occasions, previously published figures are subject to revision for all variables and all years.

Major or benchmark revisions

Information on benchmark revisions carried out in 2019 is available in this document:

https://ec.europa.eu/eurostat/documents/737960/9861115/Benchmark_revisions_2019.pdf

Eurostat publishes national accounts data for the European Union, euro area and country data (for EU Member States, EFTA countries, candidate countries, the United States, Japan and some other countries on an ad hoc basis).

Countries use many sources to compile their national accounts, among them administrative data from government, population censuses, business surveys and household surveys. No single survey can hence be referred to. Sources vary from country to country and may cover a large set of economic, social, financial and environmental items, which need not always be strictly related to national accounts. In any case, there is no single survey source for national accounts.

Member States should transmit national accounts data to Eurostat upon national publication and/or in line with the deadlines specified in the European System of Accounts (ESA 2012) transmission programme. Member State's annual main aggregates are generally transmitted at t+2 and t+9 months.

Data are collected from national sources. As the breadth of the sources varies, so does the frequency of collection, from monthly to annually, and in the case of population censuses they are mostly collected every decade.

Data in ESA2010 are transmitted via SDMX which introduced standardised codes.

National Accounts combine data from many source statistics. Techniques of data collection vary widely, depending on the compilation approach, the source statistics available, the particular account in the system of accounts, the timeliness of data release and other factors.

Source data undergo a sequence of checks within NSIs. Eurostat checks national data mainly for completeness (coverage of reference periods and variables) and consistency (accounting consistency, time-consistency between quarterly and annual accounts and consistency over time) and follows up with NSIs on any lack of quality in this respect.

The same checks are applied to data for the European aggregates. Validation against data from other domains and validation of the statistical tools used are done on an ad-hoc basis.

Where single Member States' figures are not available, Eurostat may use unpublished estimates to impute country data and hence calculate the European aggregates.

If Member States' accounts show discrepancies (explicit or implicit) between GDP and the sum of components, European annual accounts derived from summing these up would show a discrepancy equal to the sum of Member States' discrepancies. To avoid this, European annual accounts use some variables to adjust for any possible lack of additivity between the total and the sum of its components, i.e. these variables are effectively used as balancing items. This is only possible at current and at previous year's prices, because of the lack of additivity induced by the chain-linking technique. 

NSIs may provide explicit balancing adjustments for their national accounts. These are recorded as "discrepancy items" in the appropriate tables.

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