Approaches to Integrating Administrative Records with Result Data of Statistical Surveys- Development of Business Register in Japan September, 2013 Masaaki Sato Economic Structure Statistics Division, Statistics Bureau, Ministry of Internal Affairs and Communications, the government of Japan
Contents 1. Development of the EstablishmentFrame Database (Business Register) 2. Methods of Developing the Establishment Frame Database (Business Register) With the Use of Administrative Records 3. Overview of Inquiries to Establishments and Enterprises (Fiscal Year 2012) 3.1 Inquiries to New Establishments 3.2 Confirmation of Business Abolishment <Reference>Overview of Results of Inquiries made to New Establishments and of Confirmation of Business Abolishment (no printed materials available) 4. Utilization of Inquiry Results 5. FutureIssues
1. Development of the EstablishmentFrame Database (Business Register) • Role of Sampling Frames Information that is provided to national authorities, prefectures and designated cities, etc., and that is for extracting subjects of statistical surveys on establishments, or for creating statistics on establishments.
1. Development of the EstablishmentFrame Database (Business Register) [Previous Establishment and Enterprise Database] As updates generally took place at the same timing as the release of an Economic Census, only two updates were made in five years, indicating degradation in the data. [The new Establishment Frame Database (Business Register)] Started its operation since the year 2013 Aiming for utilizing highly precise sampling frames which timely and accurately cover changes and abolishment of establishments and enterprises Upgraded
1. Development of the EstablishmentFrame Database (Business Register) [Details of Upgrade] (1) Expansion of Information Sources Constructed by integrating results from Economic Censuses, 19 statistical surveys and 3 administrative records (the Commercial and Corporation Registration, Labor Insurance and EDINET) → Information on new establishments and business abolishment, which is obtained from records of the Commercial and Corporation Registration and Labor Insurance, is input to the Business Register after actual business activities on Inquiry Sheets are checked. → In relation to Confirmation Sheets, answers are received through mail or the Internet. ← A crucial point in comparison with other countries is that tax-related data cannot be used (Not availablefor legal and regulatory reasons. The threshold of amending the laws and regulations is high.)
1. Development of the EstablishmentFrame Database (Business Register) [Details of Upgrade](Continued) (2) Enrichment of available information Records of accounting information and information on enterprise groups (3) Retention of Common Codes for Establishments Sampling frames and results from each statistical surveycontain aCommon Establishment Code. (4) Creation and provision of the Annual Frame Set a base date each year, and prepare and provide the latest information as of the base date.
1. Development of the EstablishmentFrame Database (Business Register) The legal base of the development of the Business Register • Statistics Act (Article 27) (Act No. 53of 2007) The Minister of Internal Affairs and Communications shall develop an establishment frame database by utilizing questionnaire information pertaining to fundamental statistical surveys or general statistical surveys, questioning juridical persons and other organizations or through other methods, for the purpose of contributing to the accurate and efficient production of statistics by administrative organs, local public entities, and incorporated administrative agencies, etc. that have made a notification under Article 25 (hereinafter referred to as "incorporated administrative agencies, etc. under Article 25") and the reduction of the burden on respondents of statistical surveys by them.
Master Plan concerning the development of official statistics (Extracted)(Cabinet Decision, March 2009) 2. Measures Concerning the Development of Official Statistics That Should Be Comprehensively and Systematically Established 2 Matters related to securing and improving consistency and international comparability of statistics (2) Construction and utilization of a business register b) Orientation of approaches To accurately develop population information, (omitted) In developing population information of business corporations using registered information, the accuracy of maintaining and updating population will be improved through referring to information such as the industry name, number of employees, number of business establishments, etc. that cannot be comprehended through registered information by using a method of enclosing stamped postcards/envelopes for responses. Furthermore, with regard to the use of administrative record information, the maintenance and renewal of business registries using notifications regarding the establishment of a business establishment covered under employment insurance and reports of the establishment of a labor insurance relationship will be reviewed.
(Summary) The Establishment Frame Database (Business Register) ○ Set a Common Establishment Code in various statistical surveys and administrative records, and create a database based on the Code. ○Already developed and operating inmajor countries in the world as a basis of industrial statistics In Japan, Article 27 of thenew Statistical Act treats the Database as the one developed bythe Minister of Internal Affairs and Communications. Business Register Results of Statistical Surveys and Administrative Records ● Providing a directory andsupplementary information to various statistical surveys ● When providing a directory, levelling the burdens of survey targets (Implementing correction of duplications efficiently) ● Supporting implementation of various statistical surveys etc. (Results) ○ Enhanced the precision of statistical surveys and SNA ○With a common establishment as a key creating new statisticswhich connect results of statistical surveys with administrative records Statistical surveys Creating a DB with the Common Codes as a key (Record Information) Main statistical surveys, etc. to be recorded in the DB (Base Information) Economic Census Business Frame Business Activity Administrative Records, etc. Information from Labor Insurance, (From May 2012) the Commercial and Corporation Registration and EDINET (Annually) January 2013, started operating the Establishment Frame Database 1
2. Development of the Establishment Frame Database (Business Register) Using Administrative Records • Commercial and Corporation Registration Information ○Obtaining monthly commercial and corporation registration data (including establishment, move, trade name change, merger, dissolution and so on) from Ministry of Justice. ○ Since the Fiscal Year 2009,inquiries by post are regularly made to new corporations established after July 2009 (the Economic Census - Business Frame, 2009)
2. Development of the Establishment Frame Database (Business Register) Using Administrative Records • Labor Insurance Information ○Obtaining monthly Labor Insurance data (“Employment Insurance” and “Workers’ Accident Compensation”), such as the participation status, from the Ministry of Health, Labour and Welfare ○Implementing trial inquiries in Fiscal Year 2011, andthe full-scale inquiry started in Fiscal Year 2012. Regular inquiries are made every month (targets: about 13 thousand establishments, per month) to new establishments organized after February 2012 (the Economic Census - Business Activity, 2012) ⇒ Based on this, inquiries based on the Commercial and Corporation Registration can exclude overlapping target establishments referred to in Labor Insurance Information. The number of inquiries changed to once annually (Targets: about 100 thousand establishments/year)
2. Development of the Establishment Frame Database (Business Register) Using Administrative Records • EDINET（Electronic Disclosure for Investors‘ NETwork） Electric disclosure system for investors to obtain disclosed documents through the Internet, based on the “Financial Instruments and Exchange Act” ○Enterprises subject to disclosure (about 4,000 corporations) ●Securities listed in a Financial Instruments Exchange (listed enterprises) ● Securities for which Securities Registration Statements are submitted (enterprises submitting Securities Registration Statements) ● The number of shareholders is 1000 or more either as of the end of the business year or as of the end of the previous four business years (companies taxed based on their business sizes) ○The time limit for submitting a Securities Report Within 3 months after the end of the business year
2. Development of the Establishment Frame Database (Business Register) Using Administrative Records ○MainRecorded Information ● The submitting company’s name, address, telephone number, capital, number of employees, account-closing month, gross sales and total costs, the name and location of its parent company, and the existence and number of consolidated subsidiaries if there are any, etc. ○Utilization of EDINET information ●Adding establishments ● Updating name, address, etc. ● Reflecting merger or split
2. Development of the Establishment Frame Database (Business Register) Using Administrative Records ○Based on the 3 administrative records, grasping about 240 thousand establishments as new establishments (enterprises) annually ○Points to remember in using administrative records → Regarding enterprises (establishments) newly registered with the Commercial and Corporation Register, it is necessary to check whether they have conducted business activities. → Regarding new establishments (enterprises) grasped from administrative records, it is necessary to separately obtain their attribute information so as to register such establishments with the Business Register. → Further, it is necessary to check whether some establishments have actually abolished their business (e.g. in the case Labor Insurance does no longer apply to an establishment due to a reduction in the number of employees).
3.1 Inquiries to New Establishments (2012) ●Inquiry Flow Possible to select mail or the Internet for sending responses (about 40% of respondents answered through the Internet) (Note) Inquiries based on the Commercial and Corporation Registration Information proceed only up to the stage of Postcard Demand (as telephone numbers are unknown) No response No response Telephone demand (consigned operator) 〒 Postcard demand (consigned operator) Mailinquiry (consigned operator) • ●Inquiry Items • Name and AddressOrganization • Activity of EstablishmentCorporation's ID Number • Start-up DateSingle-unit, Head office or Branch • Establishment‘s popular nameHead office establishment's name, address and telephone number • Representative telephone numberOutline of the organization • Nos. of persons engaged and regular employees in the establishment (Capital etc., No, of regular employees, Kind of main business activities) • Contents of the main business activity of the establishment • Amount of sales (income) of the establishment etc.
3.2 Confirmation of Business Abolishment (2012) ●Confirmation Flow Tel. No. in-use/forwarded Checking the telephone number history data Telephone confirmation （Temporary staff） Registration data Labor Insurance data Tel. No. not in-use Mail confirmation • ●Confirmation Items • Name and Address • Whether the establishment is relocated or not • Activity status of the establishment • Management methods of the current business • (managed by the business owner alone, managed by unpaid directors/volunteers only) • Relationship between the establishment subject to confirmation and the establishment answering the phone call • (an establishment with a different organization, an establishment whose management agency has been changed, an establishment which has been through an adsorption-typemerger or a consolidation-type merger, etc.)
Overview of Results of inquiries to New Establishments • Situations with New Establishments ○Results of inquiries based on Labor Insurance Information (February to May 2012) 1. Business Activities of Establishments The establishments answering “In operation” account for about 80% of the total
Overview of Results of inquiries made to New Establishments • Situations of New Establishments 2. The Single-unit, Head office or Branch classification of the establishments answering “In operation” “The establishments with the status of “Single-unit” or “Branch” account for over 80% of the total
Overview of Results of inquiries made to New Establishments • Situations with New Establishments 3. Industrial classification of the establishments which answer “In operation” The numbers of establishments in “I Wholesale and Retail Trade,” “P Medical, Welfare,” and “M Accommodations, Eating and Drinking Services” are high in the descending order.
Overview of Results of inquiries made to New Establishments • Situations with New Establishments 4. The employment scales of the establishments who answer “In operation” The establishments whose numbers of employees are less than 20 account for 80% or more of the total.
Overview of Results of Confirmation of Business Abolishment • Situations of Confirmation Results ○Confirmation results based on Labor Insurance information (February to April 2012) “Business abolished” and “In operation” account for about 50% and about 30%, respectively.
4. Utilization of Inquiry Results • Development of the Annual Frame ・The Annual Frame is developed from various administrative records and statistical survey results with sampling frames at a designated time point of the year as a standard, on the basis of the information on the Survey Sheets of the Economic Census. ⇒ The 2012 AnnualFrame (at the time of July 1, 2012) reflecting the results of the inquiries based on the administrative records for the period of February to June 2012, with the information on the Survey Sheets for the Economic Census 2012 - Activity Survey as its basis. → The provision of it started from the end of June 2013.
4. Utilization of Inquiry Results • Reflecting in the Economic CensusDirectory The results of the 2012 Economic Census - Activity Survey as a basis, the 2014 Economic Census – Business Frame Directory is to reflect inquiry results and each statistical survey (Census of Manufacturers, Financial Statements Statistics of Corporations by Industry, Survey on Incorporated Educational Institutions, Survey of Medical Institutions,etc.) according to the administrative records made after February 2012. (Scheduled)
5. Future Issues, etc. • Creation of Business Register Statistics → Business Pattern is planned to be provided from the end of 2013. → Methods of creating Business Demography are under review.
5. Future Issues, etc. (Continued) • Developing a system for direct profiling (hearing) by expert personnel Gathering complex information on complex corporate mergers and on organizational changes led by corporate restructure, and grasping accurate pictures of corporate organizations. ← It is difficult to take hold of changes only from administrative records. • Considering the utilization of tax data etc. Grasping individual proprietors who do not have any employer is not possible solely with the currently utilized administrative records. → Considering the possibility of utilizing “NotificationofEstablishment/ Abolishment of IndividualProprietorship.” (The National Tax Agency ) • Confirmation of business abolishment Limitation of checking with administrative records. Accurate notices are few. From results of Economic Censuses, 2.9 hundred thousand establishments are abolished annually, however, today only 30 thousand abolished establishments are grasped from administrative records.
<Reference> Example Statistics Created from the Establishment Frame Database (Business Register) ○ Asstatistics bridging a period between one Economic Census and another, create Business Register statistics which utilize information of the Annual Frame, and comprehend the economic activities of establishments and enterprises in Japan every year. • Business Pattern (static statistics) Statistics of the numberof establishments and enterprises, the number of employees, sales, etc., by region and by industry sector • Business Demography (dynamic statistics) Statisticsfocusing on transfers of establishments and enterprises and on growth anddeclination of industries (transfer situations compared with the Annual Frame of the previous year, etc.)
Example Statistics Created from the Establishment Frame Database (Business Register) • “Business Demography” is ○demography: study of population statistics Population in the present period = population in the previous period + births - deaths (By region)- move-outs to other regions + move-ins from other regions Applying to industrial statistics No. of establishments in the present period = No. of establishments in the previous period + entries - exits (By industry) - move-outs to other industries + move-ins from other industries
OverviewofBusinessRegisterStatisticsof Other Countries [Anexample of Britain (Business Demography)] URL http://www.ons.gov.uk/ons/rel/bus-register/business-demography/2010/index.html
OverviewofBusinessRegisterStatisticsof Other Countries [Anexample of Britain (Business Demography)(Continued)] (Notes on use) ○The starting point of Business demography is that enterprises in operation in the reference year (Year t) are the sampling frame (those enterprises which make sales or have employees at one time point during the reference year). ○Newly organized enterprises are those existing in Year t but not in Year t-1 or Year t-2. ○Abolishedenterprises are those existing in Year t but not in Year t+1 or Year t+2. In order to provide a preliminary result on the number of business abolishment, adjustment is to be made in anticipation of the number of restarting enterprises (to be amended at the time of releasing thefinal result).
OverviewofBusinessRegisterStatisticsof Other Countries [Anexample of Britain (Business Demography)(Continued)] • Statistical Table (Example) BUSINESS DEMOGRAPHY - 2010Enterprise Births, Deaths and Survivals Table 1.1Count of Births of New Enterprises for 2009 - 2010District, Counties and Unitary Authorities within Region and Country
OverviewofBusinessRegisterStatisticsof Other Countries [Anexample of Britain (Business Demography)(Continued)] Table 2.1Count of Deaths of Enterprises for 2009 - 2010District, Counties and Unitary Authorities within Region and Country
OverviewofBusinessRegisterStatisticsof Other Countries [Anexample of Britain (Business Demography)(Continued)] Table 4.1Survival of Newly Born EnterprisesGovernment Office Region by Births and their Survival for 2005 - 2009