Technical Information - Impact of the IESS Framework Regulation
A new framework regulation governing the production of European Statistics on persons and households (Integration European Social Statistics Framework Regulation – IESS FR) came into force on 01 January 2021. The IESS FR covers various domains of social statistics including labour market statistics. It aims to ensure that social statistics based on sample surveys, e.g. the Labour Force Survey (LFS), are produced in a more harmonised and coordinated manner across Europe.
The IESS FR also establishes guidance on:
The Central Statistics Office (CSO) had to introduce changes to the LFS questionnaire in Ireland from Quarter 1 (Q1) 2021 because of the IESS regulation. These include changes to LFS variables collected by the LFS questionnaire with some new questions added, while some questions have been removed, and others have changed in terms of response options or frequency. There have also been some changes to the order of the questions as the flow of the LFS questionnaire across Europe is now more prescribed and harmonised under the IESS FR. The LFS questionnaires for Ireland for Q1 2021 and previous quarters are available here: Labour Force Survey.
The changes to the LFS due to the IESS FR in Ireland were expected to be minor and not cause any significant break in series. This is because many of the changes required have already been implemented by the CSO during the transition from the Quarterly National Household Survey (QNHS) to the LFS in 2017.
While the impact of the changes envisaged under the IESS FR were expected to be minimal for Ireland, the CSO still implemented a pilot survey to evaluate what impact the IESS FR would have on results from the LFS. This allowed the CSO to deal with breaks in series that might be caused due to IESS FR by creating a consistent, coherent and break free LFS series. This pilot survey was initially planned to be conducted early in 2020 but had to be postponed due to COVID-19 and the inability of CSO interviewers to carry out face-to-face interviews from March 2020 to April 2021. The plans for the IESS pilot survey had to be amended due to the impact of Government restrictions in place during 2020 in Ireland, and the revised IESS pilot survey was rescheduled and carried out via telephone interviewing in Q4 2020.
Separate to the pilot survey, the CSO have been working with Eurostat to re-engineer the already published LFS series in Ireland to reflect what the series would look like if they were collected under the IESS regulation. As outlined above, the expectation was that the changes due to the IESS FR would be minimal for the LFS in Ireland and based on current analysis of the pilot survey data and the re-engineering of the historic series, that expectation has been realised.
One of the main changes for the LFS due to the IESS FR in Ireland is the way in which the labour market status of those who are Away from work (e.g. holidays, illness, layoff, off season etc.) in the reference period are classified. The rules regarding attachment to the employment for those 'Away from work' in the reference week have changed. Up to Q4 2020, the attachment (absence duration of at most three months and/or continued receipt of at least half of their salary from their employer) was only being tested for those who indicated that they were 'Away from work' because of 'Temporary lay-off'. All other reasons for absence from work in the reference week were being automatically classified as 'Employed'. From Q1 2021, the rules regarding attachment have been extended to include testing for duration of at most three months for persons who are ‘Away from Work ‘ when interviewed because of off season and other reasons. In addition, persons ‘Away from Work’ on parental leave are being tested for duration of at most three months and whether they receive any work-related income.
The CSO applied this change under the IESS regulation retrospectively to the LFS series up to Q4 2020. This was done by including additional reasons for absences when testing the attachment to a job for those who were 'Away from work' in the reference week to determine their labour market status. This has allowed the CSO to evaluate the impact of this change under the IESS FR and re-engineer the historic series to account for the change. Other changes such as recoding of existing variables to reflect the changes under the IESS regulation were also included as part of this re-engineering process on the full historic LFS series. Please see the Information Note published by the CSO on 03 June 2021 for more information on the IESS FR.
In the graphs below, the “Pre-IESS” series are those published for the Q4 2020 LFS release on 25 February 2021 while the “Post-IESS” series are those as published with the LFS for Q1 2021 today which have been re-engineered up to Q4 2020 to take account of how absences from employment are being treated under IESS.
As the following graphs show, the changes applied to date have had a minimal effect for most of the historic LFS series from 1998 through to 2019. This is largely because the numbers 'Away from work' in the reference week tended to be relatively low in most quarters up to 2019. However, in 2020, because of the impact of COVID-19 and Government restrictions, the numbers who reported being 'Away from work' in the reference week, increased substantially and, thus, the attachment to employment is being tested for more persons rather than being assumed for them. The net effect is that, under the IESS FR, there are fewer persons 'Away from work' in the reference week being classified as 'Employed', which reduces the total number of employed persons during 2020 but has a minimal impact on results prior to 2020.
Figure 8.1 compares the pre-IESS and post-IESS estimates of the number of persons in employment. The impact of IESS on the series up to 2019 is very minimal but the impact of the high number of absences from work and the new attachment rules has reduced employment levels in 2020.
Figure 8.2 compares the pre-IESS and post-IESS employment rate estimates and the differentials in 2020 highlight the reduction in employment estimates due to the new attachment rules.
Figure 8.3 compares the pre-IESS and post-IESS estimates of the number of unemployed persons. The effect of IESS on unemployment is less pronounced in 2020 than for employment as more of those absent from work who were previously employed fell into the ‘inactive’ category rather than unemployed.
Figure 8.4 compares the pre-IESS and post-IESS labour force participation rates. Like employment and unemployment, the participation rates for the pre-IESS and post-IESS series are similar up to 2019 but there are differences in 2020 for the reasons outlined above. The participation rate for Q2 2020 shows the highest differential at 2 percentage points and it is worth noting that Q2 also showed the highest number of absences in 2020.