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Background Notes

Background Notes

Data Sources, Definitions, Classifications and Methodology

Online ISSN: 2009-096X
CSO statistical publication, , 11am

Introduction

This publication presents the results of the calculation of Gross Value Added (GVA) by the CSO using the Output method for the years 1995 to 2021. GVA can be considered as Gross Domestic Product (GDP) in basic prices (i.e. without the addition of product taxes and product subsidies). The CSO are incrementally integrating this Output method (also known as the Production Approach) into the existing national accounts compilation process which also employs both the Income method and the Expenditure method in the Annual National Accounts (ANA) publications (previously known as the National Income and Expenditure or NIE). Pending the full incorporation and integration of these three distinct approaches, detailed sectoral estimates using the Output method should be considered as transitional and exploratory, particularly for the most recent two years (2020 and 2021). In this publication, data are expressed in both current prices and constant prices. The constant price series is chain linked annually and referenced to the year 2020. This means the chain linked data for the year 2020 are the same as the current price data for the year 2020. The chain linked series are not additive except for 2020 and 2021.

A detailed explanatory note is provided by the CSO National Accounts Integration Division for users of this annual publication. It provides background and descriptive material on these estimates. The note also introduces the data sources and methods used in the compilation of these estimates and is available via the following link: Output and Value Added by Activity 2021 - Explanatory Note November 2022

Methodology

The Output Method measures GVA as the value of Output less the value of goods and services used in producing these outputs (Intermediate Consumption). The basic components of the Output method are therefore Output, Intermediate Consumption and Gross Value Added (GVA = Output minus Intermediate Consumption).

Output includes production of goods and services supplied or intended for supply to units other than their producers, including those used up in the production process. Also included are own-account production of goods retained by their producers for their own final consumption or gross fixed capital formation and own-account production of housing services produced by owner-occupiers. Excluded from the production boundary are domestic and personal services produced and consumed within the same household.

The underlying definitions used are those of the European System of Accounts (ESA) 2010. ESA 2010 is the European version of the current UN mandated international standards for national accounts statistics, the System of National Accounts (SNA) 2008.

The primary data sources for these estimates are the CSO's Structure of Business Statistics (SBS) surveys. These SBS surveys cover both manufacturing and services sectors. Detailed questionnaires are sent to thousands of enterprises each year. The Census of Industrial Production (CIP) covers NACE 5-39, the Building and Construction Inquiry (BCI) covers NACE 41-43 and the Annual Services Inquiry (ASI) covers many codes between NACE 45-96. National Accounts are grateful to our colleagues in SBS for their assistance with these data.

Users should note that these Output method data are presented from a National Accounts compilation perspective. Output and Gross Value Added are shown by sector. However, these figures do not take account of changes in employment numbers and consequently should not be used as proxies for comparisons of productivity or wage rates by sector. Output and Gross Value Added data are a starting point for such analysis when used in combination with additional, relevant data.

Foreign-owned Multinational Enterprises and Other Sectors

An additional chapter on 'Foreign-owned Multinational Enterprises and Other sectors' was added to the 2018 edition published in December 2019. The CSO publication Annual National Accounts 2021 (ANA21) contains a chapter which splits the economy into 'Foreign-owned MNE dominated' and 'Other' sectors. Foreign-owned Multinational Enterprise (MNE) dominated sectors occur where MNE turnover on average exceeds 85% of the sector total. These 'Foreign-owned MNE dominated' sectors contain NACE 18.2, 20, 21, 26, 27, 32.5 and 58-63.

This Output and Value-Added publication uses the A64 NACE classification structure.

The 'Foreign-owned MNE dominated' and 'Other' sectors in this Output publication generally follow the split in the above with the following exceptions:

  • NACE 18 is a single A64 code and as NACE 18.2 is a minority of NACE 18, it is included in 'Other' in this publication.
  • The majority of A64 code NACE 31-32 is composed of NACE 32.5 and is included in 'Foreign-owned MNE dominated' in this publication.
  • NACE 58, 59-60, 61, 62-63 are four separate A64 codes. NACE 58 and 62-63 are included in 'Foreign-owned MNE dominated' while NACE 59-60 and 61 are in 'Other' in this Output publication.

Total 2021 GVA at €401,448 million is the same in both. The 2021 ‘Foreign-owned MNE dominated’ GVA in the ANA21 is €204,379 million compared with €199,730 million in this Output publication, a difference of 2.3%. This is largely due to NACE 59 (Motion picture, video and television programme production, sound recording and music publishing), 60 (Programming and broadcasting activities) and 61 (Telecommunications) being included as ‘Foreign-owned MNE dominated’ in the ANA21 and as ‘Other’ in this Output and Value-Added publication. The composition of sectors will change by type of ownership over time. To allow for ease of comparability over the time-series, the NACE code composition of the two groups has been maintained over the 1995-2021 period.

CSO data sources

A range of published sources, predominantly from within the CSO, are used in the compilation of these Output and Gross Value Added tables. Data sources employed in the compilation of these estimates include:

  • Annual Services Inquiry
  • Balance of International Payments
  • Building and Construction Inquiry
  • Census of Industrial Production
  • Household Budget Survey
  • National Income and Expenditure
  • Output, Input and Income in Agriculture
  • Quarterly National Household Survey, etc.

As referenced above, the main data source for these estimates are the CSO's Structure of Business Statistics (SBS) surveys. The Census of Industrial Production (CIP) covers NACE 5-39, the Building and Construction Inquiry (BCI) covers NACE 41-43 and the Annual Services Inquiry (ASI) covers many codes between NACE 45-96. There are notable exceptions to this coverage, particularly for Services. For example A21 sectors K (NACE 64-66) and O, P, Q (NACE 84-88) are not included in the ASI. The SBS also operates at a lag of approximately 18 months from the end of the reference year.

Other data sources

Where appropriate, use is also made of published reports of Government Departments, semi-state bodies and financial institutions. Company accounts and administrative records are also used. Part of the compilation process is an examination of the consistency between these data and the Income method data, which are based mainly on administrative sources. Although the initial GVA figures are broadly consistent with the Income method figures, some initial inconsistencies are found between the methods. The following are some of the causes of these inconsistencies:

Non-response and data errors. Survey data and administrative records are both subject to non-response and data errors. The approach for correcting these may give different results.

Definitions/concepts. There are differences between the definitions/concepts used for the data collected in the surveys and the definitions/concepts applying to the data collected from administrative sources. The data from administrative sources are converted as far as possible to National Accounts definitions/concepts.

Activity coverage. The coverage of some activities in the SBS differs from the coverage of data collected from administrative sources. A variety of methods are used to estimate the aggregate total for each sector.

Company/enterprise. The SBS collect data from companies, some of which have complicated organisation structures. Data from administrative sources do not always map to the same structure, i.e. for a particular enterprise, there might be a single survey response covering the whole group of companies, whereas several separate responses for companies within the same group might be contained in the administrative records. As a result, components of such groups may be classified to different activities in the Output and Income methods, respectively.

Classifications

The activity classification used is NACE Rev. 2. For National Accounts purposes, the economy is classified by 64 activities using the Eurostat ESA2010 A64 coding scheme. Some activities have to be combined due to confidentiality. The corresponding NACE Rev. 2 division codes are also shown.

Definitions

Output at basic prices covers the value of all goods produced for sale, including unsold goods, and all receipts for services rendered. Output furthermore covers the market equivalent of goods and services produced for own use, such as own account capital formation, services of owner-occupied dwellings and agricultural products produced by farmers for own consumption. The output of such goods is estimated by valuing the quantities produced against the price that the producer would have received if these goods had been sold. Goods purchased for direct resale are not included in Output. Consequently Output and Value Added are very different concepts in the National Accounts.

Output is valued at basic prices, defined as the price received by the producer excluding trade and transport margins and the balance of taxes and subsidies on products. This is the price the producer is ultimately left with.

Some special cases:

  • Distributive trade, in particular the retail and wholesale trade in goods where no physical transformation occurs. The value of these services is the difference between the sales value and the purchase value of traded goods.
  • Real estate activities not only include services of non-residential buildings and rented dwellings, but also of owner-occupied dwellings. The latter are valued on the basis of rents of comparable rented dwellings.
  • Banking mainly deals with financial intermediation, which is the acquisition, transformation and issuing of financial assets. The compensation for these services is implicitly included in the interest paid to and received from banks. The value of these imputed bank services is calculated as the margin received by banks on loans and paid by banks on deposits.
  • Insurance and pension funding mainly transforms individual risk into collective risk. The value of these services is set as the difference between contributions and benefits. In the case of pension funds and life insurance companies, corrections are made for changes in actuarial reserves.
  • Government mainly produces collective services. Since there are no market prices available, Government output is determined from production costs and is estimated as the total of Intermediate Consumption, Compensation of Employees, Consumption of Fixed Capital and the Net taxes on production paid by the Government itself.

Market output is the output of goods and services sold at economically significant prices.

Non-market output is the output of own-account production of goods and services provided free or at prices that are not economically significant. Non-market output is produced mainly by the general government and non-profit institutions serving households (NPISH) sectors.

Output for own final use is the production of output for final consumption or gross fixed capital formation by the producer. This is also known as own-account production.

Intermediate consumption at market prices includes all goods and services used up in the production process in the accounting period, regardless of the date of purchase. This includes for example fuel, raw materials, semi-manufactured goods, communication services, cleansing services and audits by accountants. Intermediate consumption is valued at purchasers' prices, excluding deductible Value Added Tax (VAT). For companies, which do not need to charge VAT on their sales, the VAT paid on their purchases is non-deductible. It is therefore recorded as a component of Intermediate Consumption.

Not included in Intermediate Consumption are:

  • Purchases of goods, particularly by retail or wholesale enterprises, which are resold without undergoing any processing.
  • Purchases of goods used in the production process with a life span of more than one year. These purchases are recorded as fixed capital formation. The use of these goods is spread over their economic life span and recorded as consumption of fixed capital.

Gross Value Added (GVA) is conceptually the same aggregate as Gross Domestic Product (GDP). They both measure the added value generated in an economy by the production of goods and services. The difference between the two concepts is that GDP is measured after including product taxes (e.g. excise duties, non deductible VAT, etc.) and deducting product subsidies while GVA is measured prior to adding product taxes but includes product subsidies.

Gross Domestic Product at market prices is the final result of the production activity of resident producer units. It is the sum of the GVA of the various industries plus taxes and less subsidies on products. It is presented in the National Accounts at market (or purchasers’) prices.

Value added at basic prices is the value generated by any unit engaged in production and the contributions of individual sectors or industries to GDP. It is measured at basic prices, excluding taxes less subsidies on products. Value added at basic prices by industry is equal to the difference between Output (basic prices) and Intermediate Consumption (purchasers' prices).

Value added at factor cost is calculated as follows:

Value added at basic prices
minus Non product taxes
plus Non product subsidies
equals Value added at factor cost

Composition of NACE codes

A10

Agriculture, forestry and fishing (NACE 1-3)
Industry (except construction) (NACE 5-39)
Construction (NACE 41-43)
Wholesale and retail trade, transport, accommodation and food service activities (NACE 45-56)
Information and communication (NACE 58-63)
Financial and insurance activities (NACE 64-66)
Real estate activities (NACE 68)
Professional, scientific and technical activities; administrative and support service activities (NACE 69-82)
Public administration, defence, education, human health and social work activities (NACE 84-88)
Arts, entertainment and recreation; other service activities; activities of household and extra-territorial organizations and bodies (NACE 90-98)

A21 (of which 20 used in National Accounts)

A NACE 1-3 Agriculture, Forestry and Fishing
B NACE 5-9 Mining and Quarrying
C NACE 10-33 Manufacturing
D NACE 35 Electricity, Gas, Steam and Air Conditioning Supply
E NACE 36-39 Water Supply; Sewerage, Waste Management and Remediation Activities
F NACE 41-43 Construction
G NACE 45-47 Wholesale and Retail Trade; Repair of Motor Vehicles and Motorcycles
H NACE 49-53 Transportation and Storage
I NACE 55-56 Accommodation and Food Service Activities
J NACE 58-63 Information and Communication
K NACE 64-66 Financial and Insurance Activities
L NACE 68 Real Estate Activities
M NACE 69-75 Professional, Scientific and Technical Activities
N NACE 77-82 Administrative and Support Service Activities
O NACE 84 Public Administration and Defence; Compulsory Social Security
P NACE 85 Education
Q NACE 86-88 Human Health and Social Work Activities
R NACE 90-93 Arts, Entertainment and Recreation
S NACE 94-96 Other Service Activities
T NACE 97-98 Activities of Households as Employers; Activities of Households for Own Use
U NACE 99 Activities of Extraterritorial Organisations and Bodies (not included in National Accounts)