Report from the Commission to the Council assessing the application of extending coverage of statistical units in Council Regulation (EC) No 530/1999 to units with less than ten employees
Date: 2003-03-14
Institutions: European Commission
Subjects: EU statistics, data collection, economic statistics, micro-enterprise, wage cost

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 14.03.2003
COM(2003)118 final

REPORT FROM THE COMMISSION TO THE COUNCIL

assessing the application of extending coverage of statistical units in Council Regulation
(EC) No 530/1999 to units with less than ten employees

1.

INTRODUCTION

Council  Regulation  (EC)  No  530/19991  requires  from  Member  States  the  four-yearly
collection of statistics on the structure of earnings and on the structure of labour costs, for all
enterprises  with  10  or  more  employees.  When  this  Regulation  was  drafted,  there  was  a
concern that including statistical units with less than 10 employees would be an unjustifiable
burden  for  Member  States.  However,  Article  4  of  the  Regulation  contained  a  provision
requiring  the  Commission  (Eurostat)  to  study  the  possible  future  inclusion  of  these  smaller
units  in  the  structural  surveys  on  earnings  and  labour  costs  and  to  submit  a  report  to  the
Council within four years, i.e. before 1 April 2003.

To compile this report, the Commission (Eurostat) has consulted Member States and members
of  the  Eurostat  Working  Group  on  Wages  and  Labour  Costs.  The  report  examines  the
requirement  for  extending  the  coverage  to  enterprises  with  less  than  10  employees  and
proposes a possible solution, taking into account the relevant data collection systems in each
Member State. The report has been approved by the Statistical Programmme Committee

2.

REQUIREMENT FOR EXTENDING COVERAGE TO SMALLER STATISTICAL UNITS

Data from all enterprises are required in order to provide a representative picture of Member
State and European Union economies. This is particularly important because the structure of
enterprises varies considerably across the EU (Table 1).

Table 1

Austria
Ireland
Luxembourg
Netherlands
Denmark
Germany
Sweden
France
Finland
Belgium
United Kingdom
Portugal
Spain
Italy
Greece
EU-Average

Enterprise size structure estimates 2000:
Private enterprises excluding forestry/fishing
Average enterprise size (employees)
10
10
10
10
9
8
8
7
6
6
6
5
5
3
2
6

Source: Observatory of European SMEs 2002/02

1

OJ L 63, 9.03.1999, p. 6

2

                                                
Micro enterprises2 (i.e. those with less than ten employees) are more prevalent in certain EU
economies and they tend to have distinctive characteristics - e.g. they have a shorter life-span
and  are  less  export-oriented.  Specific  policy  initiatives  that  are  aimed  at  supporting  and
encouraging  small  businesses  need  to  be  complemented  by  good  statistical  information.
However, the collection of data from micro enterprises often entails a relatively high cost for
an  employer  with  limited  staff  and  computing  resources.  Governments  are  understandably
reluctant  to  increase  the  administrative  burden  on  small  businesses  at  the  same  time  that
competitiveness and entrepreneurship are being encouraged. Therefore a realistic balance has
to be struck between the needs of data users and those of small businesses.

3.

EXPERIENCE OF COLLECTING DATA FROM SMALL ENTERPRISES

A number of Member States have undertaken studies related to the collection of earnings or
labour  cost  statistics  from  micro  enterprises,  and  a  summary  is  presented  in  Table  2.  The
experience  highlights  that  this  segment  of  the  economy  has  characteristics  which  clearly
distinguish it from larger enterprises. Micro enterprises start and cease with a greater degree
of volatility; the survey response rates are often lower and they require longer to complete the
information, often because they lack computerised  business  accounting  systems  and  rely  on
manual records.

Table 2

Portugal

France

Italy

Greece

Summary of previous work undertaken in Member States

Analyses of the 2000 structural business survey and the 2001 quarterly earnings
survey (Quarter 4) indicate that for smaller statistical units the survey response
rate is typically lower than for larger statistical units.

France  attempted  to  extend  the  1992  Labour  Cost  and  Structure  of  Earnings
Surveys to statistical units with less than 10 employees. This proved too difficult
to  achieve  and  was  not  supported  by  employers.  Resource  shortages  and
organisational changes have prevented any subsequent extensions.

Analyses of the 2000 structural business survey indicate that statistical units with
less  than  10  employees  have  specific  characteristics  compared  to  larger  units,
e.g lower labour costs, slightly more hours worked, lower survey response rates
and more occurences of missing data items.

In parallel with the annual industry survey, a sample survey has been carried out
over the last three years covering units with less than 10 employees. Information
is available on the types of employees, earnings and labour costs.

2

In this paper the term "micro enterprise" means "statistical unit with less than 10 employees"

3

                                                
Table 2

Spain

Summary of previous work undertaken in Member States

The  Quarterly  Labour  Cost  Survey 
the
characteristics  of  units  with  less  than  10  employees  compared  to  larger
businesses:  large  number  of  business  births  and  deaths  each  year,  limited
accounting and administrative resources, lower survey response rates and more
statistical variation in the data.

in  Spain  provides  details  on 

United Kingdom

A study on compliance costs was undertaken in 2000, covering 700 contributors
to  the  annual  survey  on  the  structure  of  earnings.  The  study  indicated  that,
compared to larger businesses, units with less than 10 employees required more
time to complete data requests and had lower survey response rates.

Netherlands

The  techniques  used  to  compile  the  2000  Labour  Cost  Survey  from  existing
sources  could  also  be  used  to  provide  results  for  units  with  less  than  10
employees, avoiding any additional burden on business.

At the moment, only three Member States  (Portugal,  United Kingdom  and the Netherlands)
currently include micro enterprises as part of the data collection for the four-yearly structural
statistics required by Regulation 530/1999.

4.

FEASIBILITY  OF  EXTENDING  COVERAGE  TO  ENTERPRISES  WITH  LESS  THAN  10
EMPLOYEES

The  extension  of  the  structural  surveys  to  micro  enterprises  must  take  into  account  the
practical constraints that exist across the different national statistical systems. One significant
issue is that in many Member States any increase in the statistical burden placed on employers
runs contrary  to  national statistical policy.  For such  countries three  possible  solutions  could
be:

– 

– 

– 

to make use of other national data sources;

to develop estimation procedures; or

to collect less detailed structural data from smaller enterprises.

The use of other national data sources can be an effective way of obtaining the required data.
However, the level of detail may not be sufficient, the definitions used may not exactly match
the statistical requirements or the results may not be available in time. Furthermore, the ability
to improve the statistical quality of data, e.g. in terms of definitions used or timeliness may be
limited if the the National Statistical Office is not directly responsible for the data collection.

A more feasible option for several Member States may be to apply estimation procedures to
existing  statistical  or  administrative  sources,  in  order  to  generate  adequate  results  for  micro
enterprises. Such procedures would need to be developed on a national basis and the quality
of the estimates would have  to  be  carefully evaluated,  particularly in  respect of the level of
detail and accuracy which can be obtained.

Finally,  it  may  be  possible  to  collect  from  micro  enterprises  structural  data  which  are  less
detailed than the data collected from larger enterprises. This would help to reduce the survey
burden for micro enterprises, but it would restrict the statistical results that could be produced
whenever micro enterprises are included in an analysis.

4

5.

THE NEXT STRUCTURAL SURVEYS IN 2004 AND 2006 - TRIAL PERIODS

A small number of Member States have indicated to Eurostat that they could provide data for
micro  enterprises  for  the  next  two  structural  surveys  in  2004  (Labour  Cost  Survey)  and  in
2006 (Structure of Earnings Survey). Other Member States will have to modify their existing
structural surveys or investigate the use of other sources and estimation techniques.

The  next  two  structural  surveys  could  therefore  act  as  a  trial  for  the  eventual  inclusion  of
these  small  statistical  units.  All  Member  States  would  be  invited  to  supply  data,  on  a
voluntary basis, for units with less than 10 employees. In this way, results from surveys, other
sources and estimation techniques could be evaluated and compared. The results could also be
compared with relevant statistics from the national accounts, which already include the effect
of micro enterprises. For meaningful conclusions, it is important that as many Member States
as  possible  are  encouraged  to  take  part  in  the  trial.  The  outcome  would  then  influence  the
final decision on the inclusion of these units in subsequent structural surveys, from 2008.

6.

RECOMMENDATIONS

In  principle,  the  inclusion  of  micro  enterprises  is  not  contentious  and  is  in  line  with  the
objectives of EU comparability and coherence with other EU business statistics and national
accounts. The difficulty lies in how inclusion can be achieved without undue cost and burden.
The recommendations below take into account the positions reported by Member States and
represent  a  pragmatic  longer-term  solution  to  be  tested  and  evaluated  by  Eurostat  and
Member States:

– 

– 

– 

– 

Member  States  that  are  already able  to  provide  structural  statistics  on  earnings  and
labour costs for micro enterprises will be asked to provide Eurostat with these data,
on  a  voluntary  basis,  for  the  Labour  Cost  Survey  in  2004  and  for  the  Structure  of
Earnings Survey in 2006.

Member  States  that  are  currently  not  able  to  produce  any  structural  statistics  on
earnings  and  labour  costs  for  micro  enterprises  will  be  asked  to  propose  cost-
effective approaches that can be developed to provide the necessary detail. This may
involve  the  application  of  statistical  estimation  techniques  to  existing  data  sources.
The approaches should be developed for testing in the Labour Cost Survey in 2004
and in the Structure of Earnings Survey in 2006.

Eurostat will study the actual results and the test results relating to micro enterprises
from the Labour Cost Survey of 2004 and the Structure of Earnings Survey of 2006
and will evaluate the quality of the results.

Subject to a satisfactory quality evaluation of the results for micro enterprises based
on  the  Labour  Cost  Survey  2004,  Eurostat  will  start  work  with  Member  States  to
establish a legal basis for the inclusion of statistical units of all sizes in the Labour
Cost Survey in 2008.

5

– 

Following a satisfactory quality evaluation of the results for micro enterprises based
on the Structure of Earnings Survey 2006, Eurostat will work with Member States to
establish a legal basis for the inclusion of statistical units of all sizes in the Structure
of Earnings Survey in 2010.

Eurostat

February 2003

Attachments

Annex 1:

Eurostat questionnaire

Annex 2:

Summary of questionnaire responses

6

Annex 1: Eurostat questionnaire

COUNCIL  REGULATION  (EC)  NO.  530/1999  CONCERNING  STRUCTURAL
STATISTICS ON EARNINGS AND LABOUR COSTS

Questionnaire to assess the implications of extending coverage to statistical units with less
than 10 employees

INTRODUCTION

Current  EU  legislation  concerning  structural  statistics  on  earnings  and  labour  costs  does  not
require  data  for  statistical  units  with  less  than  10  employees.  Yet  increasingly,  information
from small enterprises is required in order to provide a complete and coherent picture of the EU
economy.  However,  when  the  Council  Regulation  on  earnings  and  labour  costs  was  being
drafted, there was a concern that including these small units would be an unjustifiable burden
for Member States. Eurostat undertook to study the implications of covering this segment of the
economy and agreed to submit a report to the Council within four years.

Much  of  the  groundwork  for  the  report  has  already  taken  place.  Structural  business  statistics
and  national  accounts  now  require  the  coverage  of  small  enterprises,  and  this  has  generated
important  lessons  to  be  considered.  However,  additional  information,  more  specific  to  the
collection of data on earnings and labour costs from businesses, is still required to complete the
overall picture; that is the purpose of this questionnaire.

________________________________________________________________

The questionnaire is in two parts:

Part 1 - Structural statistics on labour costs

Part 2 - Structural statistics on earnings

Please complete the questionnaire by inserting your text into the document.

________________________________________________________________

7

Part 1 - Structural statistics on labour costs

Questions 1.1 - 1.7

1.1

1.2

1.3

Please describe any studies that  you have undertaken to  assess the burden and  data
quality  issues  in  relation  to  the  collection  of  labour  cost  data  from  statistical  units
with less than 10 employees.

____________________

Do  the  sources  you  use  for  the  four-yearly  structural  labour  cost  statistics  already
include statistical units with less than 10 employees?

_____________________

Could structural labour cost statistics be provided to Eurostat for statistical units with
less  than  10  employees,  in  accordance  with  the  definitions  and  transmission
requirements specified in Commission Regulation (EC) 1726/1999, starting from the
reference year 2004?

If the answer is NO, please indicate the reasons why and then continue with Question
1.4.

If the answer is YES, please turn to Part 2.

____________________

1.4

What  would  be  required  in  order  for  you  to  meet  the  requirements  of  Commission
Regulation  (EC)  1726/1999  in  respect  of  statistical  units  with  less  than  10
employees?

In responding to this question, please consider the following:

The  extent  to  which  your  existing  data  collections  can  be  adapted  to  include  these
units?
How  small  enterprises  are  represented  for  structural  business  statistics  under
Regulation (EC, Euratom) 58/1997?
How small enterprises  are  represented for the  estimates of employee compensation
in the national accounts (ESA 95)?
The possibility of exploiting suitable administrative data sources?
The use of statistical estimation techniques?

____________________

1.5

1.6

1.7

Would  there  be  any  additional  technical,  organisational  or  resource  issues  for  your
national  statistical  office,  in  order  to  provide  structural  labour  cost  statistics  for
statistical units with less than 10 employees?

____________________

How soon could the necessary labour cost data from statistical units with less than 10
employees be collected/estimated?

____________________

What  would be  the  additional  burden  placed  on  businesses  in  order  to  provide  this
information to Eurostat?

____________________

8

Part 2 - Structural statistics on earnings

Questions 2.1 - 2.7

2.1

2.2

2.3

Please describe any studies that  you have undertaken to  assess the burden and  data
quality issues in relation to the collection of earnings data for individual employees
in statistical units with less than 10 employees.

____________________

Do  the  sources  you  use  for  the  four-yearly  structural  statistics  on  earnings  already
include statistical units with less than 10 employees?

____________________

Could  structural  statistics  on  earnings  be  provided  to  Eurostat  for  statistical  units
with  less  than  10  employees,  in  accordance  with  the  definitions  and  transmission
requirements specified in Commission Regulation (EC) 1916/2000, starting from the
reference year 2006?

If the answer is NO, please indicate the reasons why and then continue with Question
2.4.

If the answer is YES, please stop and return the questionnaire to Eurostat.

____________________

2.4

What  would  be  required  in  order  for  you  to  meet  the  requirements  of  Commission
Regulation  (EC)  1916/2000  in  respect  of  statistical  units  with  less  than  10
employees?

In responding to this question, please consider the following:

The  extent  to  which  your  existing  data  collections  can  be  adapted  to  include  these
units?
How  small  enterprises  are  represented  for  structural  business  statistics  under
Regulation (EC, Euratom) 58/1997?
How small enterprises  are  represented for the  estimates of employee compensation
in the national accounts (ESA 95)?
The possibility of exploiting suitable administrative data sources?
The use of statistical estimation techniques?

____________________

Would there be any additional technical, organisational and resource issues for your
national  statistical  office,  in  order  to  provide  structural  statistics  on  earnings  for
statistical units with less than 10 employees?

____________________

How soon could the necessary  structural  statistics on earnings  from  statistical units
with less than 10 employees be collected/estimated?

____________________

What  would be  the  additional  burden  placed  on  businesses  in  order  to  provide  this
information to Eurostat?

2.5

2.6

2.7

9

Annex 2: Summary of questionnaire responses

10

11