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Implementing Coding Tools for a New Classification Andrew Allen, UK Office for National Statistics Implementing Coding Tools for a New Classification Andrew Allen, UK Office for National Statistics

Operation 2007 - The players: • In the UK: The Standard Industrial Classification of Operation 2007 - The players: • In the UK: The Standard Industrial Classification of Economic Activities (SIC) (current version SIC (2003) • In Europe: NACE, the Nomenclature générale des activités économiques dans les Communautés européens (current version NACE Rev 1. 1) • In the UN: ISIC, the International Standard Industrial Classification of all Economic Activities (current version ISIC Rev 3. 1)

The UK SIC • is a 5 digit classification system • is required, by The UK SIC • is a 5 digit classification system • is required, by EU legislation, to be identical to NACE down to and including the 4 digit Class level • contains a national 5 th digit level which does not exist in NACE

The Results – changes in structure SIC 2003 SIC 2007 NACE Classes 514 615 The Results – changes in structure SIC 2003 SIC 2007 NACE Classes 514 615 NACE Classes not split 414 537 UK Sub Class splits 285 191 Total Sub Classes 699 728

ACTR as an aid to coding • ACTR – Automatic Coding by Text Recognition ACTR as an aid to coding • ACTR – Automatic Coding by Text Recognition • Developed by Statistics Canada • ONS standard tool for coding, initially industry and occupation • Replaces Precision Data Coder for industry coding • Determines a code from a text description • Extent of automation of process is controlled by parameters

Knowledge Bases – SIC 2003 • ACTR relies heavily on indexes of standard descriptions: Knowledge Bases – SIC 2003 • ACTR relies heavily on indexes of standard descriptions: – Business descriptions from responses to the Business Register Survey – Published index for the SIC 2003 – The short descriptions for each SIC 2003 code – Standard descriptions for construction industry statistics – Trade code descriptions for PAYE (Pay As You Earn Tax) employers – Farm type descriptions • With a total of > 30, 000 standard descriptions

How ACTR works • Each input description is converted to a standard form • How ACTR works • Each input description is converted to a standard form • This is compared with the standard forms of descriptions held in the knowledge base • The closeness is presented as a score between 0 and 10 • The system has rules to determine whether the score is sufficient to confirm a match: – Requires a score of more than 7. 5 to code automatically (our setting which may differ for other data sets) – Lower scores are passed through interactive coding • Coding does not depend on the order in which the knowledge bases are checked

Extract from Business Register Survey Questionnaire Extract from Business Register Survey Questionnaire

ACTR Process • Supplied text: Horticultural services • HORTICULTURAL SERVICE • Best fit index ACTR Process • Supplied text: Horticultural services • HORTICULTURAL SERVICE • Best fit index entry: Sales and service of horticultural machinery • HORTICULTURAL MACHINERY SALE SERVICE • Score is 6. 911 (out of 10) • ACTR prefers SIC 2003 code: 51880 (Wholesale of agricultural machinery and accessories)

Interactive coding • Scores below 7. 5 are passed to clerical staff for coding Interactive coding • Scores below 7. 5 are passed to clerical staff for coding interactively • The system presents options in descending order of score • If none of the choices appear good, staff modify the description • Once a decision is made, the person coding confirms the choice • The index description is then held on the IDBR.

Introducing the SIC 2007 (NACE Rev 2) • New index files: – SIC 2007 Introducing the SIC 2007 (NACE Rev 2) • New index files: – SIC 2007 headings – SIC 2007 index • Initially code forward from the SIC 2003 using bridging codes – these are codes for each knowledge base entry that link the SIC 2003 and SIC 2007 • Later will change to code backwards from the SIC 2007 • Eventually dual coding will cease

Impact of ACTR on IDBR at Micro Level • Existing SIC 2003 is 01120 Impact of ACTR on IDBR at Micro Level • Existing SIC 2003 is 01120 (Growing of vegetables etc) • The preferred ACTR SIC 2003 is 51880 (Wholesale of agricultural machinery and accessories) • The SIC 2007 comes from the bridging code – SIC 2003: 51880 – Bridging code: MTOLR – SIC 2007: 46610 • SIC 2003 code will change but only when agreed

Conversion to SIC 2007 • ACTR will deal with units that have a suitable Conversion to SIC 2007 • ACTR will deal with units that have a suitable business description • Conversion tables will deal with: – Units with descriptions that ACTR is unable to code (vague descriptions) – Units without a description – Units supplied through administrative sources (existing VAT traders, PAYE employers, Registered Companies)

Creation of Conversion Tables • Tables have been created to convert units from SIC Creation of Conversion Tables • Tables have been created to convert units from SIC 2003 to SIC 2007: – – – Using ACTR bridging codes Coding existing data through ACTR Producing cross-tabulation of SIC 2003 to SIC 2007 Allocating on a probability basis rounded to nearest 5% Validate relationships against the acceptable range of industries • Best fit tables also produced for users who cannot accommodate probability based conversion

Coding process Coding process

Impact on the IDBR at the Macro Level • Impact on SIC 2003 is Impact on the IDBR at the Macro Level • Impact on SIC 2003 is only on those reporting units that have business descriptions for local units, where ACTR can code. – – – ACTR codes ACTR does not code No business description Administrative data only Total local units 620, 000 210, 000 340, 000 1, 660, 000 2, 830, 000 • SIC 2007 comes from the bridging codes only where ACTR codes – otherwise SIC 2007 comes from conversion from SIC 2003

A AGRICULTURE, HUNTING AND FORESTRY B FISHING C MINING AND QUARRYING D MANUFACTURING E A AGRICULTURE, HUNTING AND FORESTRY B FISHING C MINING AND QUARRYING D MANUFACTURING E ELECTRICITY, GAS AND WATER SUPPLY F CONSTRUCTION G WHOLESALE AND RETAIL TRADE; REPAIR OF MOTOR VEHICLES H HOTELS AND RESTAURANTS I TRANSPORT, STORAGE AND COMMUNICATION J FINANCIAL INTERMEDIATION K REAL ESTATE, RENTING AND BUSINESS ACTIVITIES L SIC 2003 PUBLIC ADMINISTRATION AND DEFENCE; COMPULSORY SOCIAL M EDUCATION N HEALTH AND SOCIAL WORK O OTHER COMMUNITY, SOCIAL AND PERSONAL SERVICE ACTIVITIES P PRIVATE HOUSEHOLDS EMPLOYING STAFF AND UNDIFFERENTIATED Q EXTRA-TERRITORIAL ORGANISATION AND BODIES

Impact at SIC 2003 broad industry level (provisional counts) Section Starting stock In Out Impact at SIC 2003 broad industry level (provisional counts) Section Starting stock In Out Net Change A&B 167, 000 0. 5% 0. 6% -0. 1% C, D and E 180, 000 5. 9% 5. 2% +0. 7% F 260, 000 1. 4% 0. 9% +0. 5% G 530, 000 2. 4% 2. 5% -0. 1% H 188, 000 2. 3% 1. 6% +0. 7% I 116, 000 2. 7% 2. 4% +0. 3% J 58, 000 6. 5% 3. 3% +3. 2% K 872, 000 1. 2% 1. 3% -0. 1% L 29, 000 10. 4% 11. 1% -0. 7% 432, 000 2. 9% 3. 8% M, N and O -0. 9%

A Agriculture, Forestry And Fishing B Mining And Quarrying C Manufacture D Electricity, Gas, A Agriculture, Forestry And Fishing B Mining And Quarrying C Manufacture D Electricity, Gas, Steam And Air Conditioning Supply E Water Supply; Sewage, Waste Management And Remediation Activities F Construction G Wholesale And Retail Trade; Repair Of Motor Vehicles And Motorcycles H Transportation And Storage I Accommodation And Food Service Activities J Information And Communication K Financial And Insurance Activities L Real Estate Activities M Professional, Scientific And Technical Activities N Administrative And Support Service Activities O Public Administration And Defence; Compulsory Social Security P Education Q Human Health And Social Work Activities R Arts, Entertainment And Recreation S Other Service Activities T Activities Of Households SIC 2007

Correspondence between SIC 2003 and SIC 2007 for local units coded by ACTR Correspondence between SIC 2003 and SIC 2007 for local units coded by ACTR

Implementation timetable December 2006 NACE published January 2007 SIC 2007 is published on NS Implementation timetable December 2006 NACE published January 2007 SIC 2007 is published on NS website February 2007 Development and tuning of data coder (ACTR) – first release on 2007 basis, subject to revision June 2007 Re-coding using ACTR August 2007 New release of ACTR, using SIC 2007 index November 2007 SIC 2007 Index published (consistent with ACTR August 2007) January 2008 SIC 2007 fully implemented on the Register 2008 ? ? ACTR SIC 2003 overwrites historic SIC 2003

Conclusions • The ACTR tool delivers considerable savings in terms of cost and burden Conclusions • The ACTR tool delivers considerable savings in terms of cost and burden on businesses compared to traditional survey approaches. • The knowledge base is portable (i. e. independent of the coding engine), enabling sharing this with any interested parties, e. g. administrative data suppliers, to increase the consistency of coding. • The use of bridging codes permits simultaneous coding to multiple classification systems, essential if periods of dualcoding are required. • The knowledge base approach can help to inform the development of future versions of a classification, by providing a reference frame of business activity descriptions.