Classify this...

August 21, 2013

Kids go through a phase where they love to classify. Quartz rocks get piled with quartz rocks. Amethysts go in another pile. Limestone and shale go elsewhere. Then, they tally how many rocks are in each pile.

Statistics Canada does somewhat the same exercise on a much grander scale. As data arrive from surveys or census or administrative sources (bits gathered by other departments or agencies), the data are sorted into piles. Sub-piles and special tabulations follow.

But who decides what data go into which pile? Enter Standards Division.

Standards Division's role is to develop and implement classification systems, which at times involves working closely with counterparts in the United States and Mexico.

Classifying industries

Among the best known classifications is the North American Industrial Classification System (NAICS). NAICS was first developed at the time of the North American Free Trade Agreement to provide a consistent framework for the collection, tabulation, presentation and analysis of industrial statistics.

NAICS is widely used. When somebody wants to create a business, he or she must register with Canada Revenue Agency and request a business number. As part of that process, they must identify their business and self-code to a NAICS industry. Associations want to make sure they are well represented in NAICS to keep a handle on their industry. Labour organizations care because NAICS is used to show the distribution of labour across the economy.

Not every industry is the same in every country. For example, maple syrup production is important to Canada, but perhaps not as much to the United States and Mexico. That is why you will see a little US or CAN or MEX superscript on some industries to denote where the codes differ among the countries. But we have many trilateral classes.

Alice Born, Director of Standards Division, is frequently asked about the International Standard Industry Classification. While Canada, the United States and Mexico may have developed and adopted NAICS for the purposes of the free trade agreement, the three countries do consult and contribute to the international classification system and the last few rounds of revisions have brought NAICS closer to the international standard.

Classifying goods and services

Standards Division is also working to further develop the North American Product Classification System (NAPCS), a classification for all goods and services. It provides a larger umbrella for classifying and measuring goods and services in Canada.

NAPCS will allow Statistics Canada to track goods and services across a number of activities in Canada, from manufacturing, exporting and importing, to pricing and retail and wholesale trade. By using one classification system, Statistics Canada will be able to coherently measure the role, path and interrelations of goods and services in the country's economic machine.

For example, the maple syrup produced will have the same definition, unit of measure and code as the maple syrup exported to other countries and the maple syrup consumed by Canadians.

A class act!

Statistics Canada is bit different from other countries because Standards Division is responsible for all the classifications—industry, products, occupation, education, geography, economic accounts—used by Statistics Canada. Other countries adopt a more decentralized approach. "I don't want to say that we are the "standards" police, but everyone knows where to go to get their classifications," Ms. Born says. "It leads to a more coherent statistical system when the standards are centrally managed."

Consulting Canadians

The NAICS and the National Occupational Classification (NOC) are revised every five years. Standards Division consults with Canadians and internationally to ensure these periodic revisions keep pace with an evolving industrial structure and changing labour market.

Public consultations are now underway for the next NOC update in 2016 and NAICS update in 2017.

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