Appendix B: Concepts and definitions

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The Human Resource Module (HRM) carries information on the number of employee and self-employment jobs, full-time equivalent employment, total number of hours worked and labour income, gross wages and salaries and supplementary labour income. Some of these basic concepts and definitions are described next. They are discussed from a total industry perspective first, that is to say, regardless of the source of demand, tourism or non-tourism.

In the HRM, total employment in an industry is the number of all employee and self-employment jobs in that industry. It should be noted that a job that exists for only part of the year (e.g., 4 months) counts as only a fraction of a job (1/3 of a job) for the year. It should also be noted that a part-time job at 10 hours a week counts as much as a full-time job at 50 hours a week; each is one job. For this reason, jobs are not a good measure of labour inputs to production.

A better measure is full-time equivalent employment in which part-time jobs are converted to full-time jobs on the basis of hours worked. For example, two part-time jobs of twenty hours per week would be equivalent to one full-time job at forty hours per week. Total hours worked is an even better measure of aggregate volume of labour inputs to production, and the one used in the Canadian System National Accounts (CSNA) to calculate labour productivity. The concept here is that of actual hours worked, not usual hours, and of hours worked, not hours paid (see Appendix C.1).

The value of labour inputs to production in an industry is measured by the labour income and a labour component of mixed income for all jobs in that industry. Labour income consists of gross (i.e., before tax) wages and salaries, including tips,^{Note 1} commissions, bonuses, as well as supplementary labour income which covers mandatory and non-mandatory employer contributions to pension plans and social insurance and health plans.^{Note 2} Mixed income is the income after expenses of unincorporated business accruing to the self-employed.^{Note 3}

Work is currently underway to develop estimates on the number of jobs that can be directly attributed to, or generated by, tourism demand. These estimates will provide the link between the HRM and the Canadian Tourism Satellite Account (CTSA) and National Tourism Indicators (NTI). Tourism employment in an industry (concept used in the CTSA and NTI) is the number of jobs generated by, or attributable to, visitor spending on the goods and/or services produced by that industry. The difference between tourism employment and total employment (concept used in the HRM) is the number of jobs attributable to non-tourism (i.e., not directly attributable to tourism demand).

As an example, if the full-service restaurants industry has a total of 100,000 jobs, only the share that is directly associated with tourism (say 25%, or 25,000 jobs) represents the tourism employment in this industry. Similarly, only 25% of the full-time equivalent employment, total hours worked and labour income is attributed to tourism. Derived variables, such as annual average hours worked and annual average wage and salary per tourism job, as well as the average hourly earnings per hour worked per tourism job are assumed to be the same for all jobs in an industry.

At the core of the CTSA and the NTI is the definition of tourism. Tourism is defined according to international standards as: “the activities of persons travelling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes not related to the exercise of an activity remunerated from within the place visited”. Persons who engage in tourism, so-defined, are called visitors. Visitors consist of tourists (those who visit and stay outside their usual environment for at least one night) and same-day visitors.

The definition of tourism is quite broad in that both personal and business trips are included. The international standard does not precisely spell out the notion of usual environment, thereby allowing a country to apply its own specifications. For operational purposes, Canada has defined the concept of usual environment as the area less than 80 kilometres one-way from home.^{Note 4} On the other hand, crossing an international boundary is considered tourism regardless of the distance travelled. It should be noted that not all travel is tourism. In particular, the definition rules out several types of travel, including commuting to and from work or school, travel by armed forces and diplomats, as well as migration.

Tourism demand is the spending by Canadian and non-resident visitors on domestically produced commodities. This spending has a direct impact on a wide range of industries, some more so than others. This leads to a definition of a tourism industry as one that would cease to exist without tourism, or would continue to exist only at a significantly reduced level of activity. By this definition, travel services is a tourism industry, while retail trade, which derives some of its business from visitors, is not. A tourism commodity is a good or service for which a significant part of its total demand comes from visitors. Air passenger transportation is a tourism commodity, while groceries, although occasionally bought by visitors, is not, because most groceries are bought by local residents.

Gross domestic product (GDP) can be defined as the unduplicated value of production of goods and services within the geographic boundaries of a country or region (e.g., province, territory).^{Note 5} Tourism GDP is the GDP that can be attributed to the production of goods and services consumed directly by visitors.^{Note 6} In the CTSA, tourism GDP is calculated as the sum of the labour income, mixed income (net income of unincorporated business) and other operating surplus (corporate profit and depreciation) that can be directly attributed to visitor spending.^{Note 7}

Several socio-demographic variables are available in the HRM. One of these, immigrant status, is defined as follows: an immigrant is a permanent resident who is not a Canadian citizen at birth or is a person who holds a study or work permit or who is a refugee claimant or is a family member living with a refugee claimant. A non-immigrant is a person who is a Canadian citizen at birth.

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Notes

1. The imputation of unreported tips in the CSNA is described in Appendix C, C.1.
2. Includes Medicare, dental plans, short-term and long-term disability plans, life insurance, etc.
3. Mixed income is found in the CTSA. For the HRM, an imputation is made for the labour component of mixed income. See the discussion of Appendix D: Methodology Step 1.
4. The operational definition of tourism has been revised with the new, redesigned Travel Survey of Residents of Canada. Tourism will now include all overnight “out of town” trips and same-day trips exceeding forty kilometres one way from home. In addition to the usual exclusions, routine trips, such as for grocery shopping, will be excluded even if “out of town” or over forty kilometres.
5. Unduplicated means that values are not double counted. If, for example, the value of fuel used by aircraft is counted along with airfares (which already include the costs of fuel inputs) the value of the fuel would be counted twice. Instead, only the value added (the difference between revenues from sales of goods and services produced and the cost of intermediate inputs of goods and services) at each stage of production is counted in GDP. It should be noted that GDP in the CSNA and CTSA is measured at basic prices. This means essentially that valuation is at the prices received by sellers, and does not include taxes on the sale of goods and services.
6. The qualifier “directly” is important. To continue the example from above, “directly” means that only the GDP generated in the production of passenger air transportation (which visitors consume in their travels) can be counted in tourism GDP, not any of the GDP or value added generated in the production of goods and services that are inputs to air transport (like the fuel which airlines use). It is in this sense that tourism GDP is directly attributable to visitor spending. There is, of course, GDP generated in the upstream production chain that can be attributed to tourism, but only indirectly. Estimates of indirect effects of tourism can be obtained from economic impact models.
7. In the CTSA, GDP is calculated using the sum of incomes generated by production approach, one of the three approaches to measuring GDP. The other two approaches are based on summing (1) the final expenditures on goods and services produced, and (2) the value added generated in the production of goods and services.