Economic Systems Analysis: Statistical Indicators (Studies in Systems, Decision and Control, 158) 3319912461, 9783319912462

Citation preview

Studies in Systems, Decision and Control 158

Elena V. Sibirskaya  Lyudmila V. Oveshnikova  Lilia A. Mikheykina · Innara R. Lyapina

Economic Systems Analysis: Statistical Indicators

Studies in Systems, Decision and Control Volume 158

Series editor Janusz Kacprzyk, Polish Academy of Sciences, Warsaw, Poland e-mail: [email protected]

The series “Studies in Systems, Decision and Control” (SSDC) covers both new developments and advances, as well as the state of the art, in the various areas of broadly perceived systems, decision making and control- quickly, up to date and with a high quality. The intent is to cover the theory, applications, and perspectives on the state of the art and future developments relevant to systems, decision making, control, complex processes and related areas, as embedded in the fields of engineering, computer science, physics, economics, social and life sciences, as well as the paradigms and methodologies behind them. The series contains monographs, textbooks, lecture notes and edited volumes in systems, decision making and control spanning the areas of Cyber-Physical Systems, Autonomous Systems, Sensor Networks, Control Systems, Energy Systems, Automotive Systems, Biological Systems, Vehicular Networking and Connected Vehicles, Aerospace Systems, Automation, Manufacturing, Smart Grids, Nonlinear Systems, Power Systems, Robotics, Social Systems, Economic Systems and other. Of particular value to both the contributors and the readership are the short publication timeframe and the world-wide distribution and exposure which enable both a wide and rapid dissemination of research output.

More information about this series at http://www.springer.com/series/13304

Elena V. Sibirskaya Lyudmila V. Oveshnikova Lilia A. Mikheykina Innara R. Lyapina •

•

Economic Systems Analysis: Statistical Indicators

123

Elena V. Sibirskaya Plekhanov Russian University of Economics Moscow Russia

Lilia A. Mikheykina Plekhanov Russian University of Economics Moscow Russia

Lyudmila V. Oveshnikova Plekhanov Russian University of Economics Moscow Russia

Innara R. Lyapina Orel State University named after I.S. Turgenev Orel Russia

ISSN 2198-4182 ISSN 2198-4190 (electronic) Studies in Systems, Decision and Control ISBN 978-3-319-91246-2 ISBN 978-3-319-91247-9 (eBook) https://doi.org/10.1007/978-3-319-91247-9 Library of Congress Control Number: 2018940628 © Springer International Publishing AG, part of Springer Nature 2019 This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. Printed on acid-free paper This Springer imprint is published by the registered company Springer International Publishing AG part of Springer Nature The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

Preface

A team of authors has prepared the textbook of social–economic statistics for university students studying “Economics” (bachelor’s degree program) in English. Sibirskaya Elena—Doctor of Economics, Professor of Department of Statistics of Plekhanov Russian University of Economics. Author of more than 200 scientific and teaching and methodological works. Sphere of interests is conducting basic and applied research, carrying out the expertise and providing advice on statistical analysis problems of Russian economy. Oveshnikova Liudmila—Doctor of Economics, Professor of Department of Statistics of Plekhanov Russian University of Economics. Author of more than 140 scientific and teaching and methodological works. Sphere of interests is scientific and applied research of national and regional economy on the basis of statistical methodology and instruments. Mikheikina Liliia—Ph.D. in Economics, Senior Lecturer of Department of Statistics of Plekhanov Russian University of Economics. Author of more than 40 scientific and teaching and methodological works. Sphere of interests is research of innovative activity on the basis of statistical methodology and instruments. Lyapina Innara—Doctor of Economics, Professor of the Department of Marketing of the Orel State University. Author of more than 180 scientific and teaching and methodological works. Sphere of interests is national and regional economy, business, marketing, innovations, investments, statistics, and researches. A knowledge of social–economic statistics, a system of economic indicators, and methodology for their calculation provides an opportunity to work in any sector of the economy. Professional foreign language proficiency for economics graduates is one of the conditions for successful work and career advancement. Russian business is more integrated into the global economy and a foreign language proficiency becomes the same basic skill as the ability to use computers. Besides, the enterprises and firms try to refuse the services of an interpreter and employ staff members with knowledge of foreign languages and ability to translate the specialized literature and documentation.

v

vi

Preface

Often, the knowledge of common foreign language is not enough in business and professional sphere and for effective communication with foreign experts in economy and finance sphere. In a globalized economy, the foreign language, especially English, becomes an important information product. It helps to make an objective assessment of the situation in the world economy, to strategize about more effective economy for the enterprise. This explains the development of professional literature in foreign language and creation of this textbook for studying the economic statistics. Statistical Indicators for Economic Analysis book is written with consideration that readers are familiar with the theory of statistics, which has formulated the general methods and principles of establishing the quantitative characteristics of mass phenomena and processes. This book describes the concepts, definitions, indicators, and classifications of social–economic statistics with consideration of the international standards and the present-day practice of statistics in Russia. Most of the chapters are described briefly, but the authors believe that, nevertheless, the book has plenty of material for studying. The book has 10 chapters, and here is a brief description of each chapter. Chapter 1. “Introduction to Economic Statistics” reviews the subject, method, and goals of social–economic statistics, main groupings, and classifications. Chapter 2. “Population Statistics” describes the target, subject, and sources of data on population statistics, the indicators, and main groupings of population distribution. Chapter 3. “Statistics of Living Standards of Population” reviews the concepts and systems of living standards indicators. Chapter 4. “Statistical Study of Labor Force” describes the concept of labor force and the goals of labor statistics. Chapter 5. “Statistics of Labor and Company Personnel” reviews the concepts of company personnel and its structure, the indicators of employees’ headcount turnover, the indicators of work time records and use, methods of studying the dynamics of labor productivity across a set of companies, and factor models in studying the dynamics of labor productivity. Chapter 6. “Macroeconomic Indicators in SNA” describes the system of national accounts, GDP, and other macroeconomic indicators. Chapter 7. “Statistics of Production” reviews the conceptual framework of production, the types of production by grade of its readiness in manufacture, the methods inventory of manufacturing and selling products, and the methods of statistical assessment of selling activity and production quality. Chapter 8. “Statistics of National Wealth” reviews the concept and structure of national wealth, the indicators of fixed assets availability and inventory. Chapter 9. “Statistics of Production Costs” reviews the concept and structure of production costs, the methods of studying the dynamics of production cost price and distribution costs.

Preface

vii

Chapter 10. “Statistics of Financial Outcomes of Company Operations” reviews the concept of gross profit and the types of profit, the quantitative characteristics of monetary relations in terms of emergence, allocation, use, and analysis of companies’ financial resources. The textbook is created for students in economic specialties (the academic bachelor’s degree program) and can be used as an auxiliary literature for the students in other programs. Moscow, Russia Moscow, Russia Moscow, Russia Orel, Russia March, 2018

Elena V. Sibirskaya Lyudmila V. Oveshnikova Lilia A. Mikheykina Innara R. Lyapina

Contents

1

2

3

4

.... ....

1 1

....

2

.... ....

4 6

..... ..... .....

7 8 9

Introduction to Economic Statistics . . . . . . . . . . . . . . . . . . . . . 1.1 Subject Matter, Method and Goals of Economic Statistics . 1.2 System of Indicators of Economic Activity Outcomes and Their Groupings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3 Main Groupings and Their Classifications Used in Economics and Economic Statistics . . . . . . . . . . . . . . . . . Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Population Statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 Target and Scope of Population Statistics . . . . . . . . . . . . 2.2 Sources of Statistical Data on Population . . . . . . . . . . . . 2.3 Population Size Indicators. Population Main Groupings and Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4 Statistical Study of Natural Movement of Population . . . 2.5 Statistical Study of Mechanical Movement of Population 2.6 Long-Term Calculations of Population Size . . . . . . . . . . Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . .

10 12 17 19 20

.........

23

. . . . .

. . . . .

23 27 29 30 35

Statistical Study of Labor Force . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 Concept of Labor Force and Goals of Labor Statistics . . . . . . . 4.2 Concept of Economically Active Population. Employed and Unemployed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

39 39

Statistics of Living Standards of Population . . . . . . . . . 3.1 Concept of Living Standards. System of Indicators of Living Standards Statistics . . . . . . . . . . . . . . . . 3.2 Population Income . . . . . . . . . . . . . . . . . . . . . . . . 3.3 Population Consumption and Consumer Spending . 3.4 Social Differentiation of Population . . . . . . . . . . . . Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

43

ix

x

5

6

7

8

Contents

4.3 Identification of Long-Term Size of Labor Force . . . . . . . . . . . Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

46 47

Statistics of Labor and Company Personnel . . . . . . . . . . . . 5.1 Concept of Company Personnel and Its Structure . . . . . 5.2 Indicators of Turnover of Number of Employees . . . . . 5.3 Indicators of Work Time Records and Utilization . . . . . 5.4 Indicators of Employees’ Engagement Level by Shifts . 5.5 Methods of Measuring Level and Dynamics of Labor Productivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.6 Studying Dynamics of Labor Productivity Over Set of Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.7 Use of Factor Index Models in Studying the Dynamics of Labor Productivity . . . . . . . . . . . . . . . . . . . . . . . . . 5.8 Measuring Increase in Product Output Due to Labor Productivity Change . . . . . . . . . . . . . . . . . . . . . . . . . . 5.9 Concept of Salary. Payroll Fund Analysis . . . . . . . . . . Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . .

51 51 55 57 62

......

63

......

65

......

66

...... ...... ......

68 69 73

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

..

75

.. .. ..

75 80 81

....

83

.... ....

84 86

....

90

Macroeconomic Indicators in SNA . . . . . . . . . . . . . . . . . . . . . . . 6.1 Concept of System of National Accounts, GDP and Methods of Its Calculation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2 Statistics of Other Macroeconomic Indicators . . . . . . . . . . . . Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Statistics of Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1 Concept of Production, Types of Production by Grade of Its Manufacture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2 Methods of Manufacturing Inventory and Selling Products 7.3 Assessment of Plan Fulfillment in Production Volume and Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4 Analysis of Uniformity of Production and Smoothness of Production Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5 Statistical Assessment of Sales Activity . . . . . . . . . . . . . . 7.6 Statistical Study of Production Quality . . . . . . . . . . . . . . . Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . .

. . . .

. . . .

. 91 . 92 . 99 . 102

Statistics of National Wealth . . . . . . . . . . . . . . . . . . . . . . 8.1 Concept and Structure of National Wealth . . . . . . . . 8.2 Indicators of Fixed Assets Availability and Inventory 8.3 Resources and Stocks of Tangible Current Assets . . . 8.4 Assessment of Efficiency of Using Objects of Labor . Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

. . . . . .

103 103 105 113 114 117

Contents

9

Statistics of Production Costs . . . . . . . . . . . . . . . . . . . . . . . 9.1 Concept and Structure of Production Costs . . . . . . . . . . 9.2 Classification of Production Costs . . . . . . . . . . . . . . . . 9.3 Study of Dynamics of Production Cost Price . . . . . . . . 9.4 Distribution Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.5 Indicators of Level and Dynamics of Product Unit Cost Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10 Statistics of Financial Outcomes of Company Operations . . 10.1 Concept of Gross Income and Profit. Types of Profit . . 10.2 Concept and Types of Profitability Indicators . . . . . . . . 10.3 Statistical Analysis of Profit from Product Sales. Factor Models in Profit Analysis . . . . . . . . . . . . . . . . . . . . . . 10.4 Index Methods of Profitability Analysis . . . . . . . . . . . . 10.5 Factor Models in Analyses of Profitability Indicators . . 10.6 Business Activity Indicators. Break Even Point . . . . . . Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

xi

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

119 119 120 121 122

. . . . . . 123 . . . . . . 125 . . . . . . 127 . . . . . . 127 . . . . . . 129 . . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

130 132 133 135 137

Chapter 1

Introduction to Economic Statistics

After studying this chapter, you will be able to know: The main definitions, the subject matter and method of social-economic statistics; the main goals, the theoretical and methodological foundations; the system of indicators, the key groupings and classifications used in economics and economic statistics; Skills to be acquired: The ability to characterize the role of statistics in the studies of social and economic phenomena and processes. Key points: 1. The subject matter, method and goals of economic statistics 2. The main groupings and classifications used in economics and economic statistics.

1.1 Subject Matter, Method and Goals of Economic Statistics Economic statistics is: (1) the area of knowledge—science encompassing a complex and multi-branch system of scientific disciplines (areas) which have a certain specificity, they study the qualitative aspect of mass phenomena and processes in inextricable connection with their qualitative aspect; (2) the area of practical activity—collecting, processing, analyzing and publishing mass data about the phenomena and processes of social life; (3) a set of digital data characterizing the state of mass phenomena and processes of social life or their totality; © Springer International Publishing AG, part of Springer Nature 2019 E. V. Sibirskaya et al., Economic Systems Analysis: Statistical Indicators, Studies in Systems, Decision and Control 158, https://doi.org/10.1007/978-3-319-91247-9_1

1

2

1 Introduction to Economic Statistics

(4) the area of statistics applying the methods of mathematical statistics for studying social and economic processes and phenomena. The target of economic statistics are mass economic and social phenomena taking place at the level of the overall economy of the country, the economy of regions or individual economic entities. The subject of economic statistics are the quantitative and qualitative characteristics of the specific results of an economic activity. The main goals of economic statistics are as follows: – providing government bodies with information required for them to make decisions on a broad range of issues related to the formation of economic policy, elaboration of various state programs and measures on implementing them; – providing company CEOs, managers, officers who set up production facilities with information on the development of economy and social sphere, required for their better understanding of the macroeconomic environment where their companies operate, in particular, when making decisions on investments, expanding production, organizing sales, etc.; – developing and constant refining of the indicator system of socio-economic processes; – developing and substantiation of data sources; – providing the characteristic of the socio-economic potential and its components: labor force, material and technological component, natural resource component and others. The theoretical foundation of economic statistics is the economic theory which reveals the whole system of economic phenomena and processes in their mutual relations and interdependence via economic categories and laws. The methodological foundation of economic statistics is the general theory of statistics which develops the statistical methodology, that is the statistical methods of collecting, processing, presenting and analyzing statistical data. The statistical methods used for researching mass economic and social phenomena, are as follows: times series; groupings; calculating averages; balance method; correlation-regression analysis and others.

1.2 System of Indicators of Economic Activity Outcomes and Their Groupings The key element of economic statistics is the system of indicators reflecting the numerical characteristic of various economic phenomena and processes, as well as of economics on the whole. The term “system of indicators” denotes an ordered set of interrelated and mutually agreed indicators characterizing the key aspects of the economic process and the

1.2 System of Indicators of Economic Activity Outcomes and Their Groupings Table 1.1 System of indicators Indicators of resources of Development indicators social-economic potential social-economic potential

3

Indicators of population income level

Indicators of labor force

Indicators of economic activity outcomes

Indicators of income differentiation

Indicators of national wealth

Indicators of costs

Indicators of nominal and real salary

Indicators of effectiveness

Indicators of income dynamics and so on Indicators of population consumption of material values and services

Indicators of foreign trade relations Indicators of finance and prices Others

economy in general. The indicators agreement enables to use them in combinations, as well as to calculate various coefficients having major analytical importance. The term “statistical indicator” has two meanings. First, it is a specific numerical characteristic of a certain phenomenon. Second, it is general outlining the content of a certain indicator, that is the elements to be included in the indicator. Outlining the content of an indicator and the methods of its assessment is called developing the methodology. It includes the following stages: – identifying the phenomena and processes to be studied statistically (identifying the type of data requiring development), formulating the goals for the computation of indicators; – identifying the content of indicators; – identifying the methods of assessing individual indicators, that is, which of them should be used for the assessment of various types of economic assets in the computation of the national wealth, the population size and so on; – identifying the main classifications to be applied for the distribution of the studied economic phenomena on the basis of certain criteria; – identifying the main sources of the data required for the computation of indicators, as well as the procedures of processing the collected data in order to obtain generalized indicators.1 Thus, the following groups are specified in the system of indicators (Table 1.1).

1 Economic

Statistics. 2nd edition, revised: Textbook/Edited by Yu. N. Ivanov.—M.: INFRA-M, 2002—480 pp—(Series “Higher Education”).

4

1 Introduction to Economic Statistics

1.3 Main Groupings and Their Classifications Used in Economics and Economic Statistics Classifications and groupings are an important tool of studying social and economic phenomena and organizing information. Classification in economic statistics is a systematized distribution of phenomena and objects to certain sections, groups, classes, positions, types on the basis of their similarities and differences. An attribute (a criterion) or several attributes (criteria) serve as the basis for classification. Classifier in statistics is a systematized list of units (industries, businesses, products, activities, fixed assets and so on), with each of them having a code assigned. The code substitutes the unit name and serves as the means of its identification, since the code is a mark or a set of marks adopted for identifying classification groupings and classification objects. System of economic classifications is a condition for ranking, analyzing, storing and efficient searching for information. The main classifications which are obligatory for use, stand for standards. Classifications are usually agreed by statistical services with information consumers and are the subject of harmonization at the international level. In order to identify the affiliation of phenomena and units to certain classes and groups, to the classifier, detailed guides and indices in the form of reference books, are compiled for the classifier. A classifier is added to and specified in nomenclature—a standard list of units and their groups (Fig. 1.1). In today’s conditions of Russia’s integration with the international community, the Unified System of Information Classification and Coding which was established in Russia, is an important means of achieving the authenticity and comparability of indicators. Classifications enable to establish quantitative characteristics of individual groups, their specific weight. Classifications of the branches of economy are necessary for allocating companies or their parts (divisions). Classifications of the economic activity types serve as a basis for analyzing the statistical data on manufacturing, factors of production and others. There are close relations between sector classifications and classifications of commodities. The International Standard Industrial Classification of All Economic Activities is the classification of the types of economic activities having a hierarchical structure. Certain modification for taking into account the national peculiarities is possible. Classifiers, with each of them describing its units of classification, are to ensure the interrelations of these units in information flows. A significant part of All-Russia classifiers are currently based on effective international classifiers. Control Questions 1. Name the subject, method and goals of social-economic statistics. 2. Describe the indicator system of the economic activity outcomes and their groupings.

5

Fig. 1.1 Groups of all-Russian classifiers

1.3 Main Groupings and Their Classifications Used in Economics …

6

1 Introduction to Economic Statistics

3. Describe the main groupings and classifications used in economics. 4. Name the sources for obtaining data for assessing and analyzing socio-economic information. 5. Describe the main statistical recording center in the country.

Bibliography 1. Godin, A.M. Statistics: Textbook / Godin, A. M. – 10th edition, revised and corrected. – Publishing and trade corporation “Dashkov and K°”, 2013. 2. Gusarov, V.M., Kuznetsova, E.I. Statistics: Textbook. 2nd edition, revised and supplemented. M.: YUNITI– DANA, 2012. 3. Eliseeva, I.I. Statistics: Textbook / Eliseeva, I.I., Kurysheva, S.V., Egorova, I.I. – M.: Prospect, 2015. 4. Melkumov, Ya.S. Social and economic statistics: Textbook / Melkumov, Ya.S. – M.: INFRA–M, 2013. 5. Methodology of statistical study of social and economic processes / Under edition of Minashkin, V.G. – M.: Yuniti– Dana, 2012. 6. General and applied statistics: Textbook for students of higher professional education. / Akhunova, R.N., Askerov, P.F., Akhunov, A.V.; Under general edition of Akhunova, R.N. – M.: NITS INFRA– M, 2013. 7. Salin, V.N. Statistics: Textbook / Salin, V.N., Shpakovskaya, E.P. – M.: KnoRus, 2014. 8. Social and economic statistics: Textbook / under edition of Efimova, M.R. – M.: Yurait, 2014. 9. Social and economic statistics: Textbook / Melkumov, Ya.S. – 2nd edition. – M.: NITS Infra– M, 2013. 10. Statistics: textbook for academic bachelor programs / Under edition of Eliseeva, I.I. 4th edition, revised and supplemented. – M.: Yurait, 2014. 11. Economic statistics: Textbook / Moscow State University named after M.V. Lomonosov (MGU); Under edition of Ivanov, Yu.N. – 4th edition, revised and supplemented. – M.: INFRA – M, 2011.

Chapter 2

Population Statistics

After studying this chapter, you will be able to know: The concept and main goals of demographic statistics and labor market statistics; the methodology of calculating the indicators of natural and mechanical population movement; the main categories of statistical study of the labor market: labor force; economically active population; employed and unemployed population; the positive and negative aspects of labor migration impact on the economic and social development of the country; Skills to be acquired: Analyzing and interpreting the data of Russian and foreign statistics about the size, structure, movement of population and labor force; using modern equipment and information technologies for meeting analytical and research goals. Key points: 1. 2. 3. 4. 5. 6.

Target and subject of population statistics. Sources of statistical data about population. Indicators of population size. Main groupings and distribution of population. Statistical study of natural population movement. Statistical study of mechanical population movement. Long-term calculations of population size.

© Springer International Publishing AG, part of Springer Nature 2019 E. V. Sibirskaya et al., Economic Systems Analysis: Statistical Indicators, Studies in Systems, Decision and Control 158, https://doi.org/10.1007/978-3-319-91247-9_2

7

8

2 Population Statistics

Demographic processes Processes of natural population movement and alternation of generations, that is reproduction (change of population size because of births and deaths, as well as marriages and divorces)

Processes of changing population structure (by gender, age, social and economic structure, education and literacy level, ethnic groups)

Processes of changing population distribution across territory

Processes of population migration (relocation of people across the borders of individual territories, especially with change of residence for a long period of time or forever)

Fig. 2.1 Demographic processes

2.1 Target and Scope of Population Statistics Population statistics is the oldest area of the science of statistics,1 which studies population and the processes related to population dynamics, from the quantitative side under specific conditions of social development. The target of population statistics is a set of people residing in a certain area or on the whole planet. The scope of study for this area of statistics are all the forms of population movement (natural, migratory, social movement) and the laws of population movement development. The goals of population statistics include: developing the methods of statistical records and control of the records quality of demographic events (births, deaths, marriages, divorces, migrations), the methods of constructing demographic indicators; the calculations of the size and composition of population in the periods between censuses, the long-term calculations of population size and composition; the social characteristic of population; the analysis of demographic processes dynamics and interrelations; organizing and conducting population censuses, developing census results, publishing statistical data on population. The main goal of calculating the indicators of population statistics is assessing the demographic situation established in the specific territory under specific conditions of location and time, the demographic situation forecast for the future. The processes demonstrated in Fig. 2.1, relate to demographic processes. Population statistics uses 2 groups of statistical methods: 1 Writing by ancient Chinese historian and philosopher Confucius contains one of the first mention-

ing about collecting data on population.

2.1 Target and Scope of Population Statistics

9

– generally recognized methods (of mass observation, data summaries and groupings, methods of studying dynamics, graphic studying of phenomena, index method, balance method)2 ; – specific methods developed only for studying population: methods of real and hypothetical generation. Method of real generation (cohorts) enables to consider the natural movement changes of people of the same age—longitudinal analysis. A real generation is a set of people who were born at the same period of time. The real generation method is based on calculating the indicators (birth rate, number of marriages, mortality rate) which characterize the pace of the demographic processes occurring in one real generation in different periods of its life. Cohort is a set of people simultaneously experiencing a certain event (marriage cohort; migrants and others). Generation is a frequent case of a cohort. The hypothetical generation method considers natural movement of people of the same age—cross-sectional analysis. In this method, indicators for the same period of time, but relating to different age groups, are summarized for obtaining the demographic activity summary indicator. This method is of the best applicability for assessing the demographic situation, it has a good predictive capability. In order to obtain a summary characteristic of a studied demographic process in general, a system of probability tables is used in the practice of statistics. The main indicators of such tables are as follows: the person’s age at the moment of the event occurrence for an each age group; the event occurrence probability for each age group; the number of individuals in each age group for who the event has occurred; the probability of being in the previous state. The following types of probability tables are used: tables of birth, mortality, number of marriages, divorce rate.

2.2 Sources of Statistical Data on Population The main sources of statistical data on population are as follows: – population censuses conducted on a regular basis, usually once per ten years, in some countries—once per five years. According to the UN experts’ definition, “Population census is the summarizing process of collecting, summarizing, assessing, analyzing and publishing demographic, economic and social data about all the population living at a certain moment of time in the country or in its distinctly limited part”; – current statistical records of demographic events, conducted on a continuous basis; – current registers (lists, card files) of population, which function on a continuous basis as well; – sample and special surveys.

2 These

methods are described in more detail in the theory of statistics.

10

2 Population Statistics

In population statistics, most frequently, an individual is a unit of observation, but sometimes a family serves as a unit of observation. In international practice, it is common to operate with households. A household, unlike a family, may consist of one person supporting himself/herself financially. Population in general, individual population groups, young families which were born within the year, those who died and others, can be the targets of statistical observation. A census program usually includes gender, birth date, age, marital status, a number of children, as well as occupation, type of work, employment status (owner or employee), source of income. In addition, the census program, as a rule, has questions characterizing the population literacy, professional qualification level, the number of years of education. Besides, censuses relatively often have questions regarding citizenship, participation in wars, mental and physical deficiencies, religious faith, the native language and the language used for communication, and others. An obligatory question is on where people are located at the critical moment of the census. These census data are used as the basis for constructing maps of internal and external migration. If the census program has a question on how far the place of work or studies is located from the person’s home, data on so-called commuting migration are obtained. Sometimes, for developing more detailed data, questions about the number of years in marriage, the number of marriages, the reason for divorce are included in the census program. Studies of living conditions are conducted as well: on the number of rooms where a family lives, the source of central heating, the availability of modern conveniences and so on. In the periods between censuses, the main data source is the current registration of demographic events (registering vital records, registering births and deaths). On the basis of registering demographic events, the birth rate is possible to calculate by the age of the mother and the father, their marital status, nationality, occupation, social group, territory of residence and so on; the mortality rate by the age and gender, by the cause of mortality, by the residence place, by the nationality. The current registration of demographic events is applied for calculating demographic indicators. Other sources of data on population are as follows: various lists of population compiled by different institutions for performing certain tasks; centralized electronic systems of automated population cards; sample surveys (micro-censuses of population); special surveys dedicated to in-depth study of some specific goal. Organizing them is less costly than conducting a census and a sample survey.

2.3 Population Size Indicators. Population Main Groupings and Distribution The indicators of population size, structure and movement, depending on the purpose they are required for, are calculated either by the resident population or by the present population (these are the population categories considered during census).

2.3 Population Size Indicators. Population Main Groupings and Distribution

11

Present population is the part of the population which is located in the given settlement at the point of keeping records, irrespectively of the permanent residence place. Resident population is the part of the population which constantly resides in the given settlement, irrespectively of the actual location at the point of keeping records. Temporarily absent are persons who have been temporarily absent in their permanent residence place (for the period not exceeding 6 months) at the point of keeping records. Temporarily present are individuals who have been temporarily located in the given settlement (for the period not exceeding 6 months) at the point of keeping records. There is interrelation between these categories of population, which is called the balance of population categories: Present population  Resident population + Temporarily present − Temporarily absent or Resident population  Present population − Temporarily present + Temporarily absent

(2.1)

Analytical and average indicators of time series are used for analyzing the population dynamics and size: pure and relative gains, growth rates, absolute count of 1% gain. The population size in any settlement varies greatly within a year, and for this reason, the average population size is identified in statistics for calculating a number of indicators. The average population size can be calculated by various methods. The most precise method is the method of calculating the average population size by the number of person-years lived by the population: S¯1  The number of person-years lived by the population for certain time period to divided by time period t

(2.2)

The arithmetical mean is calculated on the basis of the population size at the beginning and at the end of the period: S

Sb + Se 2

(2.3)

If the population size data for several equally spaced dates are known, then the average yearly population size can be calculated with higher precision, as the arithmetical mean for time series with equally spaced dates: S

S1 1

+ S2 + · · · + Sn−1 + n−1

Sn 2

(2.4)

12

2 Population Statistics

The arithmetic weighted average for time series with not equally spaced dates is as follows:  St S  (2.5) t where S is the average population size in the specific time interval, is the duration of this interval.

2.4 Statistical Study of Natural Movement of Population The change in the population size due to births and deaths is called natural movement of population. Absolute and relative indicators are calculated for studying natural population movement. Absolute indicators include the following: 1. Number of persons born within a year in the given region—(persons)—Gain; 2. Number of people who died within a year in the given region (persons)—Loss; 3. Natural population increase (loss) (persons): Natural increase  Increase − Loss

(2.6)

4. Number of marriages registered in the given country within a year (Marriages) or number of persons who entered into marriage (2 * Marriages); 5. Number of divorces (terminated marriages) in the given country within a year (Divorces) or the number of persons who terminated the marriage (2 * Divorces). As a rule, all the indicator of demographic statistics are calculated for the overall year. Relative indicators of demographic statistics include general and special indicators. General indicators include birth and mortality rates, marriage and divorce rates; rate of natural increase and birth-death ratio. All the ratios, except the birth-death ratio, are calculated in parts per thousand, that is per every 1000 persons of the population, and the birth-death ratio is identified in percentage (that is per 100 persons of the population). 1. Crude birth rate: Cb 

  B · 1000  P

Birth rate  Births divided by P multiplied by 1000 (‰), where P is the average yearly size of the present population of the region

(2.7)

2.4 Statistical Study of Natural Movement of Population

13

2. Crude death rate: Cd 

  L · 1000  P

(2.8)

Death rate  Loss divided by P multiplied by 1000 (‰) 3. Rate of natural increase: Cne 

  NE · 1000 or Cne  Cb − Cd  P¯

(2.9)

Rate of natural increase  Natural increase divided by H multiplied by 1000 (‰) or Birth rate − Death rate (‰) 4. Birth-rate ratio (Pokrovsky factor): CP 

B Cb · 100 or C P  · 100 (%) L Cd

(2.10)

Birth-rate ratio = Birth divided by Loss multiplied by 100 or Birth-rate ratio = Birth ratio divided by Loss ratio multiplied by 100 (%) 5. Marriage rate Cm 

  2∗ M · 1000  P¯

(2.11)

Marriage rate  2 multiplied by Marriages divided by H multiplied by 1000 (‰) Marriages—the number of marriages 6. Divorce rate: Cdiv 

  2 ∗ Div · 1000  ¯ P

(2.12)

Divorce rate  2 multiplied by Divorces divided by H multiplied by 1000 (‰), where Divorces is the number of divorces In addition to the general rates, special indicators are taken into account as well in demographic statistics: 1. Infant mortality rate characterizing the mortality level of infants before one year of age. Considering that in the current year, some infants born in the previous year, can die before one year of age, the infant mortality rate for the year is calculated as the sum of two components:   M0 M1 · 1000 (2.13) + m0  N0 N1

14

2 Population Statistics

where M0 is the number of infants who died before one year of age in the current year from the generation of infants who were born during the previous year, M1 —is the number of infants who died before one year of age in the current year from the generation of infants who were born during the current year, N1 is the number of infants who were born during the current year, N0 is the number of infants who were born during the previous year. 2. Age-specific birth rates are the number of infants who were born by women of a certain age group X per 1,000 of the average annual number of women of the given age group (Table 2.1): FX 

NX WX

· 1000

(2.14)

where NX_ is the number of infants born alive in women at the age “x”, W X is the average annual number of women at the age “x”. These rates are calculated by one-year and five-year age groups. 3. Special birth rate (fertility indicator) is the ratio of the infants who were born alive to the average number of women of reproductive age (15–49 years of age): F

N W15−49

· 1000

(2.15)

This indicator does not depend on the gender structure of the population, and in less extent than crude birth rate, it depends on the population age structure. 4. Age-specific mortality rate is the number of persons who died at the certain age X per 1000 persons of population of the given age on average per year: mX 

MX SX

· 1000

(2.16)

where MX is the number of those who died at the age “x”, S x is the average annual number of population at the age “x”. These rates are usually calculated by five-year groups of population. 5. Summary birth rate is calculated by means of dividing the sum of one-year agespecific birth rates by 1000. This indicator characterizes the average number of

Table 2.1 Scale for assessing special birth rate GBR

Total number of newborns per 1000 women of reproductive age

Characteristic of birth level

Less than 64 64–100 101–120

Low Medium Above average

121–160

High

161 and more

Very high

2.4 Statistical Study of Natural Movement of Population Table 2.2 Pattern of survivorship (mortality) table Age in Number Number Probability Probability years of persons of persons of death to survive who who die within the until the survived during next year age X + 1 until the transition of life age X from age X to age X+1 X

lX

dX

qX

PX

15

Number of persons living at the age X years

Number Mean of person- lifetime years of life ahead

LX

TX

0 eX

X+1

children who were born by one woman throughout her reproductive life (from 15 to 50 years of age).  Fx SBR  (2.17) 1000 Summary birth rate is the best indicator of birth. Its value depends neither on the peculiarities of the population age structure nor on the number of women of reproductive age. 6. Demographic load factor Demographic load factor  (Population under 15 years of age + Population above 15 years of age) divided by Population of 15−60 years of age

(2.18)

7. Population ageing rate3 Population ageing rate  (Population above 65 years divided by Population size) multiplied by 100 (%)

(2.19)

8. Indicator of the average expectancy of forthcoming life is the summary indicator of survivorship tables. Survivorship (mortality) table uses one-year age groups from the age of 0 (newborns) to 100 years of age (Table 2.2). The average duration of the coming life is understood as the number of years ahead for the given generation of born people to live, if we assume that throughout all the life of this generation, during the transition from one age to the other, the mortality will be equal to the today’s mortality level in individual age groups. The number of persons who survived until the age of X years, is set for 10,000 people.

3A

country is “demographically old” if the ageing rate exceeds 15%.

16

2 Population Statistics

The probability to die within the next year of life, that is during the transition from age X to the age X + 1 is calculated as follows: dX lX

qX 

(2.20)

The probability to survive until the next age can be established as px  1−qx

(2.21)

The number of persons living at the age of X years, reflects the average value from the number of persons who survived until this age and until the age X + 1. For all ages, except for 0 years old, it can be approximately calculated by the formula: LX 

lX + lX+1 2

(2.22)

The number of person-years of life ahead is the total number of person-years which are to be lived through by a set of people from age X to the ceiling age W including. It serves as intermediary auxiliary data for calculating the average population life expectancy: TX 

W 

LX

(2.23)

X

The average population life expectancy is calculated by means of diving the sum of probable person-years by the number of the studied persons: eX0 

TX  lX

W X

LX

lX

W 

X lX

+ lX+1 lX

(2.24)

The indicator of the average expectancy of the life ahead depends on the population mortality level which, in turn, depends on the social conditions of the population life. Survival rate, or transfer rate is calculated on the basis of mortality tables. It is calculated by comparing the average number of persons living in two adjacent age groups: PX 

LX+1 LX

(2.25)

Life (mortality) tables are composed for the overall country and for individual regions both for the entire population and for its individual categories (men and women, urban and rural population). They are used in analyzing the changes in the population size by means of natural increase, for calculating the long-term population size, as well as in the insurance business for identifying payment rates for persons of different ages.

2.5 Statistical Study of Mechanical Movement of Population

17

2.5 Statistical Study of Mechanical Movement of Population Migratory population movement (migration) is understood as population movement across the borders of the territory (country, region and so on) related to the change of residence, as well as to different locations of the residence and workplace. The key criteria of the migration classification are migration routes, extent of migration organizing, causes, temporal attribute. Reporting is the main form of a statistic observation over migration. Specially arranged observations are of auxiliary nature. In order to study the whole set of migration processes, statistics applies absolute and relative indicators of migration, method of analysis of time series, method of groupings, balance method, statistical tables and charts. Also, correlation-regression analysis is applied, which enables to identify the interrelation between the migration level, unemployment and the salary level in different countries. The following classification of migration types is applied (Table 2.3). The absolute indicators of migration include: 1. The number of persons who arrived in the given region, Arrived persons 2. The number of persons who departed from the given region, Departed persons 3. Population growth by migration in the region (balance of migration), persons. Population growth by migration  Arrived persons − Departed persons

(2.26)

Relative indicators of migration intensity characterize the frequency of the residence change cases in the population generality within a certain period of time. The

Table 2.3 Classification of migration types No. Classification attribute Migration type 1

Movement routes (range of distances travelled)

External, international (emigration and immigration) and internal (for Russia—inter-republican, inter-regional, inter-district, intra-regional, intra-district)

2

Causes

Political, economic (labor), social

3

Legality

Legal and illegal (unlawful)

4

Extent of organizing

Organized and non-organized (spontaneous) migration

5

Population categories

Migration of old residents and migration of new settlers (in fact, these are migrations of different population categories—resident and present population, respectively)

6

Independence of decision on migration

Voluntary, forced and quasi-forced (social and economic causes of urgent departure)

7

Period of relocation

With no return, temporary, seasonal, push-pull (regular trips which are not related to change of residence place)

18

2 Population Statistics

factors to follow are also calculated in parts per thousand, that is per every 1000 people of the population. 1. Arrival factor: Arrival factor Resident population divided by Population   size multiplied by1000 

(2.27)

2. Departure factor: Departure factor Departed population divided by Population   size multiplied by 1000 

(2.28)

3. Factor of population growth by migration: Factor of population growth by migration  Population growth by migration divided by Population size multiplied by 1000   C M  AF − D F 

(2.29) (2.30)

4. Factor of migratory turn intensity (C MOB ) characterizes the frequency of the cases of residence change on average per 1000 persons of the region population for the period:   A+D · 1000  ¯ P Migratory turn intensity factor  (Arrival + Departure) divided by Cmti. 

  Population size multiplied by 1000  (2.31)

5. Factor of migration efficiency Factor of migration efficiency  Arrival − Departure divided by Arrival + Departure (2.32) 6. Relative balance of migration Relative balance of migration  Arrival divided by Departure multiplied by 1000

(2.33)

2.5 Statistical Study of Mechanical Movement of Population

19

The value of overall population increase is calculated on the basis of the data on natural and migratory population increase: Overall population increase  Natural increase + Population growth by migration    Born people − People who died    People who arrived − People who departed (2.34) Overall population increase factor K opi is calculated: Overall population increase factor  Natural increase factor + Factor of population growth by migration Overall population increase factor  Overall population increase divided

  by Population size multiplied by 1000  (2.35)

2.6 Long-Term Calculations of Population Size Demographic forecast is a scientifically substantiated foresight of the future size and structure of population and its reproduction. The extent of precision of a forecast depends on the calculation period length on the nature of the source data, as well as on the extent of precision of assessing all the factors affecting in the long term the birth level, the mortality level, the intensity of migration processes and their route. The forecast of the overall population size is of limited value and is not informative. Forecasting the future population growth, in the first place by gender an age, is significantly more important, especially for economic and social planning. Long-term calculations of population for individual regions of the country are conducted with consideration of the intensity of migration processes and the structure of migrants by gender and age. Long-term population size is calculated on the basis of data on the natural population increase and population growth by migration for a certain period, and well as on the basis of the assumption whether the identified patterns will continue within the forecasted period of time. Long-term population size (Pn+1 ) is identified by the formula:   Copi t Pn+t  Pn × 1 + (2.36) 1000 where Pn is the population size at the beginning of the forecasted period; t is the number of years for which the calculation is forecasted; C opi is the overall population increase factor.

20

2 Population Statistics

Control Questions 1. 2. 3. 4.

Formulate the goals of demographic statistics. What are the sources of data about population? Name the classification attributes used in studying the population structure. Name the absolute and relative indicators of natural and migratory movement of population and the methods of their calculation. 5. Describe the range of issues covered by labor market statistics.

Bibliography 1. Arkhangelsky, V.M., et al. Practical demography/Arkhangelsky, V.M. et al. M.: TSSP, 2005. 2. Borisov, V.A. Demography: Textbook for higher education institutions. / Borisov, V.A. M.: NOTA BENE, 2005. 3. Godin, A.M. Statistics [Electronic resource]: Textbook / Godin, A.M., – 10th edition, revised and corrected. – Publishing and trade corporation “Dashkov and K°”, 2013. 4. Golodov, S.V. Demography and economy. Statistical analysis / Golodov, S.V., Kuznetsov, E.I. // Problems of adaptation of domestic economic and statistical methodology to international standards: collection of science articles / Financial University affiliated with the Russian Federation government; editor-in-chief Salin V.N., – M.: Nauka– Business– Paritet, 2013. – pp. 103–109. 5. Demographic definitional dictionary / Edited by professor Rybakovsky L.L. – M.: TSSP, 2003. – 352 pp. 6. Demographic encyclopedic dictionary / Editorial board: Valentei D.I., et al. - M.: Soviet encyclopedia, 1985. – 808 pp. 7. Demography and population statistics: Textbook / Eliseeva, I.I., Vasilieva, E.K., Klupt, M.A., et al.; edited by Eliseeva, I.I. – M.: Finance and statistics, 2006. – 688 pp. 8. Demography: Textbook / Under general editorship of Volgin N.A., M.: RAGS Publishing House, 2003. – 384 pp. 9. Demography: Schoolbook / joint authors; edited by Glushkova, V.G., Simagin, Yu.A. – 5th edition, stereotypical. – M.: KNORUS, 2010. – 288 pp. 10. Eliseeva, I.I. Statistics: Textbook / Eliseeva, I.I., Kurysheva, S.V., Egorova, I.I. – M.: Prospect, 2015. 11. Zvereva, N.B. Basics of demography: Schoolbook / Zvereva, N.V., Veselkova, I.N., Elizarov, V.V. – M.: Vyshaya Shkola, 2004. – 374 pp. 12. Klupt, M.. Demography of Earth’s regions. – St. Petersburg: Piter, 2008. – 347 pp. 13. Medkov, V.M. Demography: Textbook / V. M. Medkov. M.: INFRA-M, 2008. 14. Medkov, V.M. Demography: Textbook. – M.: INFRA-M, 2004. – 576 pp. 15. Melkumov, Ya. S. Social and economic statistics: Schoolbook / Melkumov, Ya.S. – M.: INFRA-M, 2013. 16. Methods of economic research: Schoolbook / Orekhov, A.M.. – 2nd edition. – M.: NITS Infra – M, 2013. 17. Population. Encyclopedic dictionary - M.: Big Russian encyclopedia, 1994. - 640 pp. 18. Basics of demography: Schoolbook / Kosov, P.I., Bereneeva, A.B. – 2nd edition, supplemented and revised. – M.: INFRA-M, 2010. – 288 pp. 19. Salin, V.N. Statistics: Schoolbook / Salin, V.N., Shpakovskaya, E.P. – M.: KnoRus, 2014. 20. Social and economic statistics: Textbook / edited by Efimova, M.R. – M.: Yurite, 2014. 21. Social and economic statistics: Schoolbook / Melkumov, Ya.S.. – 2nd edition. – M.: NITS Infra– M, 2013. 22. Statistical tools in regional economic research: Schoolbook / Khokhlova, O.A.. – Russian Economic University named after G.V. Plekhanov. – M.: Publishing house of Russian Economic University named after G.V. Plekhanov, 2014. – 143 pp.

Bibliography

21

23. Federal law of November 29, 2007 No. 282– FZ “About official statistical records and system of state statistics in the Russian Federation” (version of July 23, 2013). 24. Economic statistics: Textbook / Edited by professor Ivanov, Yu.N. – 4th edition, revised and supplemented. – M.: NITS Infra– M, 2013. 25. www.gks.ru – Official website of the Federal State Statistics Service. 26. www.ec.europa.eu/eurostat –Eurostat. 27. www.unstats.un.org – UN statistical department. 28. http://www.rosmintrud.ru – Ministry of Labor and Social Protection of the Russian Federation (Russian Ministry of Labor).

Chapter 3

Statistics of Living Standards of Population

After studying this chapter, you will be able to know: The goals and the statistic indicator system of the population living standards; the characteristic of the employed population working conditions (the number of working hours, the duration paid holiday and the number of days off, working conditions, labor disputes); the indicators of culture, education, health care and so on; the importance of the indicators of population living standards; Skills to be acquired: Analyzing and interpreting the indicators of population income; indicators of population spending and consumption of material goods and services; savings; indicators of population income differentiation, level and poverty line; social-demographic characteristics; making the general assessment of the population living standards. Key points: 1. 2. 3. 4.

Concept of living standards. System of statistic indicators of living standards. Population income. Population consumption and spending. Social differentiation of population.

3.1 Concept of Living Standards. System of Indicators of Living Standards Statistics Population living standards can be defined as a complex social and economic category reflecting the level of supply of necessary material goods and services to the population, the achieved consumption level of these material goods and services and the extent of satisfying reasonable (rational) needs. © Springer International Publishing AG, part of Springer Nature 2019 E. V. Sibirskaya et al., Economic Systems Analysis: Statistical Indicators, Studies in Systems, Decision and Control 158, https://doi.org/10.1007/978-3-319-91247-9_3

23

24

3 Statistics of Living Standards of Population

Pecuniary valuation of material goods and services actually consumed within the known time interval at the average household and corresponding to a certain level of satisfying the needs, represents cost of living. In broader sense, population “living standards” include the conditions of life, work, everyday life and spare time, health and education of a person, and the term “quality of life” is often used. Four living standards, demonstrated in Fig. 3.1, can be singled out. The main criteria characterizing the population living standards are the indicators of incomes and spending, the consumption of material goods and services, living conditions, GDP per capita, free time and others. These indicators are studied for the overall population and across social groups. In world practice, it is suggested to calculate the summary (integral) indicator of the population living standards—the Human Development Index (HDI). The Human Development Index is an integral indicator which is calculated on annual basis for cross-country comparison and measurement assessing the level of the average achievement of the country in three main human development areas: the longevity based on the healthy lifestyle, identified by the life expectancy at birth; the knowledge measured by the adult populations literacy level and the aggregate gross factor of people who entered primary, secondary and higher educational institutions; and the decent standard of living assessed by the GDP per capita in accordance with the purchasing power parity.

Fig. 3.1 Population living standards

Affluence (using the goods ensuring many-sided development of a person) Normal level (rational consumption of goods according to scientifically based norms) Poverty (consumption of goods at the level of maintainingworking capacity) Destitution (a set of goods and services, minimum acceptable by the biological criteria)

3.1 Concept of Living Standards. System of Indicators …

25

The Human Development Index is a standard tool in overall comparison of the living standards of various countries and regions. The index is published in the framework of the UN Development Program in the reports about human potential development. In calculating the Human Development Index, three types of indicators are taken into account: the life expectancy (longevity assessment); the population literacy level (the average number of years spent on education) and the expected duration of studies; the living standards estimated via the Gross National Income per capita in the Purchasing Power Parity in US dollars. The Human Development Index is calculated as the arithmetical mean of the three above mentioned indicators:  H D I  (I1 + I2 + I3 ) 3

(3.1)

The index of each indicator is calculated by the formula:  Ii  xi − ximin ximax − ximin

(3.2)

where x i is the actual value of the indicator; x imin and x imax are the minimal and maximal values of the indicator, respectively. Currently, the generalized system of indicators has been developed, which characterizes the quantitative and qualitative features of the social and economic differentiation of social development (Table 3.1). The report by Stiglietz-Sen-Fitoussi specifies the following key parameters of human well-being: the material level of living, economic security, health, educa-

Table 3.1 Generalized system of indicators Factor

Description

Differentiation factor of human potential development index

It characterizes the extent of difference in the social and economic development of the analyzed countries, the regions inside a country, social groups

Differentiation factor of health index (longevity)

It indicates to what extent the health condition in one country (region) is better than in the other It indicates to what extent the population education level in one country (region) is better than the population education (literacy) level in the other country

Differentiation factor of education index

Differentiation factor of income index

It characterizes the degree of economic differentiation of analyzed countries or regions

Differentiation factor of mortality index

It demonstrates the difference in the health condition of compared countries or regions

26

3 Statistics of Living Standards of Population

tion, personal activities, including work, personal security, social connections and relations, environment conditions, voting right and governance. The study by Layard describes the main well-being factors which he calls “Big Seven”: family relations, financial situation, work, communities and friends, health, personal freedom (as it is understood by democratic society) and personal values (people outlook on life). Although this list is not exhaustive, empirical studies demonstrate that life satisfaction mainly depends on these factors. Eurostat expert group on developing the quality of life indicators (on the basis of the Eurostat paper published in March 2010)1 provided guidelines to assist countries in measuring indicators which can be used for cross-country comparisons. These indicators comply with the guidelines of the Sponsorship Group on Measuring Progress, Well-being and Sustainable Development (initiative of Eurostat and INSEE). The OECD How’s Life report defines human well-being by eleven attributes grouped by categories “material well-being” (income and wealth, work and earnings, accommodation) and “quality of life” (health condition, education and skills, balance between work and personal life, social connections, civil society involvement and governance, environment qualities, personal safety and subjective well-being). The attributes chosen by the OECD, are based on those suggested in the report by StiglitzSen-Fitoussi. In 2010, the indicators measuring the Human Development Index were expanded, and the index was significantly adjusted. In addition to the utilized Human Development Index which is a summary indicator based on the country average statistical data, and does not consider the internal inequality, three new indicators were introduced: – Inequality-adjusted Human Development Index; – Gender Gap Score; – Multidimensional Poverty Index. In Russia, a seven category system of population living standards indicators has been developed: 1. Summary indicators (GDP and GNI calculated in constant prices per capita; Infant Mortality Rate; Life Expectancy at Birth; Human Development Index). 2. Population income. 3. Population consumption and spending. 4. Population money savings. 5. Accumulated property and provision of population with housing. 6. Social differentiation of population. 7. Poorer strata of population. Provision of population with housing is the proceed from dividing the housing stock at the year end by the size of the resident population of the country (region) on the same date. It can be calculated on the basis of:

1 http://epp.eurostat.ec.europa.eu/portal/page/portal/gdp

and beyond/achievements.

3.1 Concept of Living Standards. System of Indicators …

27

– the total area of the housing stock2 ; – the residential area. For studying the provision of population with housing, the following indicators are calculated as well: the number of families registered on the waiting list for being provided with state housing; the number of families which improved their housing conditions; the average amount of square meters of residential area per person. In order to study the poorer strata of the population, the following indicators are applied: the amount of the minimum living wage3 ; the minimum wage4 ; poverty factor.5 “Poverty line” indicator reflects the income level which is necessary for maintaining the subsistence living.

3.2 Population Income Population income are the resources in monetary and physical terms which can be used for satisfying the personal needs and which are the basis of the population material well-being. Aggregate monetary incomes cover the entire range of the means of subsistence reaching the population, including free services and services bringing benefits. In real-valued form, population aggregate incomes are subdivided into monetary and in-kind incomes. Population monetary incomes6 are defined as the sum of all monetary receipts to the population, which are available for current consumption and do not reduce the population savings by means of spending financial and non-financial assets or increasing liabilities. Earned income includes the remunerations related to population participation in economic activities. The earned income indicator consists of: 2 Housing

stock is the totality of all living quarters irrespectively of their ownership type, including residential houses, special purpose buildings (dormitories, shelters, premises for temporary residence of refugees and forced migrants, houses for the lonely old-aged, nursing homes for disabled and others), apartments and other living quarters suited for dwelling. Housing stock does not include structures and premises designated for rest, seasonal and temporary residence: country houses, summer garden cottages, sports and tourist lodges, motels, camping sites, sanatoriums, holiday houses, resort hotels, hotels, barracks, railways cars and others. 3 The amount of the minimum living wage in Moscow in 2016 (the 1st quarter data) per capita is 15,041 roubles per month; for children—13,198 roubles per month, for pensioners—10,623 roubles per month. The amount of the minimum living wage in Russia in 2016 (the 1st quarter data)—per capita is 9776 roubles per month; for pensioners—8025 per month; for children—9677 per month. 4 In Russia, it amounts to 7500 roubles per month (Federal Law of February 06, 2016 “On Amending the Minimal Monthly Wage”). In Moscow, it amounts to 17,300 roubles. 5 The share of the poor in Russia as of the end of March 2016 was 15.9%. It is worth mentioning that one year before, this indicator amounted to 13.8%, and at the end of 2014—11.2%. 6 The methodological provisions on calculating the indicators of population incomes and spending [Electronic resource]//Available: http://www.gks.ru/wps/wcm/connect/rosstat_main/rosstat/ru/ statistics/population/level/# (Accessed 14 October 2016).

28

3 Statistics of Living Standards of Population

(a) incomes of people who are employed; (b) incomes from self-employment (incomes from entrepreneurial business and other manufacturing activities); (c) welfare payments; (d) property incomes; (e) other monetary receipts. The indicators of incomes of employed workers (salary) are formed on the basis of companies’ data about the pays for their employees’ work, about the amount of the monetary allowances of military men and other payments to employees which are not considered in the payroll. Incomes from entrepreneurial business and other manufacturing activities include the following components: – – – –

incomes from work of self-employed; incomes from leasing accommodation or the other property; royalties; directors’ remuneration and other similar pays to the individuals in the company management body (the Board of Directors or the other similar body).

Welfare payments include paying pensions, allowances, public assistance, stipend and insurance indemnities. Property incomes are defined as receipts related to making gains on financial assets (gains on financial assets), as well as to other receipts related to implementing property rights to financial assets, patented materials or materials governed by copyright. In the framework of the present methodological provisions, property incomes include the following types of receipts: dividends,7 interest paid for money on individuals’ bank accounts in lending agencies; payment of yield on state-issued securities and other securities; investment income (property income of policy holders). Other monetary receipts. They include money orders estimated by the data of the Balance of Payments, the Russian Post and the Bank of Russia; lottery gains and other gambling operations; incomes from handing recyclable materials for recycling; incomes hidden from taxation by means of illegal conversion of money in cash; incomes from selling financial assets; compensation payments to some categories of individuals, which are established by Sberbank data; interest (except for interest for mortgage-backed bonds emitted before 01.01.2007); interest (discount) received when promissory note presented for payment, was paid; material benefit received from saving on interest for the taxpayer’s use of borrowed (credit) funds received from companies or individual entrepreneurs, from purchasing goods (works, services) and securities; other receipts not distributed along the items of population monetary incomes’ formation, present in official reports.

7 Data are provided by the Federal Tax Service of Russia at the federal level with the breakdown

the constituent entities of the Russian Federation (Form No. 2-NDFL).

by

3.3 Population Consumption and Consumer Spending

29

3.3 Population Consumption and Consumer Spending Monetary expenditures8 of households is the amount of actual expenditures incurred by the household members within a certain period of time, and they include consumer spending, as well as non-consumer related spending. Population expenditures are identified on the basis of the sum of individual components: – consumer spending; – mandatory payments and various fees; – other expenditures of population. Consumer spending includes spending of individuals on purchasing goods and paying for services, as well as payments for goods (works, services) made abroad by bank cards. They include expenditures on purchasing goods in retail outlets and outside them, as well as through wholesale store networks; expenditures on paying for services (paying for personal services, paying for transport services; paying for communication services, paying for utility services including paying by people for their residing in living quarters; expenditures on maintaining and redecorating living quarters,9 paying for the services of cultural institutions, paying for tourist services, paying for the services of hotels and similar means of accommodations, paying for the services of physical culture and sports, paying for medical services, paying for sanatorium and recovery services, paying for veterinary services, paying for legal services, paying for education system services, paying for social services provided to seniors and the disabled, paying for other types of services, paying for intermediary services when conducting transactions on real estate purchase and sale and leasing real estate, rent for living quarters10 ); amount of payments for goods (works, services) produced abroad, by means of bank cards. Mandatory payments and various fees include taxes and duties actually paid by population; insurance payments; fees to public and cooperative organizations; interest paid by population for loans (including currency loans), as well as taxes and

8 Methodological

provisions on calculating the indicators of population monetary incomes and expenditures [Electronic resource] // Available: http://www.gks.ru/wps/wcm/connect/rosstat_main/ rosstat/ru/statistics/population/level/# (Accessed 14 October 2016). 9 The scope of utility services takes into account the amounts of reductions on their payments if the reductions are provided via money transfer to people’s bank accounts. If the provided social support is considered in the utility bills (with subsequent reimbursement of the expenditures incurred by organizations for these purposes), then the scope of utility services reflects the actual amount paid by population (without subsidies and social support). 10 They are calculated at the federal level with the breakdown for the constituent entities of the Russian Federation on the basis of the data of OBDKH (Study of Households’ Budgets) and VPN2002 (Russian Census of 2002).

30

3 Statistics of Living Standards of Population

duties,11 purchasing lottery tickets and other expenditures on gambling business; sending money orders by population. The case when population profits exceed expenditures, demonstrates increments of assets in the form of cash. The case when population expenditures exceed profits, demonstrates the population expenditures were partly funded by means of reducing the assets of households.

3.4 Social Differentiation of Population One of the aspects of studying the population living standards is social differentiation.12 Social differentiation is a social-economic concept describing the society stratification into groups of people which differ in their social status and incomes. Society has political, economic and social differentiation. Political differentiation in any modern society occurs by means of population stratification into the managers and the manageable, into political leaders and the rest—broad masses of people. Economic differentiation pinpoints to the differentiation of population incomes, people living standards, it identifies the rich, the middle and the poor population strata. A person’s occupation, profession identifies the professional differentiation of the society. The key group of factors affecting the incomes differentiation, are significant differences: in the amount of monetary payments from the social consumption funds; in the salary amounts of employees working in public production; in the opportunity of receiving incomes from redistribution and participation in labor activities, from news forms of cooperation; in the amounts received from personal subsidiary plot; in the amounts and structure. Incomes differentiation demonstrates differences in the consumption of goods and services by people, that the differences in the population living standards. Population incomes differentiation is based on the amount of the total income per capita. Italian economist V. Pareto who researched the issues of income distribution, established that inequality in incomes is inherent to all states in approximately equal proportions.13 11 They include income taxes of individuals including those who are not tax residents of the Russian Federation, individual entrepreneurs with different taxation mode and other taxes, duties, penalties, customs payments, and are identified by the data of the Federal Tax Service of Russia and the Bank of Russia. 12 Differentiation is the term of Latin origin. It means difference, inequality, dividing and stratification of the whole into various parts, stages and forms. 13 This conclusion hereinafter was called the Pareto Principle. It states that there is an inverse proportion between the level of incomes and the number of income recipients: 80% of the GDP is controlled by 20% of population, and the remaining 20% of the GDP is distributed among 80% of population. For this reason, the Pareto principle is called “80/20 rule”.

3.4 Social Differentiation of Population

31

Differentiation in statistics is the extent of difference between two samplings. Analysis of population incomes differentiation is conducted by means of the system of indicators: the average size of income per capita; the modal size of the average monetary income per capita; the median size of the average monetary income per capita; the decile factor of income differentiation which indicates by what factor the minimal incomes of 10% of the wealthiest population exceed the maximal incomes of the 10% of the poorest population. The decile factor of income differentiation is calculated as the ratio of the ninth decile (d9 ) to the first decile (d1 ): Cid 

d9 d1

(3.3)

Deciles are the options dividing the series of increase into ten equal parts. The first decile cuts off 1/10 part of the totality, and the ninth decile cuts off 9/10 parts. Deciles are calculated by similar formulas: 1  f i − Sd1 −1 10 d1  xd1 + i f d1 9  f i − Sd9 −1 d9  xd9 + i 10 (3.4) f d9 where xdI is the lower boundary of the interval containing decile; i is the decile interval value; f di is the frequency of the interval containing decile; Sdi−1 is the accumulated value of the interval preceding the interval containing decile. Quartiles represent the totality of the attribute dividing the ranked totality into four equal parts. There is quartile of the first order (lower quartile) and quartile of the third order (upper quartile). Each of them cuts off respectively ¼ and ¾ of the totality. The following formulas are used for calculating quartiles: 1  f i − S Q 1 −1 4 Q 1  x Q1 + i f Q1 3  f i − S Q 3 −1 Q 3  x Q3 + i 4 (3.5) f Q3 where xQ is the lower boundary of quartile intervals; i is the range of the interval; f is the sum of frequencies; SQ−1 is the accumulated frequency of the interval preceding the lower quartile; SQ−3 is the accumulated frequency of the interval preceding the upper quartile; fQ1 —fQ3 is the frequency of the quartile interval.

32

3 Statistics of Living Standards of Population

Line at angle of 45º A

B

Lorenz curve

Fig. 3.2 The Lorenz curve

Gini coefficient of income distribution. It measures to what extent the actual distribution of incomes across the numerically equal population groups, differs from homogeneous distribution of incomes, and it is calculated by the formula:   G 1−2 Xi cum Y i  Xi Y i, (3.6) where Xi is the share of the population of i-st group in the total population size; Yi is the income share of each i-st group; cum Yi is the accumulated income share of each i-st group of population; i  1, 2, …, n is the number of social groups of the population. Income equality measure fluctuates from 0 to 1, when the value is 0, it denotes absolute equality of the incomes of all the population groups, when the value is 1, it means absolute inequality, that is, the close the value is to 1, the higher incomes are concentrated in individual population groups. The extent of incomes inequality can be traced on Lorenz Curve (Fig. 3.2). The Gini coefficient14 can be calculated along the Lorenz curve as the ratio of the area between the lines of the homogenous and actual distribution to the sum of the areas A and B which is equal to ½. Corrado Gini proposed the calculation formula (the Brown formula): 14 The Gini method is one of the statistical analysis theories of the economic situation on the state and regional scale by a non-representative set of random variables having a different nature and interconnected through correlation.

3.4 Social Differentiation of Population

G 1−



33

(X k − X k−1 ) (Yk − Yk+1 )

(3.7)

In this formula, X k and Y k are not bigger than the parts of the population ranked by their income level, and the respected shares of money they receive. Please note that n is the number of households having their share in the aggregate product. All the categories of income recipients are usually broken down by the group characteristic into five parts (quintiles), and in each group, calculation is made of the factor of correspondence of the current financial well-being distribution to the country citizens. The range of the Gini coefficient values varies from 0 to 1, and the higher its value is, the more differentiated in wealth the society is. In analyzing the structural differences in incomes, the system of indicators which includes individual and summary indicators, is applied. Individual indicators include: – the “absolute” indicator, the dimensionality of this indicator is indicated in %. di  di A − di B

(3.8)

– relative indicator Cdi 

di A di B

(3.9)

where di A , di B is the proportion of the i-st structural group of units A and B. When comparing two structural characteristics of incomes, the following summary indicators are used: Linear and quadratic structural differences coefficients named after Kazinets. Linear I d and quadratic σd structural differences coefficients named after L. Kazinets of two structures are calculated in the following way: – when comparing two structures A and B  Id   σd 



|d B − d A | k

(3.10)

(d B − d A )2 k

(3.11)

where d A , d B is the specific weight of the structural group of territory A and B; k is the number of structural parts (groups). K. Gateev integral coefficient of structural differences is calculated by the formula:  (d B − d A )2 CG   2  2 (3.12) dB + d A

34

3 Statistics of Living Standards of Population

A. Salai structural differences index is identified in the following way: 

2   dB − d A  dB + d A Is  k

(3.13)

If K. Gateev integral coefficient of structural differences or A. Salai structural differences index are close to zero, this demonstrates that there are no structural shifts in the population incomes. If the coefficients are equal to 0.4–0.5, significant changes in the structure are observed. The indicators of size, structure and dynamics of the living wage are important as the main tools of assessing the country’s population living standards. The living wage is the valuation of the basket of goods, as well as the mandatory fees and duties.15 The overall living wage for the Russian Federation is designated for: assessing the living standards of the Russian Federation population when social policies and federal social programs are developed and implemented; the substantiation of the minimum wage set forth at the federal level, as well as for establishing the amounts of stipends, allowances and other welfare payments set forth at the federal level; the federal budget formation; other purposes set forth by the federal law. The living wage in the Russian Federation constituent entities is designated for: assessing the living standards of the population of a respective constituent entity of the Russian Federation when regional social programs are developed and implemented; providing necessary state welfare assistance to needy individuals; formation of the budgets of the Russian Federation constituent entities; other purposes set forth by the federal law. The procedure for calculating the amount of the living wage in the constituent entities of the Russian Federation is executed in accordance with the general principles and approaches stipulated by the Rules of calculating the living wage amount per capita and across the major social and demographic groups of population on the whole in the Russian Federation, approved by the resolution of the Russian Federation government of January 29, 2013 No. 56. When the price is calculated of the foodstuff for the basket of consumer goods for the main social and demographic groups of population, it is recommended to use the list of representative foodstuff for identifying the level of consumer prices on foodstuff when calculating the amount of the living wage, adopted by the joint Order of the Russian Federation Ministry of Labor and the Federal State Statistics Service of March 11, 2013 No. 93n/91.16 This list can vary with consideration of the natural and climate conditions, national traditions and local peculiarities of food item consumption by the key social and 15 Federal Law as of October 24, 1997 No. 134-FZ “On the Living Wage in the Russian Federation” (edition as of December 3, 2012). 16 It was placed on the official website of the Ministry of Labor of the Russian Federation under the Document Bank section.

3.4 Social Differentiation of Population

35

demographic groups of the population in the constituent entities of the Russian Federation, as well taking into account the availability of food items in the regional consumer markets. According to this law, the basket of consumer goods includes the minimum food baskets (in physical terms), as well as non-food goods and services, with their cost identified as the ratio to the cost of the minimum food baskets (50% of the food cost) required for maintaining a person’s health and life support. Data on the consumer goods basket cost are provided per person per month. Starting from 2000, the amount of the living wage has been designated on the quarterly basis via the consumer goods basket stipulated by the federal law, and via the data of the Federal State Statistics Service about the level of the consumer prices on food items, non-food goods and services. The overall amount of the living wage for the Russian Federations is specified by the government of the Russian Federation. Control Questions 1. Describe the concept of “the living standard”. 2. What are the interrelations between disposable income, adjusted disposable income and real disposable income? 2. Name the key indicators of the population income and explain the interrelations between them. 3. Name the key indicators of the population spending and explain the interrelations between them. 4. Describe the integral indicators of the living standards. 5. Which indicators are taken into consideration in calculating the human development index? 6. How is the balance of the income and expenditures of the population constructed? 7. Which indicators are used for describing the population distribution in incomes? 8. How is the decile income gap ratio calculated? 9. For what purpose was the concept of living wage adopted in Russia?

Bibliography 1. Aivazyan, S.A., Mkhitaryan, V.S. Applied statistics and basics of econometrics: university textbook. – M.: YUNITI, 1998. – 1022 pp. 2. Godin, A.M., Statistics [Electronic resource]: Textbook / Godin, A. M. – 10th edition, revised and corrected. Publishing and trade corporation “Dashkov and i K°”, 2013. 3. Demographic concept dictionary/ edited by Rybakovsky, L.L. M.: Center of social forecasting, 2003. 4. Population incomes differentiation [Electronic resource], http://ru.wikipedia.org/wiki/%D (Accessed October 16, 2016). 5. Dubrov, A.M., Mkhitaryan, V.S., Troshin L.I. Multidimensional statistical methods: Textbook. – M.: Finance and statistics, 2000. – 352 pp.

36

3 Statistics of Living Standards of Population

6. Eliseeva, I. I. Statistics: textbook / Eliseeva, I.I., Kurysheva, S.V., Egorova, I.I. – M.: Prospect, 2015. 7. Kachanova, N.N. Statistics of population living standards: schoolbook / Kachanova, N.N., Glebkova, I.Yu., Dolbik-Vorobei, T.A.; edited by Salin, V.N. Moscow: KNORUS, 2016. 182 pp. (Bachelor and Master degree programs). 8. Methodological provisions on calculating indicators of population monetary spending and expenditures [Electronic resource], http://www.gks.ru/wps/wcm/connect/rosstat_main/rosstat/ ru/statistics/population/level/# (Accessed October 14, 2016). 9. Population: encyclopedia dictionary / chief editor Melikyan, G.G. M.: Big Russian Encyclopedia, 1994. 10. On calculating the living wage per capita and across the main social and demographic population groups in the Russian Federation constituent entities in compliance with the federal law of October 24, 1997 No. 134-FZ “On living wage in the Russian Federation” (in the federal law edition of December 3, 2012 No. 233-FZ) // SPS Consultant Plus (http://www.consultant.ru/) (Accessed October 16, 2016). 11. Panteleeva T.S., Chervyakova, G.A. Economic foundations of social work: textbook for institutions of higher professional education, 3rd edition. Moscow: Publishing Center “Academy”, 2012. p. 189. 12. Order of the Federal State Statistics Service of July 02, 2014 No. 465 “On adoption of Methodological Provisions on calculating indicators of population monetary incomes and spending” [Electronic resource], http://www.consultant.ru/document/cons_doc_LAW_ 167107/ (Accessed October 14, 2016). 13. Problems of modern economics. Inequality of population incomes: types and implications. [Electronic resource], http://www.m-economy.ru/art.php?nArtId=3687 (Accessed October 16, 2016). 14. Recommendations of the Conference of European Statisticians on conducting the population and housing censuses of 2010. UN ECONOMIC COMMISSION FOR EUROPE, EUROSTAT, 2006. 15. Ryabushkin, B.T. Social statistics: Textbook/Edited by corresponding member of the Russian Academy of Science Eliseeva I.I. 3rd edition, revised and enlarged. Moscow: Finance and statistics. 480 pp, illustrated, 2003. 16. Salin, V.N. Economic and statistical study of consumption. Moscow, Finance and statistics, 1990. 17. Modern economic theory. Inequality in income distribution [Electronic resource], http:// modern-econ.ru/ekonomika-rossii/osobennosti/denejnye-dohody/nerav (Accessed October 16, 2016). 18. Social and economic statistics: textbook / edited by Efimova, M.R. Moscow, Yurite, 2014. 19. Statistical tools in regional economic studies: schoolbook / Khokhlova, O.A., Russian Economic University named after G.V. Plekhanov. Moscow, publishing house of REU named after G.V. Plekhanov, 2014. 143 pp. 20. Statistical dictionary. Moscow, the State Committee on Statistics of the Russian Federation, 1996. 21. Surinov, A.E., Shashnov, S.A. On main trends in the living standards and saving behavior of the Russian population // Economic Journal of HSE. 2002. No. 3. 22. Federal law of October 24, 1997 No. 134-FZ “On the living wage in the Russian Federation” (edition of December 3, 2012.) // SPS Consultant Plus (http://www.consultant.ru/) (Accessed October 16, 2016). 23. Shevtsov, P.A. Methodological issues of analyzing population income level// Audit and financial analysis, 2011, No. 6. pp. 199–202. 24. Sharin, V.I. Basics of social policy and social protection: Schoolbook / Sharin V.I. Moscow, NITS INFRA-M, 2016. 383 pp, 60x90 1/16. Higher Education: Bachelor’s programs) (Binder 7BTS) ISBN 978-5-16-011700-3. 25. Economic statistics: Textbook/ Edited by professor Ivanov, Yu.N. 4th edition, revised and enlarged. Moscow, NITS Infra– M, 2013.

Bibliography

37

26. Encyclopedia of statistical terms. In 8 volumes. Methodological basics of statistics. Moscow, the Federal State Statistics Service, 2011. 27. Acemoglu, D., S. Johnson, and J. Robinson (2004). Institutions as the Fundamental Cause of Long-Run Growth, NBER Working Paper, No. 10481. 28. Amiel, M.H., P. Godefroy, and S. Lollivier (2013). Quality of life and well-being often go hand in hand. Insee Premiere, No. 1428, February. 29. Australian Bureau of Statistics (2010). Measures of Australia’s Progress: Is life in Australia getting better? 30. Brickman, P., and D.T. Campbell (1971). Hedonic relativism and Planning the Good Society. In Adaptation-Level Theory: A Symposion, M.H. Apley, ed., pp. 287–302. 31. Dasgupta, P. (2000). Economic Progress and the Idea of Social Capital. In Social Capital: A Multifaceted Perspective, P. Dasgupta, and I. Serageldin, eds. 32. Hall, J., and others (2010). A framework to measure the progress of societies, OECD Statistics Directorate Working Paper No. 34. 33. Layard, R. (1980). Human Satisfactions and Public Policy. Economic Journal, vol. 90, No. 363, pp. 737–750. 34. Layard, R. (2011). Happiness: Lessons from a new science. 35. Layout and Printing at United Nations, Geneva – 1424875 (R) – April 2015 – 327 – ECE/CES/31. 36. Stieglitz, J.E., A. Sen, and J.-P. Fitoussi (2009). Report by the Commission on the Measurement of Economic Performance and Social Progress. 37. United Nations, Economic Commission for Europe Conference of European Statisticians. Measuring Human Capital: leading initiatives and challenges ahead. Note prepared by OECD and an expert group chaired by New Zealand. Sixty-first plenary session, Geneva. 10–12 June 2013. ECE/CES/2013/5. 38. www.ec.europa.eu/eurostat – Eurostat. 39. www.gks.ru – Official website of the Federal State Statistics Service. 40. www.unstats.un.org – The United Nations Statistical Division.

Chapter 4

Statistical Study of Labor Force

After studying this chapter, you will be able to know: Concept of labor force; methods of studying the structure and distribution of labor force; indicators of labor force size; methods of drawing up a balance of labor force; methods of identifying the population size and economic activity level, employment and unemployment; classification of people employed in economy by the status in employment; Skills to be acquired: Estimating the labor force size and studying the labor force structure; drawing up the labor force balance; calculating and interpreting the factors (levels) of economic activity, employment and unemployment. Key points: 1. The concept of labor force and the goals of labor statistics 2. The concept of economically active population. Employed and unemployed 3. Identifying labor force size in long-term perspective.

4.1 Concept of Labor Force and Goals of Labor Statistics The basis for the labor force management system in any country is population and labor force which are a set of means (financial, material, technical, human and others) interrelated via a single mechanism, with these means characterizing the quantitative and qualitative composition of population and labor force. The key factor for developing production has always and everywhere been person’s work. Work, as the universal condition of the substance exchange between the man and nature, is the everlasting and natural condition of man’s life. Mandatory requirement for a work process is the worker having a set of physical and mental © Springer International Publishing AG, part of Springer Nature 2019 E. V. Sibirskaya et al., Economic Systems Analysis: Statistical Indicators, Studies in Systems, Decision and Control 158, https://doi.org/10.1007/978-3-319-91247-9_4

39

40

4 Statistical Study of Labor Force

abilities to work—labor force joining the means of production. Hence, the main production force of the society is labor force. One of the conditions of attributing persons to labor force is their ability to work. Whereas a part of persons can be engaged in the national economy (the employed), and the other part may not be engaged, but the latter still remain a part of the labor force. Labor force as the economic category represents the economic relations formed in the society at the certain stage of its development in the process of generation, distribution, re-distribution and utilization of the employable population in the national economy. Labor force has qualitative and quantitative attributes. Labor force is the part of the population which, due to the age and the health condition, is employed or employable (according to the Labor Law). The main goals of the statistics of labor force and labor market are as follows: – studying the size, structure, distribution and dynamics of economically active population employed in economy, the unemployed and economically inactive population across the industries and sectors of economy, and the regions of the country; – studying personnel movement and the work time utilization; – studying the effectiveness of the living labor utilization; – studying the data on labor conflicts. The total size of the labor force is calculated as follows: The size of the working age population is equal to Number of non-working people with disabilities of categories 1 and 2—Number of people of the working age who retired early + Number of actually working people of the non-working age (adolescents, pensioners). From the viewpoint of labor force formation, it is important to calculate the following indicators of the workload: 1. Labor force replacement factor Labor force replacement factor  Number of adolescents (0−15 years old) divided by Number of persons of working age

(4.1) 2. Retirement load factor Retirement load factor  Number of persons of retirement age divided by Number of persons of working age

(4.2)

3. Overall workload factor Overall workload factor  [Number of adolescents (0−15 years old) + Number of persons of retirement age] divided by Number of persons of working age

(4.3) Labor force balance is drawn up on the basis of the labor force size Labor force balance has two parts.

4.1 Concept of Labor Force and Goals of Labor Statistics

41

The 1st part covers labor force, including: – – – – –

employable population of the working age; persons above the working age, employed in the economy; adolescents employed in the economy; working citizens of a different country; citizens of the given country working outside its territory. The 2nd part covers the labor force distribution:

– total number of persons employed in the economy by the sectors of the economy; – students of working age on day shift education; – economically inactive population (by categories). The concept of labor activity is inseparably connected with labor force. Labor activity sets the capacity for executing the amount of work, as well as stipulates the work conditions for an employee. Labor activity is any activity conducted by people of any gender and age for manufacturing goods or providing services for their consumption by other persons or for own consumption (according to Resolution 19 of the CIS Inter-State Statistical Committee (2013)). According to article 20 of the Russian Federation Labor Code, the employee and the employer are the parties of labor relations The employee is an individual who entered labor relations with the employer. Unless otherwise is stipulated by the Code or by other federal laws, persons who reached the age of 16, are entitled to enter labor relations as employees, and in the cases and by the procedure stipulated by the Code—persons below this age. Article 15 of the Russian Federation Labor Code specifies labor relations as the relations based on an agreement between the employee and the employer on the employee performing in person the labor function (work in the position according to the list of staff, profession, specialty with specifying the qualification; the type of the job assigned to the employee), with the employee’s compliance with the internal work regulations and the employer providing the labor conditions stipulated by the Labor Law and other normative legal acts containing the employment and labor statutes, by the collective agreement, agreements, local normative acts, and by the work contract. According to the Methodological Provisions on Statistics (issue 1), persons employed in the economy, are divided into two groups by their employment status. 1. Employees are individuals who signed a written work contract or made an oral agreement with the head of the company of any ownership type or with an individual about the conditions of the labor activity for which they receive payment in cash or in physical values, specified during recruitment (that is during work contract execution). Individuals elected, appointed or approved for the paid position, including company directors and company managers, religious ministers, are considered as employees;

42

4 Statistical Study of Labor Force

2. Persons working on an individual basis are persons carrying out incomegenerating activity on their own, without utilizing hired people’s work or engaging some workers for a short period of time (seasonal and odd jobs); 3. Employers are persons controlling their own private (family) company, farm, as well as persons being engaged in professional activity or trade on an independent basis and regularly utilizing hired people’s work. The manager of a family business is an employer if his family owns the business without dividing it into ownership portions between the family members, and he/she utilizes hired people’s work on an ongoing basis for executing production activities. The employer is able to delegate his/her managerial functions to the hired manager, remaining responsible for the well-being of the business; 4. Unpaid employees of family business are persons doing unpaid work at a private family business owned by their relative; 5. Members of producers’ cooperatives and partners are persons working at these entities, being ones of the owners of these entities; 6. Individuals who cannot be classified by status include the unemployed who were not previously engaged in income-generating labor activity or individuals having the background which does not enable to categorize them under a certain employment status. According to UN publications “Key Indicators of the Labor Market”, there are the following categories of the employed: Employees—wage and salaried workers; Self -employed—employers, own-account workers, members of producers’ cooperatives, and contributing family workers; Individuals employed in the informal economy—persons who work without legal status, may be classified as follows: persons employed in the informal sector, persons in informal employment outside the informal sector, contributing family workers in formal or informal sector enterprises and own account workers engaged in the production of goods for own end-use by their household; Vulnerable employment—self-employed persons and contributing family workers. Studies demonstrated that the key feature differentiating employees from other categories of the employed are employment relations which are understood, according to the System of National Accounts Methodology (item 7.29) as the relations formed between the employer and the employee (for example, between a company and an individual) when a written or oral agreement is concluded between them, it may be official or unofficial, and, as a rule, it is of voluntary nature for both the parties. According to such an agreement, an employee performs work for the company, with receiving remuneration for it in monetary or natural form. The amount of remuneration usually depends on the worked time or the other objective indicator of the amount of performed work. The employer does not have the obligation to report about the agreement to some official body for registering the status of the employee (the System of National Accounts 2008, chapter 19). Thus, employment relations are an indispensible part of labor relations, and they are regulated by the labor law.

4.1 Concept of Labor Force and Goals of Labor Statistics

43

Resolution of the 19th International Conference of Labor Statisticians (2013) defines workplace or labor activities as the range of tasks and duties which are performed or are to be performed by one person in the interests of one economic unit. Term “workplace” is applied to employment. A person may hold one or several workplaces. Self-employed persons hold as many workplaces as the number of economic units, which are in their full or joint ownership, irrespectively of the number of serviced clients. In cases of holding several workplaces, the main workplace is the workplace with the longest duration of working time, according to the definition adopted in the international statistical standards on working time. Hired employment, unlike other forms of labor, is characterized by the following features: sale and purchase of “labor force” product prior to the start of work process; executing the labor process under the oversight of the employer or the staff hired by the employer; employer’s possession of the labor product, return of the part of this labor product value to the employee in form of wage or salary. It is worth mentioning that the UN system of the Key Indicators of the Labor Market recognizes the existing differences in the statistical observation over employed population in different countries: 1. According to the general methodology of the UN, the survey on the issues of employment covers all persons aged 15 years and older, although this may vary from country to country; 2. The category of “self-employed—members of producers’ cooperatives” may be included in the category of “paid employees” (for example, in Slovakia); 3. Some discrepancies occur in breaking down the self-employed into subcategories: for example, there is no differentiation between employers and ownaccount self-employed (for example, Bahamas, Ukraine); 4. In some cases, members of producers’ cooperatives are not singled out (for example, in Poland), or contributing family workers (for example, in Azerbaijan); 5. In some countries, labor statistics covers only civilians, which results in underestimated indicators of the number of employers and employees who are impossible to be classified by the employment status, especially in countries with numerous military; 6. In the countries of Latin America (for example, in Argentina and Peru), surveys are conducted only among urban population, which makes it impossible to draw comparisons with other countries.

4.2 Concept of Economically Active Population. Employed and Unemployed Economically active population is a part of population (labor resources) which offers its labor for producing goods, performing work and providing services. Economic activity factor is calculated by the formula:

44

4 Statistical Study of Labor Force    Economic activity factor  Number of economically active population on a specific date Neap divided by Total population number as of the same date (P)) multiplied by 100 (%);

(4.4)

Economically active population includes two categories: the employed in the economy and the unemployed (according to the International Labor Organization standards). Persons are considered as being employed if they within the period under consideration: performed work as employees on the remuneration basis; performed income-generating activity not as employees with engagement or without engagement of employees. The number of persons engaged in the economy, determines the demand for labor force. Employment factor is calculated by the formula: Economic factor  (Number of the employed on a specific date divided by Number of economically active population on the same date) multiplied by 100 (%)

(4.5)

The employed include persons who are temporarily absent from work in the surveyed period—because of being sick, having holidays, taking care of sick people, strikes and other similar reasons, irrespectively of the fact whether salary was accrued to them or not for the period of their absence. Those employed in economy do not include persons engaged in the production of goods or services in their own household for own end-use only (cooking food, sewing and mending clothes for the household members, cleaning the house, raising children, taking care of the household members), as well as the registered unemployed performing paid public works assigned through the employment service, and students of schools and universities performing paid works assigned by educational institutions. “One hour” criterion is applied for including or not including a person in the category of the employed. This criterion means that work in an economic activity area for one hour within the reporting period is sufficient for including this persons in the employed category. The international standards recommending “one hour” criterion, specify that this criterion is applied to one week or one day reporting period. Russian employment surveys include in the employed category those persons who work one hour per week or longer. Those employed in the economy are grouped by their employment status, and the performed work serves as the object of classification. The person’s state (standing, status) in employment is determined by the nature of the economic risk related to work performed by the person, as well as by the nature of the relations of the person within the set duties, with the other employees and the company. Employed population is divided into the following categories by its status. 1. Employees—persons performing work for remuneration in accordance with the concluded labor contract (contract, oral agreement) about the work conditions

4.2 Concept of Economically Active Population. Employed and Unemployed

45

and payment for work with the firm (company) as a legal entity or with an individual. The base pay remuneration guaranteed by the concluded contract, does not directly depend on the profit earned by the company. All persons elected or appointed for paid positions, including the executives managing the company activities on behalf of the owner, are considered to be employees. Attendants of religious cults, persons serving in the military, interior and railroad troops, state security bodies and the police, are considered to be employees as well. 2. Non-employees, that is self-employed: employers; self-employed workers; members of producers’ cooperatives; unpaid contributing family workers. The estimation of the total number of persons employed in economy (in the main or the only workplace) in the current period is conducted on the basis of the results of the population survey on the employment issues, and is refined after obtaining the latest survey results. In international comparisons of the employment rate, for identifying the overall level of population employment, the number of the employed is divided by the overall number of persons aged 10 years old and above. Such a low age threshold is applied because many developing countries have high employment rate among children. The unemployed [according to the standards of the International Labor Organization (ILO)] include male and female persons above 16 years of age, who within the surveyed period, met all the following criteria: – did not have a job (income-generating occupation); – were looking for a job, that is they applied to the state or commercial employment service, utilized or placed job ads in the media, directly applied to the company management and so on; – were ready to start a job. The unemployment factor which characterizes the unemployment rate in the country, is calculated by the formula: The unemployment factor (by the ILO)  Number of the unemployed on a specific date divided by Number of the economically active population as of the same date

(4.6)

Within the total number of the unemployed, there is a separate estimate for the unemployed registered in the state employment bodies, by the data of the Ministry of Labor and Social Protection of the Russian Federation. The official unemployment rate is calculated by the formula: Unemployment rate (official)  [Number of the unemployed (official) divided by Number of economically active population] multiplied by 100 (%)

(4.7)

Economically inactive population is the part of the population which is not in the labor force, it includes: – persons under 16 years of age; high school students; – full-time university students and cadets; – pensioners;

46

4 Statistical Study of Labor Force

– persons who receive disability pensions; – persons who stopped job search, but who are ready to start working; – persons who have no need to work, irrespectively of their source of income.

4.3 Identification of Long-Term Size of Labor Force Forecasting the economic development presumes calculating the long-term size of labor force. The size for long-term perspective is calculated by methods. 1. Technique of ageing1 ; 2. Extrapolation method.2 Technique of ageing is based on the indicators of mortality (actuarial table) and is applied mainly for calculating the size of labor force of separate ages. For example, identifying the number of persons entering the working age, enables to evaluate the process of natural additions to the labor force, and to develop programs on engaging in work those people who are beyond the scope of the working age, or work migrants. Awareness of the number of persons leaving the working age, facilitates to solve the issues of welfare and pension support of pensioners. The method enables to identify the long-term size of labor force relatively precisely, but it is used only for separate ages because of its labor-intensity. The extrapolation methods do not have this drawback, they are based on the indicators of labor force reproduction and on their possible changes in the future. Calculations are conducted by the formula:    LFn  LF0 ∗ 1 + Kog 1 − 0.5 Kog

(4.8)

where LF 0 is the labor force size in the base period; LF n is the labor force size in n years; K og is the factor of the overall growth of labor force; n is the number of years for which the calculation is forecasted. In those cases when the indicators of labor force reproduction are unknown, this formula is applied for calculating the long-term size of the whole population. Then adjustment is made for the specific weight of labor resources in the total population size in the base period.

1 Local

method. method.

2 Global

4.3 Identification of Long-Term Size of Labor Force

47

The disadvantage of this method is impossibility to use it in the long-term perspective. As a rule, it is applied for calculations for 3 ÷ 5 years ahead. The source of information for identifying the long-term size of the labor force are the current population count, population census materials, results of special surveys on population employment issues, other data obtained for identifying the labor force size. Control Questions 1. What is the difference between the concepts of “labor force” and “economically active population”? 2. List the main types of unemployment. 3. Describe the method of measuring the official unemployment rate; the overall unemployment rate determined by the ILO standards. 4. List the sources of data about unemployment. 5. Name the categories of working persons which are recommended to be singled out according to the International Standard Employment Classification. 6. Name the main characteristics of employment in the informal economy. 7. What are the ways of using the data on labor migration?

Bibliography 1. Asaliev, A. M. Economics and human resources management: Textbook / Asaliev, A. M., Vukovich, G.G., Stroiteleva, T.G. - M.: NITS INFRA-M, 2016. - 143 pp.: 60x90 1/16. - (Higher education: Bachelor programs). 2. Bychin, V. B. Work standardizing/ Bychin, V.B., Malinin, S.V, Novikova, E.V. - M.: NITS INFRA-M, 2015. - 352 pp.: 60x90 1/16. - (Higher education: Bachelor programs). 3. Garnov, A.P. Analysis and diagnostics of company financial and economic activity: Textbook/Garnov A.P. - M.: NITS INFRA-M, 2016. - 365 pp.: 60x90 1/16. - (Higher education: Bachelor programs) (Binder). 4. Gnevasheva, V.A. Youth segment of labor market in modern Russia: Peculiarities of labor force formation: Monograph / Gnevasheva, V.A. - M.: ITS RIOR, NITS INFRA-M, 2016. - 223 pp.: 60x88 1/16. 5. Golovina, S.Yu. International labor standards and Russian labor law: prospects of coordination: Monograph / Under edition by Golovin, S.Yu., Lyutov, N.L. - M.: Yur.Norma, NITS INFRA-M, 2016. - 256 pp.: 60x90 1/16. 6. Civil Code of the Russian Federation (with amendments as of October 01, 2015). // http://www. consultant.ru/document/cons_doc_LAW_5142/ (Accessed October 16, 2016). 7. Ivanov, Yu.N. Economic statistics: Textbook/Ivanov, Yu.N. – 5th edition, revised and supplemented. - M.: NITS INFRA-M, 2016. - 584 pp.: 60x90 1/16. - (Higher education: Bachelor programs). 8. Ivanov, Yu. N. Economic statistics: Textbook / MSU named after M.V. Lomonosov; Under edition by Ivanov, Yu.N. – 3rd edition, revised and supplemented. - M.: INFRA-M, 2006. 736 pp.: 60x90 1/16. - (Classic university textbook). 9. Kazantsev, S.Ya. Legal statistics [Electronic resource]: textbook for university students studying “Law” specialty, for cadets and attendees of the Interior Ministry educational institutions / [Demivo, V.N. et al.]; under edition by Kazantsev, S.Ya., Lebedev, S.Ya., Inshakov, S.M. – 2nd -edition, revised and supplemented. - M.: YUNITI-DANA: Zakon i pravo, 2012. - 271 pp.

48

4 Statistical Study of Labor Force

10. Kibanov, A.Ya. Management of employment of university graduates in the job market: Monograph/ Kibanov, A.Ya., Dmitrieva, Yu.A. - M.: NITS INFRA-M, 2016. - 250 pp.: 60x88 1/16. 11. Key indicators of the labor market of UN KILM 3 // http://kilm.ilo.org/2011/download/ kilmcompleteEN.pdf (Accessed October 16, 2016). 12. Krasnova, L.N. Company economy: Textbook / Krasnova, L.N., Ginzburg, M.Yu., Sadykova, R.R. - M.: NITS INFRA-M, 2016. - 374 pp.: 60x90 1/16. 13. Luneev, V.V. Legal statistics: Textbook/Luneev, V.V.; Institute of State and Law of Russian Academy of Science. – 3rd edition, revised and supplemented - M.: Norma: INFRA-M, 2010. - 448 pp. 14. Malykh, N.I. Statistics. Vol. 2. Social and economic statistics: textbook and workshop for academy bachelor programs/Malykh, N.I.– M.: Yurite publishing house, 2016. – 540 pp. 15. Methodological provisions on statistics. Issue 1, 1996 // http://www.gks.ru/bgd/free/B99_10/ IssWWW.exe/Stg/d000/i000080r.htm (Accessed October 16, 2016). 16. Microeconomic statistics: Textbook/Edited by Ilienkov, S.D.– M.: Finance and statistics, 2004. 17. Tax Code of the Russian Federation (part one) of July 31, 1998 No. 146–FZ (edition of June 08, 2015) (revised and supplemented, came into force since July 08, 2015) // https://www.consultant.ru/law/podborki/svedeniya_o_srednespisochnoj_ chislennosti_ip_bez_rabotnikov/ (Accessed October 16, 2016). 18. NIR. Economics, 2016, issue 2 (20) - M.: NITS INFRA-M, 2016. - 66 pp. 19. On approval of Official statistical methodology of forming system of indicators of labor activities, employment and incomplete use of labor force, recommended by 19th international conference of 19th International Conference of Labor Statisticians. Order of the Federal State Statistics Service (ROSSTAT) No. 680 of December 31, 2015. // http://www.gks.ru/free_doc/ new_site/population/trud/met-680.pdf (Accessed October 16, 2016). 20. Survey of labor resources Eurostat / Eurostat glossary // http://ec.europa.eu/eurostat/ statistics–explained/index.php/Glossary:Employee_–_LFS (Accessed October 16, 2016). 21. Official statistical methodology of forming system of indicators of labor activities, employment and incomplete use of labor force, recommended by 19th international conference of 19th International Conference of Labor Statisticians. // http://www.gks.ru/free_doc/new_site/ population/trud/met-680.pdf (Accessed October 16, 2016). 22. Palamarchuk, A.S. Company economy: Textbook/ Palamarchuk A.S. - M.: NITS INFRA-M, 2016. - 458 pp.: 60x90 1/16. 23. Petrosyan, D. S. Economic policy of state: social justice in economic relations: textbook. / Petrosyan D.S., Bezpalov V.V., Lochan S.A. - M.: NITS INFRA-M, 2016 - 214 pp. 24. Labor force, employment and unemployment in Russia (by results of sample surveys of labor force). 2016: Statistical compilation/Rosstat. - M., 2016. - 146 pp. // http://www.gks.ru/free_ doc/doc_2016/rab_sila16.pdf (Accessed October 16, 2016). 25. Reznik, S. D. Markets of labor and educational services in Russia: realities and prospects: Monograph / Reznik, S.D., Nizhegorodtsev, R.M., Reznik, G.A. - M.: NITS INFRA-M, 2016. - 324 pp.: 60x90 1/16. - (Nauchnaya mysl) (Binder) ISBN 978-5-16-011365-4. 26. Resolution of 13th International Conference of Labor Statisticians (1983) // http://kilm.ilo.org/ 2011/download/kilmcompleteEN.pdf (Accessed October 16, 2016). 27. Resolution of 15th International Conference of Labor Statisticians of ILO (1993) – International classification of status of employed (ICSE) UN/ ILO // www.gks.ru/metod/resol.pdf (Accessed October 16, 2016). 28. Resolution of 19th International Conference of Labor Statisticians (2013) // http://laborsta.ilo. org/applv8/data/icsee.html (Accessed October 16, 2016). 29. Sibirskaya, E.V. Methodology of managing personnel in service sector (textbook) / Sibirskaya, E.V., Petrukhina, E.V., Stroeva, O.A., Lyapina, I.R., Gubareva, L.I. – Orel: OSU publishing house, 2013. – 247 pp. 30. Sibirskaya, E.V., Stroeva, O.A., Simonova, E.V. Entrepreneurship (textbook) – Orel: Nauchnoe obozrenie publishing house, 2015. – 247 pp. 31. Statistics: Textbook/ Minashkin, V.G., Shmoilova, R.A., Sadovnikova N.A., Rybakova, E.S.; editor Minashkin, V.G. – M.: Prospect, 2005.

Bibliography

49

32. Statistics: Textbook/ Editor Ionin, V.G. – 3rd edition, revised and supplemented. – M.: INFRAM, 2010. 33. Statistics: Textbook for universities/Editor Eliseeva, I.I. – St. Petersburg and others: Piter, 2011. 34. Labor and employment in Russia. 2015: Statistical bulletin/ Rosstat – M., 2015. – 274 pp. // http://www.gks.ru/free_doc/doc_2015/trud15.pdf (Accessed October 16, 2016). 35. The Labor Code of the Russian Federation (with amendments as of October 5, 2015) // http:// dogovor-urist.ru (Accessed October 16, 2016).

Chapter 5

Statistics of Labor and Company Personnel

After studying this chapter, you will be able to know: Concept of the company personnel and its structure; methods of studying the indicators of size, count and utilization of work time; methods of measuring the rate and dynamics of production rate; Skills to be acquired: To identify and analyze the indicators of labor and company personnel, to apply factor index models in studying the dynamics of labor productivity. Key points: 1. 2. 3. 4. 5. 6. 7. 8. 9.

Concept of company personnel and its structure Indicators of staff headcount turnover Indicators of work time records and use Indicators of employees employment rate by shifts Methods of measuring the level and dynamics of labor productivity Studying labor productivity dynamics across a set of companies Applying factor index models in studying labor productivity dynamics Measuring increase in product output due to change in labor productivity Concept of salary. Analysis of payroll

5.1 Concept of Company Personnel and Its Structure Company personnel is a set of individuals having relations with a company which acts as a legal entity, and these relations are governed by an employment contract. Not only employees may be in such relations, individuals—the company owners or co-owners may be as well, if they contribute their work to the company operations © Springer International Publishing AG, part of Springer Nature 2019 E. V. Sibirskaya et al., Economic Systems Analysis: Statistical Indicators, Studies in Systems, Decision and Control 158, https://doi.org/10.1007/978-3-319-91247-9_5

51

52

5 Statistics of Labor and Company Personnel

and receive a respective payment for this, in addition to the part of profit payable to them. The main indicator of the staff headcount is the number of employees on payroll—the primary characteristic of the staff headcount on the specific date. The number of employees on payroll in companies of all patterns of ownership is identified by the data of daily time sheets finalized on the basis of primary documents about the movement of employees (written orders to hire a person, transfer to a different job and dismiss). The number of employees on payroll includes employees working on an employment contract and performing permanent, temporary or seasonal work for the period of one day and more starting from the day of being included in the staff. The following indicators of the headcount of employees working in a company, are entered in the forms of state statistical observations: (1) (2) (3) (4)

the number of employees on payroll on a specific date; the average number of employees on payroll for a period time; the average number of employees on payroll; the average number of employees on payroll from outside the company combining their jobs with part-time jobs for the company; (5) the average number of employees on payroll performing jobs by civil agreements. (1) The number of employees on payroll is the indicator of the company staff headcount on a specific date, including hired employees and excluding dismissed employees. The number of employees on payroll for every day is identified by the time sheet data by summing the number of all attendances and failures to appear at work: Headcount  Number of all attendances + Number of failures to appear at work (5.1) (2) the average number of persons on payroll for the specific period of time. In order to identify the average number of persons on payroll for the specific period of time, daily records of the number of employees should be conducted, which should be finalized on the basis of written orders to hire a person, to transfer him/her to a different job, and to dismiss. The average number of employees on payroll for the reporting period is calculated by summing the number of employees for every calendar day, including  days off and holiday days off TC , and by dividing the obtained sum by the number of calendar days in the reporting period (Dk )1 :

1

Note 1: The number of employees on days off and holiday days off is assumed as being equal to the number of employees for the previous working day, excluding the employees for who it was the final working day. Note 2: If the company works not a full working month, the procedure of calculating the average number of employees on payroll will not change, that is the sum of the number of employees on payroll for all the days of the company operation in the reporting period, including public holidays,

5.1 Concept of Company Personnel and Its Structure

53

 T

TC , Dκ

(5.2)

 where TC is the sum of the number of employees on payroll for all the days of the company operation, Dk is the total number of calendar days in the reporting period (3) The number of persons on payroll is applied for identifying the average salary, labor productivity and other average values. When the average number of persons on payroll is calculated, the following employees are excluded from the number of persons on payroll: those being on maternity leave, on leave because of adopting a child under three months of age, on parental leave before the child reaches three years of age; those who did not appear at work because of temporary inability to work; those who were on unpaid leaves and so on. Persons accepted for employment on part-time work conditions, are recorded proportionally the hours worked. (4) The average number of persons on payroll from outside the company combining their jobs with part-time jobs for the company is identified by the above mentioned methodology accepted for calculating the average number of employees on payroll, working part-time period of work. (5) The average number of persons on payroll, of the employees performing work by civil agreements, is identified in the same way as the average headcount for a period of time. For analytical purposes, the total average number of persons on payroll is calculated (the difference of this indicator is that persons having temporary incapacity to work, are not excluded from the number of persons on payroll—balance of working time is compiled to take account of them). In addition to the number of employees on payroll, there is the number of attending personnel and the number of actually working personnel. The number of attending personnel is identified by the number of the employees who appeared at work. The number of attending personnel is smaller than the number of employees on payroll by the number of failures to appear at work. The average number of attending personnel is calculated by dividing the sum of the numbers of attending personnel over the working days of the time period by the number of working days in the period:  Tf + PR Tq  (5.3) Tq  Q Q holiday days off and days off of the work period, is divided by the total number of calendar days in the reporting month. Note 3: The average number of employees on payroll for a quarter is identified by summing the average monthly headcount for all the months of the company operation in a quarter and dividing the obtained sum by 3. The average headcount for not a full quarter is calculated in the same way. Note 4: The average headcount for a year is identified by summing the average monthly number of employees for all the months of the reporting year and dividing the obtained sum by 12. The average number of employees on payroll for not a full year is calculated in the same way.

54

5 Statistics of Labor and Company Personnel

where Tq is the sum of the number of attending personnel over the working days of the time period, T f are actually worked man-days, PR are whole-day downtimes, Q is the number of working days in the time period. The number of persons who actually appeared at work indicates how many persons from those who attended, started work. If employees are on a business trip, they are included in those who appeared at work. If employees appeared at work, but did not start work for the reasons beyond their control, then the difference originates between the number of persons attending work and the number of actually working persons. The number of actually working persons reflects the number of persons who appeared at work and started work. It is lower than the number of persons who appeared at work by the number of whole day downtimes. The average number of actually working persons is identified by dividing the sum of actually working persons on the working days of the time period by the number of working days in the period:  Tf , (5.4) Tf  Q where T f is the sum of the number of actually working persons on the working days of the period. In order to describe the labor force utilization, factors may be calculated, reflecting the ratio of the average indicators of the number of employees and characterizing the extent of utilizing the company labor force: Factor of utilization of the number of employees on payroll for the period of time is the ratio of the average number of actually working persons to the average number of employees on payroll, it characterizes the extent of utilization of the average number of employees on payroll: Ccc 

Tf T

,

(5.5)

Factor of utilization of the number of personnel on payroll  Tf divided by T where T f is the average number of actually working persons, T is the average number of employees on payroll for the period. Factor of utilization of the number of attending personnel (workers) for the time period: Caw 

Tf Tq

,

(5.6)

5.1 Concept of Company Personnel and Its Structure

55

where T f is the average number of the actually working persons, T q is the average number of persons who appeared at work.

5.2 Indicators of Turnover of Number of Employees Constant change of the number of workers at a company creates a need to study labor force in dynamics. The facts of accepting and dismissing personnel for the reporting period constitute movement or turnover of labor force. Accepted personnel includes the persons enlisted in the company during the reporting period by a written order to hire the person, issued by the employer. The labor supply sources include those hired: – directly by the company initiative, – by referrals of employment institutions, – after graduating from respective educational institutions, including those having fellowships of this company, – as transfer from other companies, – accepted for additionally established positions as a result of renovation, expansion of production facilities, increasing the number of shifts and so on. The number of the dismissed includes all the employees who left their work in the company irrespectively of the grounds for terminating the labor contract, whose dismissal or transfer has been formalized. The sources of staff attrition include: (a) attrition by physiological reasons: reaching the retirement age, death, disease and so on; (b) attrition by the reasons directly stipulated by law—required turnover of the labor force: downsizing or making some positions redundant, being drafted for compulsory military service, enrollment in educational institutions on full-time basis, being elected for elective bodies of state authorities, public organizations, transfer to other companies, relocation to the spouse’s place of residence; (c) attrition by the reasons not directly stipulated by law and related to an employee’s personality—it causes excessive movement of labor force or staff turnover: resignation by mutual agreement of the parties, for truancy and other breaches of work discipline, dismissal because of the unsuitability of the employee for the position held and so on. In order to evaluate the quality of work with the company personnel, the system of indicators characterizing staff turnover and replenishment and describing the details of this turnover, may be applied. Staff turnover is a set of employees accepted for work (enlisted on the payroll) and dismissed employees, which is estimated in the proportion with the average number of persons on payroll for a specific (reporting) period. Staff turnover rate is characterized by the following coefficients:

56

5 Statistics of Labor and Company Personnel

Overall staff turnover coefficient is the proportion of the sum of the accepted and the dismissed for the reporting period to the average number of persons on payroll for this period: Overall staff turnover = (Number of employees accepted for the time period + Number of the employees who left the company for the time period) divided by the average number of persons on payroll for the time period

(5.7)

Turnover by acceptance intensity coefficient (Kac ) is the proportion of the number of the employees accepted for the reporting period to the average number of employees on payroll for this period: Cac 

Tp T

(5.8)

Turnover by dismissal (leaving) coefficient (Kdis ) is the proportion of the number of the employees dismissed for the reporting period to the average number of employees on payroll for this period: Cdis 

Tv T

(5.9)

Turnover by dismissal (leaving)  The number of the employees who left the company for the time period divided by the average number of persons on payroll for the time period. Staff turnover or excessive turnover coefficient (C t ) may be calculated for separate groups of employees (by age, gender, work experience): Ct 

Ti T

(5.10)

Staff turnover coefficient  T i (the size of excessive turnover (dismissed because of the staff turnover reasons—those who resigned voluntarily and who were dismissed for the breach of work discipline) divided by the average number of persons on payroll for the time period. Personnel replenishment coefficient characterizes the replenishment of employees who left the company for various reasons, by newly hired employees, it is calculated by dividing the number of the accepted employees for the reporting period by the number of the employees dismissed for this period: Cv 

Tp Tv

(5.11)

Personnel replenishment coefficient  Number of the employees accepted for the reporting period divided by Number of the employees who left the company for the time period.

5.2 Indicators of Turnover of Number of Employees

57

Coefficient of employees’ replacement (C z ): Cz 

Tp − Tv T

(5.12)

Coefficient of employees’ replacement  (Number of the employees accepted for the reporting period minus number of the employees who left the company for the time period) divided by Average number of persons on payroll for the time period. If the coefficient numerator is positive, then the number of accepted employees exceeds the number of the employees who left, and it is possible to assume that a part of those accepted for work, replaces the labor force lost because of dismissals, and another part is used in newly established work places. The coefficient has a negative value when the number of those dismissed exceeds the number of the newly accepted, which may be caused by reducing production, liquidating a part of workplaces because of technical upgrading, and other reasons. Coefficient of personnel consistency or stability (C const ) is the ratio of the number of employees who have been on payroll the whole year (who have worked the whole reporting period, that is the number of all persons dismissed during the year must be deducted from the number of persons on payroll at the beginning of the year) to the average number of employees on payroll (or the number of persons on payroll at the beginning of the year): Cconst 

Tconst T

(5.13)

Coefficient of personnel consistency  Number of employees who have been on payroll the whole year divided by Average number of employees on payroll for the period. This coefficient serves as an addition to the staff turnover coefficient, and it is applied for assessing the effectiveness of the company human resource policy, that is staff turnover which is not caused by inevitably objective reasons, causes decrease in the effectiveness of labor force utilization in production.

5.3 Indicators of Work Time Records and Utilization Work time is understood as the duration of time within which an employee actually performed the job. The main units of work time count are man-hours and man-days. Statistical reporting on labor provides the data on the number of worked mandays, man-hours, whole day downtimes and downtimes within a shift, about failures to appear at work for a good cause, about lost work time, as well as about failures to appear at work, days off and holiday days off. Man-hour of worked or non-worked time is considered as one hour of an employee being on his/her shift in a company.

58

5 Statistics of Labor and Company Personnel

Worked man-day is a day when the employee arrived at the workplace and started work, irrespectively of its duration, that is one day of his being on the company premises. Downtimes within a shift are periods of downtime which occurred within a working day or a shift with duration from 5 min and longer. There are calendar, timesheet and maximum possible work time funds. The sum of all attendances and failures to appear at work for a good cause and without valid excuses is called calendar fund of man–hours. Calendar fund of employees’ time—both total and by individual categories, may be identified by two ways: (1) summing the number of employees on payroll for all the calendar days of the time period, (2) multiplying the already known average number of persons on payroll by the number of calendar days in the same time period for which the average number of persons on payroll was identified. The calendar fund may not be fully utilized in the company production activities. Timesheet fund of time may be identified via deducting the number of holiday days off and days off from the calendar fund. In turn, maximum possible fund is smaller than timesheet fund by the number of man-days of basic leaves. In order to characterize the utilization of work time funds, coefficients are calculated as the ratio of the actually worked time in man–days (T d ) to the respective time fund (coefficients of utilization of calendar, timesheet and maximum possible funds). For example: Cif v 

Td · 100 MVF

(5.14)

Coefficient of maximum fund utilization  (The actually worked time in man— days divided by Maximum possible time fund) multiplied by 100. Coefficient of utilization of timesheet fund of time is equal to: Cifv 

Td · 100, TF

(5.15)

Coefficient of utilization of timesheet fund  (The actually worked time in man— days divided by Timesheet fund of time) multiplied by 100 or: Cif v  TF/M V F ∗ 100

(5.16)

Coefficient of the utilization of timesheet fund of time  (Timesheet time fund divided by Maximum possible time fund) multiplied by 100. Interrelation of time funds: Td Td M V F TF  · · KF MVF TF KF

(5.17)

5.3 Indicators of Work Time Records and Utilization

59

Actually worked time in man–days divided by Calendar fund  (The actually worked time in man–days divided by Maximum possible fund) multiplied by (Maximum possible fund divided by Timesheet fund) multiplied by (Timesheet fund divided by Calendar fund). In actual practice, the structure of Calendar fund of time of company employees on the whole and by separate categories is studied by compiling a work time schedule where work time resource and work time utilization are indicated. Indicators of work time utilization The following indicators characterize work time utilization: (1) the average number of working days per employee (duration of work period); The average number of working days per employee (T d ) or the average duration of working period is calculated by dividing the actually worked man-days (T d ) by the average number of workers on payroll (T p): T d  T rp 

Td Tp

·

(5.18)

Average number of working days per employee  Average work period  Actually worked man-days divided by Average number of workers on payroll. (2) average actual full and fixed duration of the working day; Average actual full duration of the working day (Tpd ) is calculated by dividing worked man-hours (T ch ), including overtime hours and man-hours of downtime within shift, by actually worked man-days (T d ), that is Tpd 

Th Td

(5.19)

Average actual full duration of the working day is Worked man-hours divided by Actually worked man-days. Average fixed duration of working day (T y ) is calculated by dividing worked man-hours within fixed time (T ych ) by worked man-days (T d ), that is Ty 

Tych Td

(5.20)

Average fixed duration of working day  Worked man-hours within fixed time divided by Worked man-days.   Average duration of working day without downtime within a shift Tych_v is identified by dividing (Worked man-hours within the fixed time minus Man-hours of downtime within shifts (T ych_v ) by Worked man–days (T d ), that is Tych_v 

Tych − Tych_v Td

(5.21)

60

5 Statistics of Labor and Company Personnel

Average duration of working day without downtime within a shift  (Worked manhours within the fixed time minus man-hours of downtime within shifts) divided by Worked man–days. (3) average number of work hours per employee. Average number of work hours per employee T h is integral indicator of work time utilization is calculated by dividing worked man–hours (including overtime downtime and downtime within a shift—T h ) by Average number of persons on payroll—Tp : Th 

Th

(5.22)

Tp

Average number of work hours per employee  Number of worked man–hours divided by Average number of persons on payroll. Average number of work hours per employee  Worked man–hours divided by Average number of persons on payroll. Coefficient of utilization of work time by the number of days of work: Cutil 

T d1

(5.23)

Td0

Coefficient of utilization of work time by the number of days of work  Average number of days of work for reporting period divided by Average number of days of work for base period. Coefficient of utilization of work time by the number of hours of work (C h ): Ch 

T h1

(5.24)

T h0

Coefficient of utilization of work time by the number of hours of work  Average number of hours of work for reporting period divided by Average number of hours of work for base period. Available number of days of work of one employee—T dp (maximum possible fund of employee): Tdp 

T p × 365 − Tvf Tp

,

(5.25)

Available number of days of work of one employee  (Average number of persons on payroll × 365 − Days off, holiday days off, holiday leaves) divided by Average number of persons on payroll. Coefficient of utilization of the duration of work period (it is similar to work time coefficient utilization by the number of work days Cp  C chd ) is the quotient

5.3 Indicators of Work Time Records and Utilization

61

from dividing Average number of work days per one employee (Td ) by Available number of work days of one employee (T dp ): Cp 

Td Td   Cchd Tdp MVF

(5.26)

Coefficient of utilization of the duration of work period  Average number of work days per one employee divided by Available number of work days of one employee  Number of worked man-days divided by Maximum possible time fund  Coefficient of utilization of work time by the number of days of work. Coefficient of work day  utilization (C id ) is calculated by dividing the average actual full T pd or fixed T y duration of working day by the established duration   T yp being equal to 8 h with a 40-h working day: – when the full duration of the working day is utilized; Cid 

T pd Ted

(5.27)

Coefficient of work day utilization  Average actual full duration of working day divided by Established duration of working day. – or when the working day duration is fixed. Cid 

Tf Ted

(5.28)

Coefficient of work day utilization  Fixed duration of working day divided by Established duration of working day. Integral coefficient of utilization (C int ) is equal to the product of the two previously described coefficients: Cint  Cutil × Cid

(5.29)

Integral coefficient of utilization  Coefficient of utilization of work time by the number of days of work × Coefficient of work day utilization. Absolute increase of worked man–hours (T h ) is calculated as follows: Th  Th1 − Th0

(5.30)

including: • because of change in the number of employees on payroll:   Th(Tp )  T P1 − T P0 T h0 ,

(5.31)

62

5 Statistics of Labor and Company Personnel

T P1 , T P0 —the average number of the employees on payroll for the reporting and base period, respectively. • because of the change of the number of work hours per worker:   Th(h)  Th1 − T h0 T P1 ,

(5.32)

Th1 − T h0 —the average number of hours of work per worker for reporting and base period, respectively. Then one may say that Th  Th(P) + Th(h)

(5.33)

5.4 Indicators of Employees’ Engagement Level by Shifts In shift work mode, the level of the employees’ engagement by shifts is studied. Shift coefficient (C sm ) is identified as the ratio of the number of man-hours (T f ) [or work hours (T pf )] worked in all the shifts to the number of man-days (or work days) worked in the shift having the biggest workload (T n or T pn ): Csm  Tf : Tn , Csm  Tpf : Tpn

(5.34)

Coefficient of shift mode utilization (C sp ) is equal to the ratio of the shift index (Ksm ) to the operating mode number of shifts (Ps ): Csp  Csm : Ps

(5.35)

Continuity coefficient (C n ) is calculated as follows: – for one day—as the ratio of the number of workers in the shift having the biggest number of workers (T pn ) to the number of work places (P m ): Cn 

Tpn Pm

(5.36)

– on average for the period—is the ratio of the number of worked man-days in the shift having the biggest workload (T n ) to (the number of work places (Pm ) multiplied by the number of work days (Dp ): Cn 

Tn Pm · DP

(5.37)

5.4 Indicators of Employees’ Engagement Level by Shifts

63

Integral coefficient of work shifts utilization (utilization of work places) is calculated by multiplication the coefficient of shift mode utilization (Ksr ) and continuity index (Kn ): Cint  Csr · Cn , Cint 

Csm Tn · Ps Pm

(5.38)

5.5 Methods of Measuring Level and Dynamics of Labor Productivity Productivity of living labor is commonly understood as the performance of specific living labor, effectiveness of target-oriented production activity on creating a product within a specific period of time. Labor productivity rate is identified as the ratio of the output of the product (performed work, provided services) to the labor inputs (output is the direct indicator) or the ratio of labor inputs to output of products, work, services (labor-intensity of the item, the operation is the reverse indicator). We will introduce the following symbols: q—quantity of products; T —total labor input (of work time); w = q/T —product output per unit of work time; t = T /q—labor intensity, that is t  1/w. In measuring the labor productivity dynamics, three methods are used, which differ in the result measurer put in the numerator of the output indicator. 1. Natural metod is used when the output of manufactured products is expressed in natural units of measurement. Natural indices of labor productivity are applied in studying the dynamics of manufacturing uniform types of products (works) and are calculated by the following formulas: (a) for one subdivision: iw 

q1 q0 : ; T1 T0

(5.39)

(b) for several subdivisions manufacturing uniform products:  iw  

 q1

T1

:

q0

T0

;

where iw is the individual index of labor productivity;

(5.40)

64

5 Statistics of Labor and Company Personnel

q1 , q0 is the output of products (works, services) in physical terms, respectively, in reporting and base periods; T1 and T0 are labor inputs (average number of employees on payroll) per manufacturing these outputs of products. 2. Labor method is used when the total output of manufacturing is expressed in some fixed units of labor-intensity. In so doing, the levels of labor productivity are characterized by the value of efficiency of the result (measured by the capacity) of actual labor inputs. Labor index of labor productivity is based on comparing the expenses per unit of manufactured products (works, services). For uniform types of products, the individual index is calculated by the following formula: (a) for 1 subdivision: it 

T0 T1 :  t0 : t1 ; q0 q1

(5.41)

(b) for several subdivisions manufacturing uniform products:   T0 T1 it   :   ¯t0 : ¯t1 ; q0 q1

(5.42)

where t0 and t1 are labor-intensity of unit of products—labor input per unit of output of products (works, services) respectively in the base and reporting periods. For manifold works, summary index is identified by the formula:  t0 q1 , (5.43) It   t1 q1 where t0 q1 are labor inputs for produced in the reporting period output of products (works, services) by the standards of labor inputs in the base period; inputs in the period. t1 q1 are labor   reporting t0 q1 − t1 q1 answers the question about the actually Difference ET obtained economizing (over expenditure) of actual labor inputs as a result of change in labor productivity (labor intensity). If individual indices of labor productivity and labor inputs in the reporting period are available, index by Academician S.G. Strumilin is used for calculation:   iw t1 q1 iw T1   . (5.44) Iw   t1 q1 T1 Its use is expedient in cases when in individual divisions of a company, different methods of measuring labor productivity are applied (natural, labor, cost-based),

5.5 Methods of Measuring Level and Dynamics of Labor Productivity

65

and it is necessary to obtain the overall evaluation of labor productivity dynamics for the company on the whole. 3. Cost-based method is applied when the output of the production outcome is assessed in monetary terms through the price or added value. In calculating the output of products at the selling prices, the sum includes the value of the gross turnover of all subdivisions, in calculating the added value, the cost is exempt from double counting, and it is equal to the value added by the processing across the overall company. Cost index is used for studying the dynamics of labor productivity of employees performing manifold works, and it is calculated by the following formula: Iw 

q1 p q0 p :  w1 : w0 , T1 T0

(5.45)

where q1 p i q0 p are the cost of products (performed works, provided services) respectively in the reporting and base periods in fixed prices; T1 and T0 is the average number of employees on payroll, respectively, in reporting and base periods; w1 and w0 are the average level of output per unit of living labor inputs in money terms respectively in the reporting and base periods.

5.6 Studying Dynamics of Labor Productivity Over Set of Companies When studying the dynamics of the average labor productivity across a set of companies, it is necessary to bear in mind that change in the overall average labor productivity will depend on: (1) change in labor productivity in individual companies; (2) change of the share of companies with different productivity in the total number of employees across the group of companies. Index of average labor productivity calculated across a group of companies (types of activity), is called labor productivity index of variable basis.      w1 T1 w0 T0 w1 dT 1 Q1 Q0 :     ÷  , (5.46) I w  w1 : w0   T1 T0 w0 dT 0 T1 T0 where Q is the product value, dT  T T is the share of the headcount of the specific company employees in the total headcount of the workers of the corporation (group of companies). In order to eliminate the impact of structural shifts (redistribution of the headcount between companies with different level of labor productivity), labor productivity index of constant base is calculated:

66

5 Statistics of Labor and Company Personnel

     w1 T1 w0 T1 w1 dT 1 Q1 ω T1 IW  w1 : w0   :     ÷ 0 . T1 T1 w0 dT 1 T1 T1

(5.47)

This index reflects the impact of the change in the labor productivity in individual companies to the change in the labor productivity in the overall corporation (group of companies). Absolute change of the average output because of the impact of the first factor (change in the labor productivity in individual companies) is calculated by the formula: ww  w1 − w0 .

(5.48)

The impact of structural changes is assessed by means of structural shift indices:      w0 T1 w0 T0 w0 dT 1 w0 T1 Q0 Istr  w0 : w0   :     ÷  (5.49) T1 T0 w0 dT 0 T1 T0 Absolute change of the average output because of the impact of the second factor (structural shifts—namely: the share of the headcount of employees with different labor productivity level) is calculated as follows: wstr  w0 − w0

(5.50)

All the three indices are interrelated: I w  I w ∗ Istr

(5.51)

Absolute change of the average output is equal to the sum of the changes by means of the impact of two factors: w  ww + wstr

(5.52)

5.7 Use of Factor Index Models in Studying the Dynamics of Labor Productivity In practice of statistics, additive and multiplication models are utilized. Let us consider the model of labor productivity change by means of headcount and product output:     Q1 Q1 Q0 Q0 Q0 Q0 + −  − − W1 − W0  T1 T0 T1 T0 T1 T1 Impact of Impact of headcount

product output

(5.53)

5.7 Use of Factor Index Models in Studying the Dynamics of Labor Productivity

67

Additive model of labor productivity: W 

MZ OT A P OPP  + + + , T T T T T

(5.54)

where MZ is the cost of consumed material resources (expenses), OT —size of salary, A—size of depreciation allocations, P—profit. Model of the interrelation of labor productivity, capital productivity and capitallabor ratio: (5.55)

f 

OPP − capital productivity F

(5.56)

–capital-labor ratio

(5.57)

Four-factor model of labor productivity: W 

OPP OPP Tch Td TP · · ·  or W  Wch × T rd × T rp ∗ dP T Tch Td TP T

where Wch 

OPP Tch

(5.58)

is the average hourly labor productivity;

T T rd  Tchp is the average actual duration of the working day; d Td T rp  TP is the average duration of work period (month, quarter, dP  TTP is the share of workers in the total headcount.

year);

Index of the average annual output reflecting the impact of all the four factors, is as follows: IW 

a1 · b1 · c1 · d1 , a0 · b0 · c0 · d0

(5.59)

The difference between the numerator and the denominator of this index demonstrates the absolute gain of the labor productivity rate: W  W1 − W0  a1 · b1 · c1 · d1 − a0 · b0 · c0 · d0

(5.60)

Quantitative assessment of the impact of each studied factor on na the labor productivity dynamics may be identified by means of the system of consecutive

68

5 Statistics of Labor and Company Personnel

chain analytical replacements. In doing so, the value of each factor needs to be consistently changed, leaving the other factors constant. The impact of studied factors on the labor productivity dynamics in relative terms may be distributed as follows: (1) impact of hourly output change:  a1 · b1 · c1 · d1 ; Ia   a0 · b1 · c1 · d1 (2) impact of reduction (increase) of working day duration:  a0 · b1 · c1 · d1 Ib   ; a0 · b0 · c1 · d1

(5.61)

(5.62)

(3) impact of change of the average number of days worked by one worker: Ic 

a0 · b0 · c1 · d1 ; a0 · b0 · c0 · d1

(5.63)

(4) change of the specific weight of workers in the total headcount of workers: Id 

a0 · b0 · c0 · d1 . a0 · b0 · c0 · d0

(5.64)

The product of individual indices is the overall labor productivity index: I W  Ia · Ib · Ic · Id

(5.65)

The sum of absolute values of the impact of all the factors is equal to the total value of the increase of the labor productivity rate: W  Wa + Wb + Wc + Wd .

(5.66)

5.8 Measuring Increase in Product Output Due to Labor Productivity Change Total product output increase (Q) may be represented in the form of difference:   W1 × T1 − W0 × T0 , (5.67) Q  Q1 − Q0  based on it: • the sum of the product output increase by means of the extensive factor—the number of employees:

5.8 Measuring Increase in Product Output Due to Labor Productivity Change

QT 



T1 −

 T0 × W 0  Q0 · IT

69

(5.68)

• the sum of the product output increase by means of the intensive factor—labor productivity:    T1 W 1 − W 0  Q0 · IT · IW (5.69) QW  including: (a) because of the change of labor productivity in individual companies:  QW  (W1 − W0 ) × T1

(5.70)

(b) because of structural shifts: Qstr 



W0 T1 − W 0

 T1

(5.71)

It is obvious that: Q  QT + QW or Q = QT + QW + Qstr .

(5.72)

5.9 Concept of Salary. Payroll Fund Analysis Salary is the share of pure added value expressed in monetary terms, calculated to the employees for the actual amount of performed works, for the actually worked time, as well as for non-worked time paid for in accordance with the current legislation. Payroll fund, indicated in state statistical reporting, includes the following payments: (1) (2) (3) (4) (5)

salary for performed work and worked time (OVP); incentive payments (BCX); compensatory payments (BKX); payment for non-worked time (OHB); other payments included in payroll (DB).

Thus, payroll is the sum of the payments composing it, and it can represented as additive model: Φ ZP  OV P + (BCX + BKX ) + OHB + DB

(5.73)

In order to identify the influence of the factors on the size and the dynamics of salary, the following multiplication multiplicative dependencies are suggested:

70

5 Statistics of Labor and Company Personnel

F  T · Z; T Q F F  T · ·  T · W · Ze ; T Q Tp Q F · ·  T · dP · WP · Ze ; F T· T Tp Q F T·

(5.74) (5.75) (5.76)

where T is the average number of employees on payroll; d p is the share of workers in the number of employees on payroll (Tp /T); Tp is the average number of workers on payroll; W p is the labor productivity of workers (Q/T p ); Z e is the share of salaries in the products (F/Q). The size and the dynamics of payroll depends on efficient utilization of work time which may be represented in the form of multiplicative dependency. F T·

Tp Td Tch Q F · · ·  T · dp · T d · T pd · Wch · Ze ; · T Tp Td Tch Q

(5.77)

where Td is the average duration of work period (T d /T p ); Trd is the average duration of work day (T ch /T d ); Wch is the average hourly output of workers (Q/T ch ). Having denominated all the factors with the alphabet letter, we will obtain: F  A · B · C · D · I · F.

(5.78)

Absolute change of payroll is equal to: F  F1 − F0 ,

(5.79)

including because of the change of the model factors: (1) the average headcount of employees: FA 

F1 · (IA − 1), IA

(5.80)

(2) the share of workers in the number of employees: FB 

F1 · (IB − 1), IA · IB

(5.81)

(3) the average duration of work period: FB 

F1 · (IB − 1), IA · IB · IC

(5.82)

5.9 Concept of Salary. Payroll Fund Analysis

71

(4) the average duration of work day: FΓ 

F1 · (IC − 1), IA · IB · IC · ID

(5.83)

(5) the average hourly output of workers: (5.84) (6) the share of salary in the products: FE 

F1 · (IF − 1). IA · IB · IC · ID · II · IF

(5.85)

The average salary indicator is the characteristic of the level of the remuneration of labor. Average salary of company employees is calculated by dividing the sums calculated from the payroll of the employees on payroll (without the salary of persons on payroll from outside the company combining their jobs with part-time jobs for the company, remunerations   of persons who are not on payroll) by the average headcount of the employees T . The average salary is calculated as follows: Z

F T

,

(5.86)

  Dynamics of the average salary Z  Z 1 − Z 0 is conditioned by the influence of two factors: (a) change in the headcount of employees, (b) change of payroll:     F1 F1 F0 F0 F0 F0 + . −  − − Z1 − Z0  T1 T0 T1 T0 T1 T1 Impact of Impact of headcount payroll (5.87) Identifying the impact of structural shifts in studying the dynamics of the average salary When studying the dynamics of average salary over a set of companies, it is necessary to bear in mind that the change of the overall average salary will depend on the two following factors: (1) changes in the average salary at every company (or by groups of employees); (2) change of the share of employees of each company (or by groups of employees) in the total headcount of the employees of the set of companies (of the industry).

72

5 Statistics of Labor and Company Personnel



  Z1 T 1 Z0 T 0 Z dT IZ   ÷   1 1 Z T1 T0 0 dT0

(5.88)

– it is variable basis index which characterizes the dynamics of the average salary under the impact of the two factors. Index of the average salary change because of the change of the remuneration of labor in every company, is expressed by the following formula:    Z T1 Z T1 Z dT IZ   1 ÷  0  1 1 (5.89) Z0 dT1 T1 T1 – it is constant base index. Index of change of the average salary because of the change of the share of headcount of every company in the total headcount of the employees is expressed by the following formula:    Z T1 Z T0 Z dT  0 1 (5.90) Istr   0 ÷  0 Z0 dT0 T1 T0 – it is structural shift index. Interrelation of indices: Iz  IZ · Istr .

(5.91)

Interrelation of absolute changes of the average salary:   Z 1 − Z0  Z1 dT1 − Z0 dT0     Z0 dT1 −  Z1 dT1 − Z0 dT1 + Z0 dT0 . Impact of 1st factor

Impact of 2nd factor

(5.92)

Payroll is in functional dependency on: (a) headcount of employees (extensive factor):   FT  Z0 · T 1 − T 0 ,

(5.93)

(b) average salary (intensive factor): FZ  (Z1 − Z0 ) · T 1 .

(5.94)

5.9 Concept of Salary. Payroll Fund Analysis

73

Overall change: F  FT + FZ .

(5.95)

These calculations demonstrate to what extent the increase of the average salary was related to the increase of payroll, that is what part of payroll increase is allocated to the average salary increase. Control Questions 1. 2. 3. 4.

What groups of employees by employment status receive salary? How is payroll identified? Do the dynamics of average nominal salary and average real salary coincide? Name the main groups of International standard classification of labor force expenses. 5. Name the methods of analysis of employees differentiation by amount of received salary.

Bibliography 1. Asaliev, A.M. Assessment of personnel in company /Asaliev, A.M., Vukovich, G.G., Kirillova, O.G., Kosareva, E.A. - M.: NITS INFRA-M, 2016. - 200 pp. 2. Asaliev, A. M. Economics and human resources management: Textbook / Asaliev, A. M., Vukovich, G.G., Stroiteleva, T.G. - M.: NITS INFRA-M, 2016. - 143 pp. 3. Berezhnoi, V.I. Statistics in examples and problems: textbook/Berezhnoi, V.I., Bigdai, O.B., Berezhnaya, O.V., Kiseleva O.A. - M.: NITS INFRA-M, 2016. - 288 pp. 4. Biryukov, V.A. Theory of economic analysis: textbook/Biryukov, V.A., Sharonin, P.N. - 2nd edition. - M.: NITS INFRA-M, 2016. - 444 pp. 5. Bychin, V. B. Work standardizing/ Bychin V.B., Malinin S.V, Novikova E.V. - M.: NITS INFRA-M, 2015. - 352 pp. 6. Garnov, A.P. Analysis and diagnostics of company financial and economic activity: Textbook/Garnov, A.P. - M.: NITS INFRA-M, 2016. - 365 pp. 7. Golovina, S.Yu. International labor standards and Russian labor law: prospects of coordination: Monograph / Under edition by Golovin, S.Yu., Lyutov, N.L. - M.: Yur.Norma, NITS INFRA-M, 2016. - 256 pp. 8. Civil Code of the Russian Federation (with amendments as of October 01, 2015.) // http://www. consultant.ru/document/cons_doc_LAW_5142/ (Accessed October 16, 2016). 9. Endovitsky, D.A. Remuneration of personnel: regulations, count and reporting, economic analysis [Electronic resource]: textbook for university students studying specialties 080109 “Accounting, analysis and audit”, 080105 “Finance and credit”/Endovitsky, D.A., Vostrikova, L.A. - M.: YUNITI-DANA, 2012. - 303 pp. 10. Ivanov, Yu.N. Economic statistics: Textbook/Ivanov Yu.N. – 5th edition, revised and supplemented. - M.: NITS INFRA-M, 2016. - 584 pp. 11. Kazantsev, S.Ya. Legal statistics [Electronic resource]: textbook for university students studying “Law” specialty, for cadets and attendees of the Interior Ministry educational institutions / [Demivo, V.N. et al.]; under edition by Kazantsev, S.Ya., Lebedev, S.Ya., Inshakov, S.M.. – 2nd -edition, revised and supplemented. - M.: YUNITI-DANA: Zakon I pravo, 2012. - 271 pp. 12. Kamyshanov, P.I. Financial and management accounting and analysis: textbook/Kamyshanov, P.I., Kamyshanov, A.P. – M.: INFRA-M, 2016. – 592 pp.

74

5 Statistics of Labor and Company Personnel

13. Kanke, A.A. Analysis of financial and economic activity of company: Textbook/Kanke, A.A., Koshevaya, I.P., - 2nd edition, revised and supplemented. - M.: ID FORUM, NITS INFRA-M, 2017. - 288 pp. 14. Kartashova, L.V. Human resources management: Textbook. – M.: INFRA-M, 2017. – 235 pp. – (Textbooks for MBA program). 15. Kibanov, A.Ya. Management of organization personnel: textbook/under edition by Kibanov, A.Ya. – 4th edition, revised and supplemented. – M.: INFRA-M, 2017. – 695 pp. 16. Key indicators of labor market of UN KILM 3 // http://kilm.ilo.org/2011/download/ kilmcompleteEN.pdf (Accessed October 16, 2016). 17. Krasnova, L.N. Company economy: Textbook / Krasnova, L.N., Ginzburg, M.Yu., Sadykova, R.R. - M.: NITS INFRA-M, 2016. - 374 pp. 18. Luneev, V.V. Legal statistics: Textbook/Luneev, V.V.; Institute of State and Law of Russian Academy of Science. – 3rd edition, revised and supplemented - M.: Norma: INFRA-M, 2010. - 448 pp. 19. Lupei, N.A. Finance: Textbook/Lupei, N.A., Sobolev, V.I., 3rd edition. - M.: Magister, NITS INFRA-M, 2016. - 448 pp. 20. Malykh, N.I. Statistics. Vol. 2. Social and economic statistics: textbook and workshop for academy bachelor programs/Malykh, N.I.– M.: Yurite publishing house, 2016. – 540 pp. 21. Microeconomic statistics: Textbook/Edited by Ilienkov, S.D.– M.: Finance and statistics, 2004. 22. Tax Code of the Russian Federation (part one) of July 31, 1998 No. 146–FZ (edition of June 08, 2015) (revised and supplemented, came into force since July 08, 2015) // https://www. consultant.ru/law/ (Accessed October 16, 2016). 23. Orlovsky, Yu.P. Minimal boundaries of salary. Effective contract / Orlovsky, Yu.P. - M.: Contract, NITS INFRA-M, 2016. - 128 pp. 24. Palamarchuk, A.S. Company economics: Textbook/Palamarchuk, A.S. - M.: NITS INFRA-M, 2016. - 458 pp. 25. Resolution of 13th International Conference of Labor Statisticians (1983) //http://kilm.ilo.org/ 2011/download/kilmcompleteEN.pdf (Accessed October 16, 2016). 26. Resolution of 15th International Conference of Labor Statisticians of ILO (1993) – International classification of status of employed (ICSE) UN/ ILO // www.gks.ru/metod/resol.pdf (Accessed October 16, 2016). 27. Resolution of 19th International Conference of Labor Statisticians (2013) // http://laborsta.ilo. org/applv8/data/icsee.html (Accessed October 16, 2016). 28. Sibirskaya, E.V. Methodology of managing personnel in service sector (textbook) / Sibirskaya, E.V., Petrukhina, E.V., Stroeva, O.A., Lyapina, I.R., Gubareva, L.I. – Orel: OSU publishing house, 2013. – 247 pp. 29. Statistics: Textbook/ Editor Ionin, V.G. – 3rd edition, revised and supplemented. – M.: INFRAM, 2010. 30. Statistics: Textbook for higher education institutions/Editor Eliseeva, I. I. – SPb et al.: Piter, 2011. 31. Labor and employment in Russia. 2015: Statistical bulletin/Rosstat – M., 2015. – 274 pp. // http://www.gks.ru/free_doc/doc_2015/trud15.pdf (Accessed October 16, 2016). 32. The Labor Code of the Russian Federation (with amendments as of October 5, 2015) // http:// dogovor-urist.ru (Accessed October 16, 2016).

Chapter 6

Macroeconomic Indicators in SNA

After studying this chapter, you will be able to know: Concept of national wealth, importance and goals of its statistical study; concept, structure, types of assessment and analysis of fixed assets; concept of inventories and the set of methods for analyzing the inventories; concept of the system of national accounts; general principles of building a system of national accounts; Skills to be acquired: Analyzing and interpreting statistical data in Russia and other countries about the dynamics of the size of national wealth; calculating the key indicators of the state, movement and efficiency of fixed assets utilization; conducting statistical analysis of the size, structure and utilization of inventories; utilizing SNA in makpokonomiqeckom analize. Key points: 1. Concept of SNA, GDP and ways of calculating them 2. Statistics of other macroeconomic indicators.

6.1 Concept of System of National Accounts, GDP and Methods of Its Calculation The main goal of functioning of the system of state statistics is meeting information needs of the state and society in comprehensive, reliable, scientifically proven and timely provided official statistical data on social, economic, demographic, ecological and other social processes. The most important data set of statistical data are indicators utilized for calculations in the System of National Accounts. This system which is about forming summary indicators of economic development, is a tool of macroeconomic analysis. © Springer International Publishing AG, part of Springer Nature 2019 E. V. Sibirskaya et al., Economic Systems Analysis: Statistical Indicators, Studies in Systems, Decision and Control 158, https://doi.org/10.1007/978-3-319-91247-9_6

75

76

6 Macroeconomic Indicators in SNA

SNS indicators are intended for characterizing the rate and dynamics of economic development. SNS is in conceptual harmony with balance of payments and with a number of other areas of macroeconomic statistics. Its data are widely used both at the national level, primarily by the national government bodies for designing economic policy, and by international organizations, including the UN, the International Monetary Fund, the World Bank, the Organization of Economic Cooperation and Development. The data contained in sector accounts and accounts for areas of economy, enable to obtain the most important macroeconomic indicators: gross/net domestic product; gross/net national income; gross/net national disposable income; national final consumption; gross/net accumulation; balance of exports and imports of goods and services; gross/net national saving; net lending/net borrowing; national wealth. For the above mentioned aggregates, calculation on the gross or net basis means calculating the aggregate before or after the exclusion of fixed assets consumption. GDP is the central indicator of the System of National Accounts. GDP per capita is utilized for characterizing the level of economic development. Index of actual volume of GDP is utilized for characterizing the economic growth rate. This indicator serves for assessing the economic policy, the effectiveness of implemented reforms and programs. Data on GDP structure by the branches of economy are used for characterizing the sector structure of the economy. Dynamic analysis of data on GDP structure by the branches of economy indicates changes in GDP structure which occurred for a certain period of time. Data on gross regional product serve as the basis for regional analysis of the national economy, they enable to estimate the economic potential of certain regions, to study the needs in subsidies and so on. In order to estimate the capacities for expanding production, to analyze the living standards, indicators are applied of the structure of GDP utilization on consumption, accumulation and export. For analyzing current changes in the state of national economy, data on GDP calculated quarterly, are applied. In analyzing the factors of economic growth, economic efficiency, indicators of labor productivity are important (labor productivity is calculated as the ratio of GDP to labor inputs) and total productivity (which is calculated as the ratio of GDP to the total inputs of labor and capital). Conversion of the components of utilization of countries’ GDP into a single currency on the basis of purchasing-power parity serves as the basis of cross-country comparisons. PPP is the number of currency units required for purchasing a standard set of products and services which can be purchased at one monetary unit of the base country. The size of GDP estimated by PPP, indicates the sizes of national economies in comparable values. Data on PPP provide a more complete and clear understanding of the relative size of national economies. GDP is the value of the products and services produced in the country in all branches of economy and designated for final consumption, accumulation and export (with the deduction of import). The GDP indicator is also utilized for characterizing the level of economic development, the economic growth rate, analyzing the labor productivity in economy and so on. GDP is calculated in basis (current) prices and in market prices.

6.1 Concept of System of National Accounts, GDP and Methods of Its Calculation

77

Basis price is the price received by the manufacturer for a unit of product or service, without taxes on products, but including subsidies on products. Market price is the final customer price, including trade and transport margin, taxes on products, it does not include subsidies on products. GDP can be calculated by three methods: by output method; method of forming GDP by adding all the sources of income; finite elements method. 1. By output method – GDP in basis prices is calculated as the difference between Gross Output of products and services in basis prices for the overall country (GObp ), on the one hand, and Intermediate Consumption (IC)—on the other hand,  or as the sum of Gross Values Added from the types of economic activity ( GV Abp ). Gross Values Added are calculated in basis prices which do not include taxes on products and import, but include subsidies on products and import.   GObp − IC (6.1) GV Abp   GV Abp (6.2) GDPbp  – GDP in market prices is calculated as follows:

GDPmp  Gross Output − Intermediate Consumption + Net Taxes on Products and Import   GObp − IC + NT GDPmp 

(6.3) (6.4)

Gross Output is the value of produced products and provided services which are the outcome of production activities of resident business entities, it consists of production of goods, non-market and market services. Gross Output is calculated both in basis prices and in market prices. Gross Output in basis prices is utilized for calculating the indicators of the industrial structure of production. Gross output of products and services in market prices identifies the total value of produced products and services utilized for intermediate and final consumption, accumulation and export. By means of gross output of products and services, the indicators of all accounts of the system are interlinked in the account of products and services. Intermediate Consumption is the value of products and services fully consumed in the process of production, it includes the following components: material costs (products and intangible services); payment for intangible services; travel expenditures in the area of paying for accommodation and transport services; other elements of Intermediate Production (composite expenditures, after-sales service, distribution costs and others). Intermediate Consumption includes the consumption of Financial

78

6 Macroeconomic Indicators in SNA

Intermediation Services Indirectly Measured—the difference between received and paid interests of financial intermediaries, which is not distributed among consumers. Taxes on products and import are charged proportionally to the amount or value of products and services produced, sold or imported by residents. They include VAT, excise duties, taxes on specific types of services, tax on profit of state companies, current mandatory payments of companies in state economic and welfare funds, taxes on import and export, custom duties and others. Subsidies on products and import are given proportionally to the amount or cost of products and services produced, sold or imported by residents. They include reimbursements from the state budget of the difference in prices on agricultural and other products. Net taxes on products and import are calculated as the difference between taxes on products and import and subsidies on products and import. 2. By method of forming GDP by adding all the sources of income GDP is calculated as the some of primary incomes of residents from participation in production: GDP  Remuneration of labor + Net Taxes on Production and import + Gross Profit of Economy (6.5) Remuneration of labor includes payments in money and in kind of all employees (residents and non-residents) in the economic territory of the country. It includes: total salary; actual social insurance contributions of companies and organizations; imputed social insurance contributions. Net Taxes on Production and import are mandatory non-repayable irrevocable payments charged by government agencies from producing entities because of production and import of products and services or utilization of production factors. These taxes are registered at the point of time when the obligation of their payment emerges. Subsidies on Production and Import are current, non-repayable irrevocable payments made by the state to companies because of production, sale or import of products and services, or utilization of factors of production for conducting a certain economic or social policy. Net Taxes on Production and import are identified as the difference between Taxes on Production and import and Subsidies on Production and import. Gross Profit of Economy is the part of added value which remains with manufacturers after deduction of expenditures related to remuneration of labor, and net taxes on production and import. This item indicates profit (loss) from production before accounting incomes from property. Profit indicator in the SNA includes not only profit of companies, but also mixed income—independent indicator of incomes which combines elements of remuneration of labor and profit. Incomes include entrepreneurial incomes (without utilization of hired labor), incomes from household plots, incomes of persons of liberal professions, royalties and others.

6.1 Concept of System of National Accounts, GDP and Methods of Its Calculation

79

3. By finite elements method GDP is calculated as the sum of expenditures on final consumption of all institutional units which are the residents of the country, gross accumulation and net export of products and services: GDP  Final Consumption + Gross Accumulation + Net Export + Statistic Discrepancy

(6.6)

Final Consumption is formed from the expenditures on final consumption of households, expenditures of government agencies on individual products and services and on joint services, expenditures on final consumption of non-government organizations servicing households. – expenditures on final consumption of households are the main part of final national consumption. They include expenditures on final consumption of resident households which are located in the economic territory of the country and abroad, expenditures of households on purchasing consumer products and services at the expense of their own budgets, and receipts of products and services in non-commodity forms, acting as personal profits. – expenditures on final consumption of government agencies and non-government organizations serving households, include the value of free services provided by these agencies and organizations to individuals in the area of health care, welfare, education, culture and art, and to overall society in the areas of science, general management, defense and others. Expenditures on final consumption of these agencies and organizations include expenditures on purchasing products and services (except for capital expenditures), remuneration of labor, payment of taxes on productions, fixed assets depreciation. Gross Accumulation on overall economy indicates net purchase by resident entities of products and services produced or received by import in the current period, but not consumed in this period. Gross Accumulation includes accumulation of fixed assets, change in inventories, as well as net acquisition of valuables (jewelries, antique goods and so on). Net Export of products and services is calculated as the difference between export and import and includes the turnover of Russia’s trade with other countries, including the countries of the Commonwealth of Independent States. The balance of export and import of products and services covers the export and import operations of the given country with all countries and includes transport services, tourism, construction and insurance, information, computer services, advertising and others. Statistic discrepancy is the value indicating the discrepancy between GDP values calculated via different methods: as the sum gross added value and the sum of final consumption, accumulation and net export.

80

6 Macroeconomic Indicators in SNA

6.2 Statistics of Other Macroeconomic Indicators National Income is the sum of primary incomes received by the residents of the country for a certain period of time in market prices. GrossNationalIncome (GNI)  GDPmarket prices + Balance of property incomes received and passed to “the rest of the world” (6.7) Net National Income (NNI) is Gross National Income minus Consumption of Fixed Capital: Net National Income  Gross National Income−Consumption of Fixed Capital. (6.8) Net Domestic Product (NDP) is Gross Domestic Product minus Consumption of Fixed Capital: NDP  GDP−CFC.

(6.9)

NPE  GPE−CFC.

(6.10)

Net Profit of Economy:

Gross National Disposable Income (GNDI): GNDI  GNI + Balanceof current transfers

(6.11)

Balanceof current transfers —balance of current transfers passed abroad and received from abroad. Gross National Saving (GNS) is calculated as the difference between medy Gross National Disposable Income and Expenditures on Final Consumption. GNS  GNDI −FC.

(6.12)

Gross National Saving minus Consumption of Fixed Capital is Net National Saving (NNS): NNS  GNS−CFC. Change of GDP size in actual prices is caused by two factors: – change of the amount of produced goods and services; – change of the price level on goods and services.

(6.13)

6.2 Statistics of Other Macroeconomic Indicators

81

For studying the dynamics of the physical size of GDP, GDP is recalculated in comparable prices. Index of actual volume of GDP is calculated as the ratio of the sizes of GDP of the current and previous periods nominated in fixed prices  GDP1 p0 q1  , (6.14) IpsGDP  p0 q0 GDP0  GDP0   p0 q0 size of GDP of the base period in fixed prices; GDP1  p0 q1 size of GDP of the current period in fixed prices (actual GDP). For studying the change of the level of prices on production of finite goods and services, deflator index of GDP is calculated:  GDP1 p0 q1   , (6.15) Idefl.GDP  p0 q0 GDP1 BBΠ1 



p1 q1 is the size of GDP of the current period in actual prices.

Control Questions 1. Describe the economic substance of the key macroeconomic indicators. 2. What is the methodological framework of the System of National Accounts of Russia?

Bibliography 1. Agapova, T.A. Macroeconomics [Electronic resource]: textbook / Agapova, T.A., Seregina, S.F. – 10nd edition, revised and supplemented. - M.: MFPU Synergy, 2013. - 560 pp. 2. Basovsky, L. E. Macroeconomics: Textbook / Basovsky, L.E., Basovskaya, E.N. - M.: NITS INFRA-M, 2016. - 202 pp. 3. Edronova, V. N. Statistical methodology in system of scientific methods of financial and economic studies: Textbook / Edronova V.N., Ovcharov, A.O.; Edited by Edronova, V.N. - M.: Magistr: NITS INFRA-M, 2013. 4. Eliseeva, I.I. Statistics: textbook / Eliseeva, I. I., Kurysheva, S.V., Egorova, I.I. - M.: Prospect, 2015. 5. Zolotarev, V. S. International finance: Textbook / Zolotarev, V.S., Kochanovskaya, O.M., Karpova, E.N, Cherenkov, A.Ya. – 3rd edition, supplemented and revised. - M.: Alpha-M: NITS INFRA-M, 2014. - 224 pp. 6. Zolotarchuk, V. V. Macroeconomics: Textbook / Zolotarchuk, V.V. – 2nd edition, revised and supplemented. - M.: NITS INFRA-M, 2015. - 537 pp. 7. Ivanov, Yu. N. Economic statistics: Textbook / Ivanov, Yu. N. – 5nd edition, revised and supplemented. - M.: NITS INFRA-M, 2016. - 584 pp. 8. International statistics. 2nd edition, revised and supplemented. Textbook for master students / Bashkatov, B.I., Surinov, A.E. – M.: Yurite, 2015. 9. Basics of international statistics: Textbook / Under general edition by Dr. of Economy Ivanov, Yu.N. – M.: NITS INFRA-M, 2013. 10. Basics of national accounts (international standard of SNA of 2008.): Textbook / Edited by professor Ivanov Yu.N. – 2nd edition. – M.: NITS INFRA-M, 2013.

Chapter 7

Statistics of Production

After studying this chapter, you will be able to know: Types of industrial products; peculiarities of accounting production and sales in physical and value terms; parameters of evaluation of meeting the targets on production output and sales, direct and indirect indicators of evaluation of meeting the targets on smoothness of production flow, goals and objectives of sales statistics, differential, complex and mixed methods of evaluating the quality level. Skills to be acquired: Differentiating industrial products by types; accounting production in physical and value terms; evaluating meeting the targets by production output and sales, analyzing uniformity and smoothness of production flow, analyzing individual stages of sales of products, evaluation the quality level of products Key points: 1. Concept of production, types of production by its degree of readiness in manufacturing 2. Methods of accounting production output and sales 3. Evaluation of meeting the targets on production output and sales 4. Analysis of uniformity and smoothness of production flow 5. Statistical estimate of sales activity 6. Statistical study of product quality.

© Springer International Publishing AG, part of Springer Nature 2019 E. V. Sibirskaya et al., Economic Systems Analysis: Statistical Indicators, Studies in Systems, Decision and Control 158, https://doi.org/10.1007/978-3-319-91247-9_7

83

84

7 Statistics of Production

7.1 Concept of Production, Types of Production by Grade of Its Manufacture In order to satisfy the needs of target groups of customers, any industrial enterprise is engaged in industrial production. In this regard, it is possible to single out the following goals of statistics of production and product sales: – identifying the scope of the production (manufactured and sold) in physical and value terms; – analyzing the structure of manufactured and sold products and assessing structural shifts which occurred; – characterizing the interrelation of the indicators of manufactured and sold products; – analyzing meeting the targets in the volume of production and its dynamics; – analyzing meeting the targets in the range, completeness, uniformity of production and smoothness of production flow; – studying and quantitative measurement of the factors which changed of size of these indicators. For implementing these analytical procedures, data collection should be made from the following sources: 1. “Report on production and performed industrial works and services” No. 12-P; 2. “Main data on production of goods and services by the form of economic activity” No. 4-U; 3. “Report on production in physical values”; 4. “Profit and loss report” No. 2. Studying is started with specifying the terminology. Industrial production is commonly understood as direct useful result of industrial and production activity of the enterprise in the form of material values, industrial works and services (Fig. 7.1): Only products of industrial and production shops of and enterprise which represent only useful outcome of the activities of these structural divisions, are referred as

Industrial production Products

Industrial works and services

Finished products Unfinished production Intermediate products Fig. 7.1 Types of industrial production

7.1 Concept of Production, Types of Production by Grade of Its Manufacture

85

industrial products. Basing on this, industrial products do not include: defective products, waste and outcomes of activities of non-industrial shops and departments of the enterprise. In turn, products are classified by the degree of readiness: 1. Finished goods (production with completion in one of the shops of the enterprise, it conforms to the requirements of standards, it is accepted by the technical control department, it is supplied with quality certificates, it is fully supplied with required components, handed to the finished goods warehouse, and entered in the books there). 2. Semi-finished products (ready types of production which passed all the production stages in one of shops of the enterprise and are subject to further processing in other shops of this enterprise). Semi-finished products are transferred from the shop where they were manufactured, in the main production at the shop cost. Some part of semi-finished products can be sold outside the enterprise (to other enterprises) by contracts as finished goods. A part of semi-finished products has to remain in material warehouses at the end of month in the form of product stocks for further processing at this enterprise, but in the next period of time. This part of semi-finished products is unfinished production, it is accounted as the difference in the values of the remainders at the end and at the beginning of the month. 3. Unfinished production (production which was started, but was not completed by the end of the month within the shop or the enterprise). This type of production is present only at enterprises where a cycle of production development is long, with more than 2 months. Unfinished production is accounted as the difference in the value of the remainders of unfinished production at the end and at the beginning of month. Industrial works and services are a necessary element of the process of creation and restoration of industrial production. Industrial works and services are a necessary element of the process of creation and restoration of industrial production. It is commonly accepted to include in them: – repair of industrial products—works on restoration of the consumer cost, qualities, the properties lost by products; – operations on completion and bringing to full readiness of the products manufactured by other industrial enterprises; – transport services on transportation of goods within the enterprise and on delivery of finished goods in compliance with the contractual obligations of the enterprise; – capital repairs, modernization and renovation of own equipment, funded from Sinking Fund or other sources (but not at the expense of the cost price). The cost of industrial works does not include the cost of the basic product on which these works are performed.

86

7 Statistics of Production

7.2 Methods of Manufacturing Inventory and Selling Products The volume of industrial production is accounted: – in physical values; – in value terms. 1. Accounting production in physical values. Accounting production in physical values is necessary in order to be aware in what volume separate types of production in the national economy are manufactured for satisfying the requirements of society, as well as for calculating the consumption of separate types of production per capita. In every enterprise, in production statistical reporting forms No. 1-P, production is always accounted in physical values, irrespectively of the manufacture quantity of each type of production. Accounting is executed in those units of measure, which are peculiar to the physical condition of this type of production. As every industrial enterprise is an independent economic entity, the staff of the enterprise independently develops and approves the performance target for a certain period of time for the specific product range in physical values. Accounting production is physical values in the following units of measure (Table 7.1): Physical values (simple and complex) are applied for analyzing values having uniform properties. Their application is limited, as they do not enable to make summation of diverse values. Conditional physical values are applied to absolute values which are characterized by uniform properties, but manifest them differently (their direct comparison without conversion in conditional physical value is not possible). For this reason, in many branches, a conditional unit of measurement is developed and established, which enables to compare physical units with conditional units, to obtain conversion coefficient, and then to multiply the production volume in kind by the conversion

Table 7.1 Types of physical values utilized for accounting production Type of physical Characteristic Example value Simple Physical unit of measurement Tonnes, pieces, litres and so on Complex

Conditional physical

Design value obtained as a result of multiplication of two or several indicators having simple units of measurement It is recalculated from simple physical units for expressing forms of a phenomenon in the units of some reference standard

Man–hours, man–days and so on

Equivalent fuel with heat of combustion 29.3 MJ/kg (7000 kilocalories/kg), equivalent tins of 353.4 cm3 in volume and so on

7.2 Methods of Manufacturing Inventory and Selling Products

87

coefficient and to account production in conditional physical units of measurement (fuel, canning branches, etc.). Besides, these units of measure are applied for consolidating several kinds of the same consumer cost. One of them is accepted as the standard, and others are recalculated by means of special coefficients in the units of measure of this standard. Sometimes, depending on different conditions of production, sale, consumption, it is possible to account the same type of production in different units of measure (electric motors—in pieces and in kilowatts). 2. Accounting products in value terms. In current conditions, value indicators, along with physical values are a necessary element of the economic mechanism. Value indicators are indicators which characterize economic phenomena in value (monetary) terms and are identified via monetary estimate of physical indicators of production. Application of cost indicators is caused by their role in the commodity-money relations as they enable to generalize the characteristics of production activity (expenses and outcomes). In value terms, the total amount of production of the enterprise in general and in its structural divisions in particular, is identified. On this basis, the ratio is identified between the newly created and postponed value, between the necessary and surplus product, between the funds of consumption and accumulation, between the product cost price and the profit in the product value. Different value indicators of production are applied for accounting production in value terms, as each of them has its purpose in accounting the total amount of production, and for this reason they have different economic goal and substance. Indicators of value terms include: Gross turnover is intended for accounting the end results of work of the enterprise. It is calculated as the sum of the values of all types of production, industrial works and services manufactured and executed in all the shops and production sites of the enterprise. As a result, the gross turnover provides inaccurate final assessment of the overall outcomes of work of the enterprise, as in the composition of gross turnover, the value of the turnover within the factory is accounted twice (the production which is accounted first where it is manufactured, and for the second time where it is reprocessed or used). For this reason, economists believe that gross turnover is not valuable from the economic point of view. In its composition, gross turnover is the sum of values of all types of the finished goods (FG), all semi-finished products (SFP) irrespective of what they were used for, and Unfinished Production (UP), as well as the value of industrial works and services (IWS), value of sold production wastes (PW). If the enterprise partially makes production from “raw materials supplied by the customer”, then its cost as a part of the gross turnover is accounted at full value—taking into account the cost of “raw materials supplied by the customer” and the cost of its processing.

88

7 Statistics of Production

Intra-Factory Turnover (IFT)—when a part of produced finished goods and semifinished products is used within the enterprise for its own production needs. Commodity output (CO) is the value of all types of finished goods which are transferred to the finished goods warehouse, entered in the books, and they are goods prepared for sale, for transfer in the national economic turnover. Commodity output includes: (a) the value of all types of finished goods (FG) (b) the value of sold semi-finished products (SFGsv) (c) the value of industrial works and services executed both for themselves and under contracts for other parties (ISother) (d) value of sold production wastes (Wastes sold). C O  FG + SFGsv + ISother + Wastes sold

(7.1)

Commodity Output is different from Manufactured Production as Commodity Output does not include: (a) changes in the value of the remains of semi-finished products in warehouses in the form of production stocks (b) changes in the value of the remains of unfinished production at the end and at the beginning of the month. Commodity output is accounted at the current wholesale selling prices of the enterprise. Currently, commodity output is indicated in forms No. 1-P as the indicator “Production Volume (without VAT and excises)”. Shipped products are the commodity output shipped but unpaid in this time period. Sold products are the commodity output shipped and paid in this time period. Volume of sales of the given month can include: (a) commodity output manufactured, shipped and paid in the given month (b) changes in the remains of finished commodity output in warehouses and en route, as the difference in the value of remains at the beginning and at the end of the period. Sold Products  CO + Commodity Remains at the beginning of the period TOHH −Commodity Remains at the end of the period

(7.2)

It is accounted at the current wholesale selling prices of the enterprise operating. Currently, sold products are indicated in statistical reporting form No. 1-P on production as value indicator “sales volume”. Gross production (GP) is the main indicator applied for exact accounting of the end results of the enterprise operation. In its composition, as well as in Gross Turnover, the following is accounted:

7.2 Methods of Manufacturing Inventory and Selling Products

89

(a) the value of all types of finished goods (FG) manufactured by the main, byproduct, auxiliary shops both from own raw materials and from the customer’s raw materials at full cost (b) the value of semi-finished products of own production and products of nonproductive shops sold to the other party under contracts (SFPother) (c) the value of industrial works and services executed both for own use in-house and for other parties for other enterprises, as-well as for non-industrial units of the enterprise (ISother) (d) the value of change of the remains of semi-finished products, tools, devices, etc. which are in material warehouses in the form of production stocks for own production, but in the next period of time (e) the value of the change of the remains of unfinished production as the difference at the end and at the beginning of the month. There are two methods of calculating gross output: 1. It is obtained as the difference between the value of Gross Turnover and the value of Intra-Factory Turnover Gross Output  Gross Turnover − Intra − Factory Turnover

(7.3)

2. Gross Output is calculated by composition Gross Output  Commodity Products + Unfinished Productionend −Unfinished Productionbeginning

(7.4)

Currently, Gross Output is not an indicator on which the enterprise performance is estimated, it is not shown in forms of statistical reporting No. 1-P, but it is calculated by the enterprise since it is required for calculating the main indicators of the output, net and conditional net production, as well as for assessing the reserves of the output dynamics. GO is accounted in the constant fixed comparable wholesale selling prices of the enterprise. Net production is the difference between gross output and financial expenses on its production Net Production  Gross Output − Financial Expenses

(7.5)

In the analysis of cost indicators, it is necessary to calculate the following coefficients: 1. The coefficient of the ratio of Gross Output and Gross Turnover—Coefficient gross which indicates how many rubles of manufactured Gross Output falls on 1 ruble of Gross Turnover Coefficient gross  Gross Output/Gross Turnover.

(7.6)

90

7 Statistics of Production

2. Coefficient of intra production combination is inverse value to Coefficient gross (coefficient 1). Change of the coefficient indicates changes in the organization of production process, change of the number of processing stages. 3. Marketability Coefficient characterizes the value of the commodity products falling on 1 ruble of gross production. Its growth indicates relative reduction of the remains of unfinished production and semi-finished products and is the consequence of the changes occurred in intra-production planning. 4. Shipment Coefficient is defined as the ratio of the value of the shipped and commodity products (SP/CP). It serves as the indirect characteristic of the quality of sales. Growth of this coefficient indicates the reduction of stocks of finished products in warehouses. 5. Coefficient of Sales characterizes the ratio of the value of sold and shipped products (Sold Products/Shipped Products). Growth of this coefficient can characterize the performance of the financial services of the enterprise, improvement of work on control of timely receipt of payments from customers. Dynamics of all the considered indicators is significantly influenced by not only the technique of formation, but also by the prices enabling to measure and draw comparisons between diverse production.

7.3 Assessment of Plan Fulfillment in Production Volume and Sales List of all types of products manufactured in the enterprise is called nomenclature. Nomenclature reflects the main areas of production and its specialization. Meanwhile, each item of the nomenclature may have several kinds of a product having different appearance, design and other features. Product range represents an expanded set (unlike the nomenclature) of types of a certain product, differing in technical and economic characteristics (standard sizes, productivity, quality, etc.). Detailed plan of production and product sales reflecting the volume, nomenclature, the range and quality of products (goods, services) is called production program of a company (organization). Assessment of fulfillment of the plan on the production volume and sales in the reporting period is conducted via comparing the actual data with the plan both for individual types of products and for the overall enterprise C P F  T otal actual out put/T otal planned out put

(7.7)

The plan on individual types of products can be fulfilled and over-fulfilled, but at the same time, poor performance of the plan can occur in product range and completeness.

7.3 Assessment of Plan Fulfillment in Production Volume and Sales

91

Coefficient of plan fulfillment by product range is calculated by dividing the total actual product output, recorded for plan fulfillment by the product range (but not above the plan targets in each stock keeping unit), by the total planned output: Coefficient of plan fulfillment by product range  Total actual output by product range/ Total planned output by product range (7.8)

In the enterprise manufactures products utilized for manufacturing more complex types of products, it is necessary to evaluate plan fulfillment in structure (completeness) of the production. Structure of production is the ratio of the share of output of individual products in the total output. Coefficient of plan fulfillment by production structure is identified as the ratio of the output recorded for fulfillment of the plan in terms of production structure, to its actual fulfillment: Coefficient of plan fulfillment by production structure = Total actual output by production range/ Total planned output by production range

(7.9)

7.4 Analysis of Uniformity of Production and Smoothness of Production Flow An important criterion characterizing the success of the enterprise operation is the organization of uniform and smooth (rhythmical) production. Uniformity of production is commonly understood as the same production in equal time intervals. In turn, smoothness of production flow is the fulfillment by all structural divisions of the enterprise of the approved output plan (and production has to correspond to a certain range and quality) according to the schedule made beforehand, providing for uninterrupted course of production, observation of the timeframe of production and full utilization of the engaged production resources. On the basis of the analysis of the smoothness of production flow, it is possible to judge the performance of the suppliers of means of production, about the availability of a portfolio orders at the enterprise, etc. In turn, non-smooth production flow has an adverse effect on the activity of the enterprise. It causes failures in the work of contractors to who finished goods are delivered, it has an adverse effect on the quality of production, especially in the period of rush work, etc. Ensuring uniformity of production plays an especially important role in mass and large scale production. When arrhythmia occurs, product cost grows, the enterprise is unable to execute the supplies timely and in full, for this reason, payment from customers arrives with delays, the enterprise pays penalties, there is over-expenditure of the salary fund. In turn, when the smoothness of production flow decreases, the profit decreases. Direct and indirect indicators are used for assessing the implementation of the plan for the smoothness of production flow.

92

7 Statistics of Production

Direct indicators—smooth production flow coefficient, variation coefficient, arrhythmia coefficient, specific weight of production for every decade (day) to monthly output, specific weight of the manufactured production for every month to the quarterly output, specific weight of the manufactured products for every quarter to the annual output, specific weight of products manufactured in the first decade of the reporting month to third decade of the previous month. Indirect indicators of smooth production flow—presence of surcharges for overtime works, payment of idle times caused by the economic entity, loss from defective products, payment of penalties for incomplete delivery and untimely shipment of production, presence of excess wastes of unfinished production and finished goods in warehouses. Coefficient of smooth production flow is calculated by the following formula: Csmooth  Outputactual/Outputplanned

(7.10)

where: Csmooth is coefficient of smooth production flow, Outputactual is actual output of production (but not exceeding the plan targets), Outputplanned is planned output of production. Indicator of cases of smooth production flow by Novikov is calculated by dividing the number of days when the output plan was fulfilled and over-fulfilled, to the total number of work days. Arrhythmia numbers by Adamov are the ratios of under-fulfillment and overfulfillment of the plan (in percentage). Respectively, the lower this figure is, the more smooth is the production flow of the enterprise. Arrhythmia numbers can be compared in dynamics. However, for this purpose it is necessary to compare the periods, identical on duration and breakdown.

7.5 Statistical Assessment of Sales Activity The purpose of activity of any enterprise is production and/or sales of products. Sale is a complex of various operations on bringing goods to the end user (Fig. 7.2). Subject of statistics of sale is the quantitative assessment of mass processes and phenomena in the specific conditions of the place and time of movement of production from the producer to the consumer (producer). For sale assessment, statistics suggests using a set of methods: method of mass observations, method of groupings, method of generalizing indicators, index method. In assessment and analysis of commodity turnover, all methods of statistical study of dynamic processes are used: creation of dynamic ranks (in physical and cost units); calculation of the indicators of commodity turnover (basic and chain rates of growth and gain, compound rates, absolute rates and absolute value of 1% gain); creation of trend and regression models of dynamics; grouping individual enterprises, firms, regions by growth rates of commodity turnover.

7.5 Statistical Assessment of Sales Activity

93

Set of actions on bringing goods to consumer Commercial actions Studying the market and consumers Sales promotion Product promotion in the market

Identifying marketing channels

Organizational arrangements Selection of sales partners Concluding agreements with Accounting and control of compliance with the agreements

Developing sales targets and schedules of delivery

Technological operations Shipment, loading, unloading of production Acceptance by quantity and quality transportation storage Preparation of production for sale

Fig. 7.2 Set of actions on bringing goods to consumer

Applications of statistics of sales of products can be formulated as follows: – observation, collection, reporting, grouping and processing information about commodity turnover on micro, meso- and macro-levels; – assessment and analysis of separate stages of sales of products; – analysis of volume and dynamics of commodity turnover; – analysis of structure and range of products; – analysis of satisfaction of consumer demand; – analysis of the number of customers. The main form of federal statistical observation of production and shipment of goods and services is the No. P-1 form “Data on production and shipment of goods and services”. N P-1 form is provided by all legal entities which are commercial organizations, and also by non-profit organizations of all forms of ownership, which produce goods and services for sale to other legal entities and individuals (except small business entities, banks, insurance and other financial credit institutions) where the average number of employees for the previous year exceeded 15 people, including those working part-time and by civil contracts. Data on production are also contained in forms of statistical reporting: No. 1enterprise “Main data on activity of organization”; No. PM-prom. “Data on production by small enterprise”; No. 1-IP (month) “Main data on activity of individual

94

7 Statistics of Production

entrepreneur”; No. 1-RP (timed) “Data on condition of settlements for shipped production, performed works (services)”, etc. Data on sales of products can be additionally received from settlement and payment documents of the enterprise, from consignment notes, acceptance reports and notices of commission agents, accounts—invoices, books of accounts, cashier operations. The common conceptual goal of statistics of commodity turnover is collecting, processing and analyzing reliable data about the volume, level, structure and dynamics of purchase and sale of goods in general and at different levels of business activities. It is necessary to carry out assessment and analysis of separate stages of sales of products by the following chains (Fig. 7.3). Basing on this Figure, in order to assess the sales of products, we will use the category of commodity turnover as a set of acts of sale and purchase of goods, i.e. the material benefits, these acts are made in the course of the goods transition from the sphere of production to the sphere of consumption for a certain period.1 By seller attribute, two categories are singled out2 : – commodity turnover of producers is sold commercial products of branches of material production (chain 1 + 2 + 6 + 7 + 8). – trade intermediary turnover—commodity turnover of trade organizations, occurring without participation of producers of goods (chain 3 + 4 + 5 + 9).

Manufacturer

1

Manufacturer

Manufacturer

2

Commodities exchange

Commodities exchange

3

Trading company

Trading company

4

Trading company

Trading company

5

Consumer

Manufacturer

6

Consumer

Manufacturer

7

Trading company

Manufacturer

8

Entrepreneur

Entrepreneur

9

Consumer

Fig. 7.3 Possible chains of sale of products

1 Chernova 2 Chernova

T.V. Economic statistics: schoolbook. Taganrog: TRTU Publishing House, 1999. T.V. Economic statistics: schoolbook. Taganrog: TRTU Publishing House, 1999.

7.5 Statistical Assessment of Sales Activity

95

– By the buyer attribute, it is singled out:3 – wholesale commodity turnover (sales volume of goods in large lots by producers and resellers to other resellers for their subsequent resale, as well as to the mass consumers buying goods for executing their activities (for example, sales of raw materials and materials to industrial enterprises for subsequent processing, sale of equipment and household equipment to institutions and organizations of sociocultural sphere, sale of goods for export, etc.) occurring within the sphere of circulation (chain 2 + 3+ 4 + 7 + 8 + partially 1). – retail commodity turnover (amount of cash sale of goods to population via all channels of sale: trade enterprises, catering companies, enterprises of mail service, gas stations, drugstores, clothes, grocery and mixed markets, etc.), in which goods leave the sphere of circulation for consumption (chain 5 + 6 + 9 + partially 1). Gross commodity turnover (the sum of all sales of goods for a certain period of time on the way of their movement from producer to consumer) is estimated by formula (chain 1 + 2 + 3 + 4 + 5 + 6 + 7 + 8 + 9). The amount of gross commodity turnover is directly proportional to the number of re-sales. Pure commodity turnover is obtained by excluding from gross commodity turnover of double entry accounting of the value of the same goods, corresponding to the real quantity of sold goods. Commodity turnover is measured in value units and in kind. In value units, the size of commodity turnover depends on the quantity of sold goods (q) and on the price of a commodity unit (p), i.e. in the formalized form, it corresponds to the product of numbers T 

n 

qi pi

(7.11)

1

where T is commodity circulation, that is the volume of sold commodities in value terms; qi is the quantity of sold i–st commodity in physical units; pi is the selling price of i–st commodity; n is the number of i–st commodities (according to the breadth and depth of the range of commodities). The indicators characterizing the commodity turnover of the enterprise, include: – commodity turnover volume in value terms in the current and comparable prices; – product range structure by separate commodity groups (in rubles and by percentage) which includes food and the non-foods sold by the specific enterprise. These goods are divided into product range groups and subgroups, and in consideration with further details, types, grades, models, and sizes are considered4 ; 3 Chernova 4 Ivanov,

282.

T.V. Economic statistics: schoolbook. Taganrog: TRTU Publishing House, 1999. Yu.N. Economic statistics. Textbook, 2nd edition, enlarged.—M.: INFRA-M, 2002—p.

96

7 Statistics of Production

– one-day commodity turnover (in rubles and percentage); – commodity turnover per employee (in rubles and percentage); – time of the circulation of goods in days and commodity turnover velocity (velocity). Dynamics of the growth of commodity turnover (DCO) in the current prices is calculated by the formula: DC O 

Actual comm.tur nover o f r epor ting year in the curr ent price × 100% Actual comm.tur nover o f last year

(7.12)

Dynamics of the growth of commodity turnover in comparable prices is calculated by the formula: DC Ocomp. prices 

Actual comm.tur nover o f reporting year in comparable prices × 100% Actual comm.tur nover o f last year

(7.13) Let us consider what statistical indicators can be applied for conducting studies of sales market and sales volume: – market capacity assessment; – identifying the characteristics of the market and its segments—the analyzing trends of the changes of the market; – forecast of sales volume; – analysis of supply and demand; – studying commercial practices and legal conditions; – commodity and company structure; Consumer study: – possible buyers of the commodity; – segmentation of buyers; Products and services researching: – checking for the compliance of technical economic indicators and quality of goods with the needs and the requirements of the buyer; Price survey: – study of interrelation between the price and the demand. Statisticians consider the behavior of prices as the mediated reaction to the change of the economic situation (currency issue, balance of supply and demand, growth and differentiation of the income of population, the change in price for interconnected goods, change of the level of quality of goods and requirements to it, etc.). Opportunities and extent of influence of the prices on production, turnover, demand are studied. Statistical assessment of the prices in the analysis of sale enables: – to register the prices, to observe their change; – to analyze the price level and their differentiation; – to characterize the structure of the prices;

7.5 Statistical Assessment of Sales Activity

97

– to study the ratios of the prices of various goods; – to estimate, analyze and model fluctuations, recurrence and seasonality of the prices; – to analyze the prices and to carry out cross-region comparisons; – to model the dynamics of the prices; – to identify and model the factors influencing the level, the variation and the dynamics of the prices; – to predict the prices. Let us consider the statistical indicators which can be used for an assessment, analysis, modeling and forecasting: (1) for identifying the price level, it is recommended to use the indicators: of individual level (moment price of the commodity type and grade); the average level (the average price on the specific date and for the period for the commodity, commodity group, the territory, the market, the buyer); of generalizing level (the cost of the consumer basket, the ratio of the price to the income); (2) the structure of the price: the specific weight of the cost price in the commodity price; the ratio of the wholesale and retail prices; the ratio of the structural components of the prices; (3) ratio of prices: ratio of the prices of goods to the base price; deviation scope of ratios of the prices from the base prices; degree of stability of ratios of the prices in dynamics; (4) variation of the prices: distribution of the prices within the commodity group; the level of territorial fluctuation; the level of stability of the prices in dynamics; the level of seasonal and cyclic fluctuations in prices; the degree of distinctions of the prices of purchases across various groups of the population); (5) dynamics of the prices: individual price indices; group price indices; overall (summary) price index; index of the average prices; trend of the prices; (6) compliance of the price to the quality of goods and to the consumer opinions: parameters of models; elasticity coefficients; indices; expert estimates; (7) elasticity: elasticity coefficient; coefficient of cross elasticity; theoretical coefficient of elasticity; private coefficient of elasticity. Study of sales promotion: – studying the effectiveness of the system of sales promotion. The goal of marketing research of sales promotion with application of statistical methods include: the characteristic (modeling) of peculiar features of the perception of methods of sales promotion in various segments of the market; statistical analysis of the target groups; accounting and analyzing the distribution costs connected with advertising and methods of sales promotion; testing advertising activities; analyzing advertising the effectiveness of advertising and the methods of sales promotion. Important goal of statistics of studying sales promotion is identifying the amount and structure of expenses, and calculating its share in the budget of the enterprise and in the amount of distribution costs. It is expedient to compare this value with the

98

7 Statistics of Production

average for industries and with the corresponding indicator of the competitor. A time series of all the three indicators has to be constructed, and the dynamic characteristics should be estimated. The structure of the budget includes a number of items: administrative expenses; material expenses; expenses on buying advertising space, on use of other media, fees and commission charges. It is necessary to assess the efficiency of actions on sales promotion, to identify the demand changes caused by the activity of this or that type, to identify the gain of volume of sale and profit caused by activities and by the investments in the activities. The effectiveness of actions on sales promotion can be modeled as the function of expenses: ΔP  f (Z ),

(7.14)

where P is result of the activities on sales promotion (gain of profit or gain of sale of production, or increase in the market share of this company, or increase in the number of buyers of this commodity); Z are expenses on sales promotion (total or per 1000 persons of the respective audience). Studying channels of distribution and sales of production. Gross commodity turnover is the indicator characterizing resellers’ participation in the market process, this indicator is directly connected with the process of movement of goods (CT gross ). The sum of all the sales of commodity on the way of the movement from the producer to the consumer forms gross commodity turnover (considered above). This indicator (if prices, losses, etc., are ignored for a while) depends on the quantity of sold goods (q) and the number of re-sales (N), that is the components of goods distribution (q/N). The size of gross commodity turnover is directly proportional to the number of re-sales, i.e. it includes repeated accounting and does not reflect the actual volume of sold goods. The actual volume of the goods “traveling” along the channel of goods distribution, is characterized by final sale of goods and is called net commodity turnover (CT net ). Net commodity turnover is exempted from repeated accounting, it is equal to final sale of goods. The circumstance that net commodity turnover is exempted from repeated accounting, does it the main estimated and base indicator of statistics of sales. Sale of goods by companies to each other will be net commodity turnover for each of them, but for the whole set of firms it is internal wholesale commodity turnover, therefore, the total amount of such sales represents repeated accounting which has to be excluded in reporting of data. For today’s system of data reporting, the use of gross and net commodity turnover for characterizing the components of goods movement by the formula Ccomp  CTgross /CTnet is practically not applied. For this purpose, it is necessary to use the respective documents reflecting the sale and movement of goods (agreement, transaction, contract).

7.5 Statistical Assessment of Sales Activity

99

The assessment of the level of the execution of agreements, transactions, contracts measured by physical values, is expressed by the following formulas: (1) level (degree) of executing contractual obligations: Nagr  qi act /qi agr

(7.15)

(2) absolute value of deviations of supply from the terms of contract: n  qi act −qi agr ,

(7.16)

where qid and qif is the amount of supplied i–st product respectively by the agreement and the actual amount.5

7.6 Statistical Study of Production Quality Quality of production is a set of properties of production to satisfy the specific needs according to its purpose. High level of quality of production facilitates increase in the demand for production and increase in profit not only due to sales volume, but also due to higher prices. The level of quality is identified by means of differential, complex and mixed methods. Differential method is quite simple, it compares individual indicators of quality of the estimated product with the base quality indicators. The level of quality is judged by the size of individual relative indicators. There are indicators of the quality of the estimated production X 1 , X 2 . X P and the respective indicators of quality of the base sample X 1b , X 2b … X Pb . For comparing indicators via differential method, values of relative indicators of product quality are calculated by the following formulas: Xi X ib X ib qi  Xi

qi 

where Xi is the value of i–st quality indicator of assessed production; Xib is the value of i–st base indicator p is the number of considered indicators of production quality

5 Statistics

of market: Schoolbook/Edited by Sharova F.L.—M.: MIEP, 2011.—144 pp.

(7.17) (7.18)

100

7 Statistics of Production

In the cases when qi value is >1, the assessed production is better than the base sample by i–st indicator, if qi  1, the assessed production is in line with the base sample, if qi < 1, the assessed production is worse than the base sample. When differential method is used, it is not required to calculate the values of relative indicators q. It is sufficient to record the result of comparison by every i–st indicator in qualitative form: production by i–st indicator is better than the base sample, is in line with it or worse. As a result of comparing indicators via differential method, the following assessment results can be formulated in qualitative form: – the quality level of the assessed production is better than the base sample level if all the values of qi > 1, and at least one value of qi > 1 (that is, the production is not worse than the base sample in all the indicators and is better than the base sample at least in one indicator); – the quality level of the assessed production is in line with the level of the base sample if all the values of qi  1 (that is, the production by all the indicators is in line with the base sample); – the quality level of the assessed production is below the level of the base sample if all the values of qi < 1, and at least one value is less than qi < 1 (that is, the production by all the indicators is not better than the base sample, and it is worse than the base sample at least by one indicator). In cases when a part of the values of relative indicators of quality qi > 1, and another part qi < 1, (that is, the production by some indicators is better than the base sample, and by other indicators is worse than the base sample), differential method does not yield a result. In this case, complex method can be applied. Complex method has several properties. It is based on comparing complex indicators of the assessed product with the complex base indicators. However, these properties have different importance for quality, and for this reason, mixed method is applied as well. Mixed method of assessment of the level of quality combines differential and complex methods. The most important properties are estimate by the differential method, other properties are united in groups and estimated by complex method. Mixed method is usually applied for production certification. For summary assessment of the level of quality of production (product), V. A. Trapeznikov technique is applied. The “quality coefficient” which is equal to the product of particular indicators of quality (coefficients) characterizing the deviation of the actual value of each controlled parameter from the values established by standards or taken for a standard. Summary coefficient is calculated as, Cc 

n  i1

Ci  C1 × C2 × . . . × Cn

(7.19)

7.6 Statistical Study of Production Quality

101

where Ki —particular indicators of quality, P—product sign. In turn, particular indicators are calculated as Ci 

Cf Cs

(7.20)

where Kf is the actual level of quality, Ks is the level of the best sample (standard). In complex assessment of the quality of production, the weighed average arithmetic value can be also used, when the averaged initial relative indicators C i differ little from each other:  Ci × Wi (7.21) Cc  i1

where Ki is the particular relative indicator of quality; W i are weight coefficients of indicators (identified via expert assessment). In case if the summary indicator of quality will be more than one, a conclusion can be made that the product sample under consideration is better in quality than the base sample. For several types of goods, it is possible to calculate the quality level via summary quality index by Boyarsky  i q q1 p (7.22) Iq   q1 p where p is comparable price of the goods; q1 is the amount of goods in the reporting year; Ik —individual indices of quality by all types of products identified as the ratio of the actual quality level to the level accepted as the base (actual level in the base period or planned level). It is calculated as follows: Iq 

q1 q0

(7.23)

where q1 , q0 —quality levels—actual and base. Control Questions 1. Name the main goals of statistics of production and sales of products. 2. What data sources are utilized in statistics of production and sales of products? 3. What types of industrial production are singled out?

102

7 Statistics of Production

4. What types of physical values are used for accounting production? Describe them. 5. What is the way to convert physical values in value terms? 6. What indicators are used for accounting production in value terms? What is the method of calculating them? 7. What is the production program of the enterprise? 8. How is meeting the targets on production volume and sales evaluated? 9. What is the impact of uniformity and smoothness of production flow on the outcomes of the company operations? 10. What indicators are included in the direct and indirect indicators of evaluation of meeting the targets on the smoothness of production flow? 11. What is sales statistics? 12. What is the conceptual goal of statistics of goods turnover? 13. By means of what statistical indicators, can the study of the sales market and sales volume be conducted? 14. What is production quality? 15. By means of which methods, is the production quality level identified?

Bibliography 1. Godin, A.M. Statistics: Textbook / Godin, A. M. – 10th edition, revised and corrected. – Publishing and trade corporation “Dashkov and K°”, 2013. 2. Edronova, V. N. Statistical methodology in system of scientific methods of financial and economic studies: Textbook / Edronova V.N., Ovcharov, A.O.; Edited by Edronova, V.N. - M.: Magistr: NITS INFRA-M, 2013. 3. Eliseeva, I. I. Statistics: textbook / Eliseeva, I.I., Kurysheva, S.V., Egorova, I.I. – M.: Prospect, 2015. 4. Ivanov, Yu. N. Economic statistics: Textbook / Ivanov, Yu.N. – 5th edition, revised and supplemented. - M.: NITS INFRA-M, 2016. - 584 pp. 5. General and applied statistics: Textbook for students of higher professional education. / Akhunova, R.N., Askerov, P.F., Akhunov, A.V.; Under general edition of Akhunova, R.N.. – M.: NITS INFRA– M, 2013. 6. Salin, V.N.. Statistics: Textbook / Salin, V.N., Shpakovskaya, E.P. – M.: KnoRus, 2014. 7. Statistics: Textbook / Editor Ionin, V.G. – 3rd edition, revised and supplemented. – M.: INFRAM, 2010. 8. Statistics: textbook for academic bachelor programs / Under edition of Eliseeva, I.I. 4th edition, revised and supplemented. – M.: Yurait, 2014. 9. Economic statistics: Textbook / Moscow State University named after M.V. Lomonosov (MSU); Edited by Ivanov Yu.N. – 4th edition, revised and supplemented – M.: INFRA– M, 2011. 10. Economic statistics: Textbook / Edited by professor Ivanov, Yu.N. – 4th edition, revised and supplemented. – M.: NITS Infra– M, 2013. 11. Encyclopedia of statistical terms. In 8 volumes. Methodological basics of statistics. Moscow, the Federal State Statistics Service, 2011.

Chapter 8

Statistics of National Wealth

After studying this chapter, you will be able to know: Composition of non-financial and financial assets included in the national wealth in the System of National Accounts; classification of material and non-material fixed assets; technique of analyzing fixed assets; distinctive features of fixed and current assets; structure of current assets; algorithm of calculating indicators of assessment of the efficiency of use of objects of the labor. Skills to be acquired: differentiating the components of national wealth; making up and analyzing the balances of fixed assets; calculating and analyzing the indicators of state, movement, use of fixed assets; carrying out the assessment of the utilization of working capital; estimating the efficiency of use of the objects of labor. Key points: 1. 2. 3. 4.

Concept and composition of national wealth. Indicators of presence and accounting of fixed assets. Resources and reserves of material current assets. Assessments of efficiency of use of objects of labor.

8.1 Concept and Structure of National Wealth National wealth in the System of National Accounts is a set of non-financial and net financial assets which were accumulated in the country as of a certain time point. Non-financial assets these are the objects which are in possession of institutional units and bringing them real or potential benefit during a certain period of time as a result of their use or storage. © Springer International Publishing AG, part of Springer Nature 2019 E. V. Sibirskaya et al., Economic Systems Analysis: Statistical Indicators, Studies in Systems, Decision and Control 158, https://doi.org/10.1007/978-3-319-91247-9_8

103

104

8 Statistics of National Wealth

Depending on the way of creating, non-financial assets are subdivided by those produced and not produced. Produced non-financial assets are created as a result of production process and include the following elements: – – – –

fixed assets; stocks of material current assets; valuables. property of the population.

Fixed assets (fixed capital) is the most important element of national wealth, they represent the produced assets repeatedly or constantly used for production of goods and services and functioning during a long period of time (not less than 1 year). Fixed assets are considered to be the objects having the value of minimum 100-multiple minimum monthly remuneration of labor, established by the law, on the date of their acquisition. Tangible current assets include goods intended for sale or further use in production. The following items are considered to be tangible current assets: – – – –

production stocks (raw materials; fuel; materials; seeds; feed); unfinished production; finished goods; national defense stocks; goods for resale.

Valuables are expensive objects of long use which are purchased and stored as store values. They include: – precious metals and stones; – antique items and jewelry; – unique works of art. Accumulated household property of the population includes the fixed assets possessed by citizens (individuals), as well as the personal property accumulated by the population, including consumer goods with service life of longer than one year. Fixed assets belonging to citizens, include fixed assets belonging to individuals: – individual housing stock; – fixed assets of personal subsidiary farms (cattle, long-term plantings, farm buildings). Non-produced non-financial assets include assets originated not from production process, but which are used in this process. They are subdivided by material and nonmaterial. Tangible not produced non-financial assets include: land; subsoil wealth; water and forest resources. Intangible not produced non-financial assets include: patent; copyright; lease agreement.

8.1 Concept and Structure of National Wealth

105

Financial assets are assets, peculiar feature of which is that most of them are offset by financial liabilities from another institutional unit. Financial assets include: monetary gold which is stored as financial asset; cash and deposits; securities; loans; technical insurance policies.

8.2 Indicators of Fixed Assets Availability and Inventory Fixed assets are divided into tangible and intangible. Currently, in statistics of Russia, the following classification of tangible fixed assets is in place: – – – – – – – – –

buildings, except housing; constructions; dwellings; machines and equipment; vehicles; tools and household equipment; working animals and productive livestock; long-term plantings; other fixed assets. Intangible fixed assets include:

– – – –

expenditures on mineral exploration; software; original works of entertainment genre, literature and art; science intensive technologies which are intellectual property.

For calculating the total amount of fixed assets, their wear, analyzing their reproduction, valuation (monetary) assessment is applied. The following types of estimates of fixed assets are distinguished: – – – – –

full initial cost, full replacement cost, initial and replacement cost minus wear (residual value), liquidating cost, book value.

Fixed assets wear out in the course of functioning, transferring their value to the manufactured production. The monetary value of cost of wear of fixed assets transferred to the manufactured production, is called depreciation. In process of product sales, these sums of money are accumulated in the sinking fund intended for complete recovery of the disposed fixed assets. The volume of annual depreciation charges is defined as the ratio of the sinking fund to the service life of fixed assets in years.

106

8 Statistics of National Wealth

The annual norm of depreciation is calculated as the ratio of the annual depreciation charges (ADC) to the average annual full initial cost of fixed assets (AFICfa ) and is nominated in %: Na 

ADC × 100(%) AF I C f a

(8.1)

Wear of fixed assets for a year in absolute terms is calculated as the difference between full and residual the value of fixed assets, or by multiplication of the annual norm of depreciation by the average annual cost of fixed assets and dividing it by 100%. Balances of fixed assets Balances of fixed assets characterize their dynamics in a year. They are drawn up according to the balance scheme by the full and residual value of fixed assets. Scheme of balance of fixed assets at full cost: 1. 2. 3. 4.

Presence of fixed assets at the beginning of the period. Fixed assets put into use during the period by all the sources of supply. Fixed assets disposed at full cost for the period in all the areas of disposal. Presence of fixed assets at the end of the period. By items: 1 item + 2 items – 3 items  4 items)

The scheme of balances of fixed at residual value (taking wear into account) The balance of fixed assets at residual value, unlike the balance at full value, considers wear of fixed assets. This balance includes: 1. Presence of fixed assets at the beginning of the period: fixed assets at the beginning of the period are accounted at the recovery cost minus wear according to the revaluation data; 2. Putting fixed assets into use during the period: new fixed assets are accounted at the full initial cost, and the value of the fixed assets purchased and received from other organizations free of charge—at residual value; 3. Wear of fixed assets during the period (depreciation): is calculated in % of the average annual cost of fixed assets. 4. Fixed assets disposed for the period: fixed assets written off because of dilapidation and wear—at the liquidating cost, and fixed assets transferred to other organizations and sold—at the residual value. 5. Presence of fixed assets at the end of the period. By items: 1 item + 2 items − 3 items − 4 items  5 items

8.2 Indicators of Fixed Assets Availability and Inventory

107

Indicators of state of fixed assets Relative indicators characterizing the state of fixed assets, are calculated on the basis of the data of fixed assets balances: 1. Coefficient of renewal (putting into use) of fixed assets: Value of the fixed assets put into use during the year × 100% Full initial cost of fixed assets at the end of the year

Cr 

(8.2)

2. Coefficient of disposal of fixed assets: Cd 

Value of the fixed assets disposed during the year × 100% Full initial cost of fixed assets at the end of the year

(8.3)

3. Coefficient of wear of fixed assets: Cw 

The sum of wear of the fixed assets as of the certain date × 100% (8.4) Full initial cost of fixed assets as of the same date

4. Coefficient of fitness of fixed assets: Cf 

Initial cost of the fixed assets minus the wear as of the date × 100% Full initial cost of fixed assets as of the same date (8.5)

Coefficient of wear indicates what part of their full cost, fixed assets have lost in the course of functioning, and coefficient of fitness indicates what part of the full cost they have preserved. Therefore Cw  1 − Coefficient of fitness; Cf  1 − Coefficient of wear

(8.6)

Indicators of flow of fixed assets Fixed assets flow is characterized by the following coefficients. 1. Coefficient of receipts (Crc ): Cr c 

Asr eceived Asend

(8.7)

where Asr eceived is the value of fixed assets received in the reporting year; Asend is the value of fixed assets as of the end of the year. 2. Coefficient of renewal (C ren ): Cr en 

Asnew Asend

(8.8)

108

8 Statistics of National Wealth

where Asnew is the value of new fixed assets. 3. Coefficient of disposal of fixed assets (C d ): Cd 

Asdisposed Asbeg

(8.9)

where Asdisposed is the value of fixed assets disposed during the year; Asbeg is the value of fixed assets as of the beginning of the year. 4. Coefficient of liquidating fixed assets (Cliq ): Asliq Asnew

Cliq 

(8.10)

where Asliq is the value of liquidated fixed assets. 5. Coefficient of replacement of fixed assets (C repl ): Cr epl 

Asr eceived Asbeg

(8.11)

6. Coefficient of expansion of fixed assets (C exp ): Cex p  1 − Cr epl

(8.12)

7. Index of the value of fixed assets (I as ): Ias 

Asend Asbeg

(8.13)

8. Pace of value gain of fixed assets (Pas ) can be calculated as the ratio of the difference of the value of the received and disposed fixed assets to the value of fixed assets as of the beginning of the year: Pas 

Asr eceived − Asdisposed Asbeg

(8.14)

The most common indicators of the flow of fixed assets are coefficients of renewal and liquidation. Slowing down of the processes of renewal and liquidation of outdated fixed assets cause increase in the degree of their wear, aging of machines, equipment and other elements. For better tracking of the processes of the change of fixed assets, it is expedient to calculate the indicators of the state and the flow of fixed assets not only in general by all the fixed assets, but also for their separate types in the view of age groups.

8.2 Indicators of Fixed Assets Availability and Inventory

109

Indicators of use of fixed assets Assessment of the use of fixed assets assumes application of a system of indicators. It is necessary to distinguish summary and private (technical-economic) indicators of the use of fixed assets. Summary (production) indicators of the use of fixed assets: capital productivity; capital intensity. Capital productivity is a direct indicator, capital intensity is a reverse indicator. Peculiarity of summary production indicators is that the effect (result of production) and fixed assets used for achieving the result, belong to the same period of time. For example, the volume of production manufactured for the year (production result) is compared with the average annual value of fixed assets for the same year. Private cost indices characterize the use of the most active part of fixed assets—machines and equipment. Private technical and economic indicators reflect the use of the equipment and production spaces. We will introduce the following symbols: Q As ASa Cp Ci

value of manufactured production; average annual value of fixed assets; average annual value of the active part of fixed assets; capital productivity; capital intensity Cp  C act p 

Q AS Q ASact

(8.15) (8.16)

1. Capital productivity indicates how many products were produced in the given period per 1 ruble of the cost of fixed assets. The better fixed assets are used, the higher capital productivity indicator is. Capital productivity of all fixed assets depends on the return of the active part and its share in the total cost of fixed assets. Interrelation between the summary indicator of use, the returns of the active part and the structure of fixed assets can be expressed as the model: Cp 

Q AS



Asact Q ×  C pact × dact Asact AS

(8.17)

Thus, capital productivity of all fixed assets depends on the return of the active part and its share in the cost of fixed production assets. Capital productivity is the direct value of the level of use of fixed assets. The interrelation of the indicators of the volume of manufactured products and the indicators of use of fixed assets can be presented as follows: Q  As × C p

(8.18)

110

8 Statistics of National Wealth

2. Capital intensity is a reverse indicator. This indicator reflects the requirements per unit of the result value. By identifying capital intensity via the comparison of the cost of fixed assets and the volume of production, capital expenditures per unit of product are established. Capital intensity calculated by this technique, characterizes the average amount of binding fixed assets in manufacturing, and is called coefficient of fixing fixed assets.

Ci 

As Q

(8.19)

Ci 

As T

(8.20)

3. Capital intensity

The indicator of capital-labor of labor ratio greatly influences on the values of capital productivity and capital intensity, this indicator is calculated as the ratio of the value of fixed assets towards the average number of workers (employees) on payroll. This indicator characterizes the level of presence of means of labor per 1 worker (employee). Capital-labor ration and capital productivity are interconnected through labor productivity. If labor productivity is expressed through the quantity of manufactured product per 1 worker (employee), then the interrelation of the indicators will look as follows: W 

As Q Q ; Cp  ; W  Cp × C L R ; CLR  T T AS

(8.21)

where W is labor productivity expressed by the quantity of manufactured product per 1 worker (employee); T is the average number of workers (employees) on payroll. For increasing production efficiency, it is very important to ensure outrunning growth in production versus the growth of fixed assets or outrunning growth of labor productivity versus the growth of its capital-labor ratio. Increase of the extent of use of fixed assets is an important source of the increase in volume of production and economizing of capital expenditures. 4. Return on assets

Ras 

Pr As + Asnor m

where Pr is the average annual sum of profit; Asnor m is the value of current assets set by norm.

(8.22)

8.2 Indicators of Fixed Assets Availability and Inventory

111

5. Payback period PP 

CI Pr

(8.23)

where C I are capital investments. For enterprises which are developing (improving): PP 

CI Pr

(8.24)

6. Effectiveness ratio indicates what profit is yielded by each ruble invested in production: E

Pr CI

(8.25)

Coefficients of use of fixed production assets 1. Coefficient of extensive use of fixed production assets provides quantitative characteristic of the use of fixed production assets: Cext 

Tact T pl

(8.26)

where Tact , T pl are, respectively, actual and planned time of use (operation) of fixed production assets. 2. Coefficient of intensive use of fixed production assets provides qualitative characteristic of the use of fixed production assets: Cint 

Q act Q pl

(8.27)

where Q act , Q pl are, respectively, actual and planned volume of product output. 3. Coefficient of integral use of fixed production assets accounts for the quantity and the quality of the operation of fixed production assets: Cint  Cext + Cint

(8.28)

Index method of analyzing change of total capital productivity Index method is applied for studying the dynamics of the efficiency of use of fixed assets.

112

8 Statistics of National Wealth

For studying the dynamics of the efficiency of use of fixed assets, indexes of capital productivity (capital intensity) of changeable and constant composition, and influence of structural shifts, are calculated. We will consider these indexes by the example of capital productivity. For individual enterprises, individual indices of capital productivity are calculated: ia 

C p1 C p0

(8.29)

where C p1 and C p0 are capital productivity in the reporting and base periods, respectively. Across several companies, average indices are calculated. Capital productivity index of changeable composition is calculated by the formula:     C p1 C p1 × As1 C p0 × As0 Q1 Q0 Ic p   ÷  ÷ (8.30)   C p0 As1 As0 As1 As0 where C p1 and C p0 is capital productivity in the reporting and base periods, respectively. Q 1 and Q 0 is the volume of manufactured (sold) products in the reporting and base periods, respectively; As1 and As0 is the average for the period, cost of fixed assets in the reporting and base periods, respectively. Index of capital productivity of constant composition is calculated by the formula:   C p1 × As1 C p0 × As1 Ic p  ÷ (8.31)   As1 As1 Index of influence of structural shifts is calculated by the formula:   C p0 × As1 C p0 × As0 Iss  ÷   As1 As0

(8.32)

Index of variable composition indicates the change of the average capital productivity, index of constant composition characterizes the change of the average capital productivity by means of the change of capital productivity at each enterprise, index of structural shifts characterizes the influence of the change in the share of fixed assets in their total amount. In other words, index of structural shifts reflects the influence of the change of structure. Capital intensity indices are constructed in the same way.

8.3 Resources and Stocks of Tangible Current Assets

113

8.3 Resources and Stocks of Tangible Current Assets Current assets of companies—are a set of revolving business assets and funds in circulation measured in monetary terms, required for ensuring continuity of the process of production and sales of products. Current assets, unlike fixed assets, participate in the production process only once, and they immediately transfer their value to the produced product. Current assets are divided by: – current assets in production (production stocks) which include stocks of raw material, materials, fuel, tools, which have service life shorter than 1 year; Current assets in circulation (commodity stocks) which represents stocks of goods, media in settlements, money. As a part of current assets forming a considerable part of all property (assets) of the firm, first of all, tangible and material elements of property (current assets) are singled out, as well as money and short-term financial investments (bonds and other securities). Financial resources are sources of formation of elements of current assets. In their structure, own funds (which are a part of authorized capital, special funds formed by means of profit) and raised funds (loans, commercial credit, accounts payable to suppliers, raised funds of legal entities and individuals, deposits, bonds). Presence of current assets in terms of money is characterized by moment (on individual dates) indicators and averages for the reporting period. Change of the remains of overall current assets and by its individual elements occurs because of the flow of current assets. That is, at the beginning they are consumed, and their renewal required for the next production cycle, occurs at the expense of financial resources arriving after product sales. This process is called turnover cycle of current assets. Indicators of use of current assets Common point for all current assets is that the period of their use may not exceed 12 months. Change of the volume of current assets is characterized by absolute indicators of replenishment and disposal. Replenishment is carried out both by means of own production and acquisitions from outside. Indicators of disposal reflect the use of revolving funds in the course of production. The difference between replenishment and disposal reflects the change of revolving funds for the period. The most important indicators in statistics of revolving funds are: – turnover coefficient (number of turnovers): Ct 

Q CA

(8.33)

This indicator shows the number of turnovers of each ruble invested in production.

114

8 Statistics of National Wealth

– coefficient of fixing indicates the amount of current assets which has to be invested in advance for manufacturing a unit of product. Cf 

1 Ct

(8.34)

– the average duration of one turnover in days: Cd 

D Ct

(8.35)

where D is the duration of the period in days (for calculations, the duration of the financial month is accepted as 30 days; quarter—90 days; year—360 days). This indicator is used for calculating the amount of current assets released from the turnover as a result of turnover acceleration: C A(Cd ) 

Cd Q 1 Cd1 Q 1 − 0 D D

(8.36)

and the amount of current assets, which were additionally involved by means of increasing sales volumes: C A(Q) 

Cd Q 0 Cd0 Q 1 − 0 D D

(8.37)

In its contents, coefficient of turnover is similar to capital productivity indicator, and fixing coefficient is similar to capital intensity indicator. It is possible to analyze the change of the sold products using the data on the coefficient of turnover. The data about the coefficient of fixing can be used to analyze the change of current assets.

8.4 Assessment of Efficiency of Using Objects of Labor Assessment of efficiency of using objects of labor can be obtained by comparing the data on the material intensity of the production outcome. Material intensity can be calculated basing on the actually manufactured volumes of products in each period and actual consumption of tangible resources. mi 

M Q

(8.38)

Along with the indicator of consumption of materials, it is also possible to use reverse indicator – productivity of materials.

8.4 Assessment of Efficiency of Using Objects of Labor

mp 

Q M

115

(8.39)

In enterprises, the level and dynamics of specific expenses of material resources on a unit of product are studied. Indicators of specific consumption are calculated by the data about production (q) and consumption of material resources in kind. m

M q

(8.40)

where m is the specific consumption of material; q is the amount of products in manufacturing of which, material of this type was used; M is the volume of material in physical terms. Index of specific consumption enables to make a conclusion about the changes which occurred in the specific consumption in the reporting period (m1 ) compared with the base period (m0 ) or the norm (mnorm ): m1 m1 or i m  m0 m nor m M1 M0 ÷ im  q1 q0

im 

(8.41) (8.42)

where im is the index of specific consumption of the material of this type in manufacturing a unit of the specific type of product. In cases when one type of material is spent on production of several types of production, index is calculated characterizing the average change of specific expenses by all accounted types of products:  m 1 q1 M1  (8.43) Im   m 0 q1 m 0 q1 where q1 is the number of actually manufactured units of product of each type. The difference between numerator and denominator of this index shows economizing (overconsumption) of material of a certain type in kind for the studied period as a result of the deviation of the actual specific consumption from the base or standard specific consumption. Summary index of specific consumption is applied to characterize the use of different types of materials on production of several types of products. In this case, the value of materials is estimated in comparable monetary units:  m 1 p0 q 1 (8.44) Im   m 0 p0 q 1 where p0 are comparable prices.

116

8 Statistics of National Wealth

The difference between numerator and denominator shows economizing (overconsumption) of expenses on materials only because of the change of specific expenses. A system of indices is applied for analyzing the change of the specific consumption of materials of a certain type on manufacturing a product of one type:    m 1 q 1 p0 m 0 q 0 p0 m 1 d1 cw ÷   (8.45) I   q p q p m d  1 0  0 0  0 0 m 1 q 1 p0 m 0 q 1 p0 m 1 d1 I fw   ÷   (8.46) q 1 p0 q 1 p0 m 0 d1    m 0 q 1 p0 m 0 q 0 p0 m 0 d1 I ss   ÷   (8.47) q 1 p0 q 0 p0 m 0 d0 The difference between the numerator and the denominator of index of changeable composition shows the change of the specific consumption of material on production under the influence of factors of change of the specific consumption in each enterprise and redistribution of outputs across the enterprises. Control Questions 1. Give definition of national wealth. What components are included in national wealth? 2. Describe he classification of non-financial assets basing on the way of creating them. 3. What do production and non-production non-financial assets include? 4. What are the components of financial assets? 5. What type of classification of tangible and intangible fixed assets is applied in Russian statistics? 6. What is depreciation of fixed assets? 7. What schemes of drawing up the balance of fixed assets exist? 8. What for is the balance fixed assets drawn up? 9. Which relative indicators characterizing the condition of fixed assets, can be identified on the base of the balance of fixed assets? 10. What coefficients characterize xapaktepizyt fixed assets flow? 11. Which indicators are classified as summary (production) indicators of use of current assets? 12. How can the dynamics of the effectiveness of fixed assets use can be studied by means of index method? 13. What are current assets? 14. What is the structure of current assets? 15. Which indicators are considered to be the most important in the statistics of current capital? 16. How can the efficiency of the use of objects of labor can be assessed by means of material intensity analysis?

Bibliography

117

Bibliography 1. Agapova, T.A. Macroeconomics [Electronic resource]: textbook / Agapova, T.A., Seregina, S.F. – 10nd edition, revised and supplemented. - M.: MFPU Synergy, 2013. - 560 pp. 2. Basovsky, L. E. Macroeconomics: Textbook / Basovsky, L.E., Basovskaya, E.N. - M.: NITS INFRA-M, 2016. - 202 pp. 3. Edronova, V. N. Statistical methodology in system of scientific methods of financial and economic studies: Textbook / Edronova V.N., Ovcharov, A.O.; Edited by Edronova, V.N. - M.: Magistr: NITS INFRA-M, 2013. 4. Eliseeva, I.I. Statistics: Textbook / Eliseeva, I.I., Kurysheva, S.V., Egorova, I.I. – M.: Prospect, 2015. 5. Zolotarchuk, V. V. Macroeconomics: Textbook / Zolotarchuk, V.V. – 2nd edition, revised and supplemented. - M.: NITS INFRA-M, 2015. - 537 pp. 6. Ivanov, Yu.N. Economic statistics: Textbook / Ivanov, Yu.N. – 5th edition, revised and supplemented. - M.: NITS INFRA-M, 2016. - 584 pp. 7. General and applied statistics: Textbook for students of higher professional education. / Akhunova, R.N., Askerov, P.F., Akhunov, A.V.; Under general edition of Akhunova, R.N. – M.: NITS INFRA– M, 2013. 8. Salin, V.N. Statistics: Textbook / Salin, V.N., Shpakovskaya, E.P. – M.: KnoRus, 2014. 9. Statistics: Textbook / Editor Ionin, V.G. – 3rd edition, revised and supplemented. – M.: INFRAM, 2010. 10. Statistics: textbook for academic bachelor programs / Under edition of Eliseeva, I.I. 4th edition, revised and supplemented. – M.: Yurait, 2014. 11. Economic statistics: Textbook / Moscow State University named after M.V. Lomonosov (MGU); Under edition of Ivanov, Yu.N. – 4th edition, revised and supplemented. – M.: INFRA – M, 2011.

Chapter 9

Statistics of Production Costs

After studying this chapter, you will be able to know: Goals of statistics of costs of production; types of production costs; list of expenses included in product cost; the method of calculation of prime cost of a unit of product. Skills to be acquired: distinguishing production costs from distribution costs; differentiating production costs by different classification attributes; conducting analysis of the dynamics of product cost and the level of distribution costs; calculating the level and dynamics of prime cost of a unit of product. Key points: 1. 2. 3. 4. 5.

Concept and structure of costs of production. Classification of costs of production. Studying the dynamics of product cost. Distribution costs. Indicators of the level and dynamics of prime cost of a unit of production.

9.1 Concept and Structure of Production Costs Activity of enterprises and organizations of all forms of ownership and operation implies certain expenses. Enterprises which are engaged in production activity, calculate production costs, and enterprises carrying out household, supply or trade and intermediary activity, calculate distribution costs.

© Springer International Publishing AG, part of Springer Nature 2019 E. V. Sibirskaya et al., Economic Systems Analysis: Statistical Indicators, Studies in Systems, Decision and Control 158, https://doi.org/10.1007/978-3-319-91247-9_9

119

120

9 Statistics of Production Costs

The most important goals of statistics of production costs are as follows: 1) studying the volume and structure of expenses; 2) analysis of the level and dynamics of prime cost; 3) identification of reserves of decreasing prime cost. When studying production costs, it is necessary to distinguish: – total value of the current costs of production and product sales—production costs; – capital expenses on the expansion and renewal of production; – other expenses which are not directly related to production. Production costs are total expenses of living and materialized labor in the process of producing a product and bringing the product from the sphere of production to the consumer.

9.2 Classification of Production Costs Production costs can be classified by means of a number of attributes: 1. In terms of technological process: – main production costs—expenses directly related to the production process; – consignment notes—expenses related to maintaining and managing production process. 2. By the method of distribution between types of production: – direct expenses—expenses related to the specific type of production; – indirect—expenses related to several types of production. 3. In terms of output volume: – conditionally changeable (are changed with the change of output volume); – conditionally constant (do not depend on the changes of output volume). 4. By economic elements: – expenses of living labor; – expenses of materialized work. 5. By economic contents (items of accounting): – – – – – – –

material inputs; general production expenses; labor remuneration costs; allocations on social needs; general running costs; depreciation of fixed assets; other expenses.

9.3 Study of Dynamics of Production Cost Price

121

9.3 Study of Dynamics of Production Cost Price Production costs are current costs of the enterprise on production and sale of a unit of product. Prime cost of a unit of product is calculated by dividing the total amount of the production costs of the specific product by the quantity of manufactured products. Commonly used symbol of a product prime cost is z. Prime cost is a part of the price of goods which includes expenses related to enter: – directly to production (raw materials, materials, semi-finished products and purchased products, fuel, power, etc.); – maintaining and managing production process; – remuneration of labor and allocations on social insurance, as well as payments on obligatory medical and property insurance; – expenses on repair of fixed production assets; – depreciation charges on complete recovery (renovation) of fixed assets; – expenses on product sales. In practice of accounting and statistics, two main types of prime cost are distinguished: – production prime cost, covering only expenses connected with the production process, starting from putting raw materials in production, and finishing with the delivery of products to the finished goods warehouse, – full prime cost including production prime cost and the expenses connected with the storage and sale of finished goods (business expenses - costs of packing, storage, loading and transportation). In practice, comparative analysis of actual cost of a unit of product with planned indicator, is often applied. For analyzing the dynamics of the prime cost level, index method is applied. Individual index of the prime cost of a unit of product is as follows: iz 

z1 . z0

(9.1)

Absolute change of the prime cost of a unit of product in the reporting period compared with the previous period: z  z 1 − z 0

(9.2)

The amount of actual economy of expenses as a result of the change of the prime cost of this type of production: E e  (z 1 − z 0 )q1 .

(9.3)

122

9 Statistics of Production Costs

In analysis of the actual change of prime cost of diverse production in separate enterprises, aggregate index of prime cost is calculated, as well as the amount of the actual economy (over-expenditure) of funds from prime cost change:  z 1 · q1 (9.4) Iz   z 0 · q1   Ee  z 1 · q1 − z 0 · q1 . (9.5) Here, it is necessary to pay attention to the fact that prime cost indexes, as well as the appropriate amounts of savings, are calculated only by comparable production, i.e. by those types of production which were made both in reporting and in the base periods. Across the group of enterprises manufacturing identical production, indices of prime cost of changeable and constant composition and influences of structural shifts, are calculated. They are calculated by the following formulas: a) index of prime cost of changeable composition:   z1 z 1 · q1 z 0 · q0   ÷  Iz  q1 q0 z0 b) index of prime cost of constant composition:   z 1 · q1 z 0 · q1 Iz   ÷  q1 q1

(9.6)

(9.7)

c) influences of structural shifts:   z 0 · q1 z 0 · q0 Iz   ÷  q1 q0

(9.8)

9.4 Distribution Costs In product sales from producers to consumers, the branches of the sphere of distribution incur expenses on transportation, loading and unloading, maintenance of warehouses and office rooms, managerial and executive personnel. Distribution costs are the expenses of labor, material and financial resources directed to the execution of trade and intermediary activity. By their economic nature, they are subdivided in additional (production) and net costs.

9.4 Distribution Costs

123

Additional distribution costs are caused by continuation and completion of the process of production in the sphere of distribution, they include expenses on transportation and storage of goods, their loading and unloading, packaging and packing. These expenses are added to the goods cost. Net distribution costs are caused by the act of purchase and sale, they include expenses on advertising, payment of interest on loans, salary of trade workers. Absolute sum of distribution costs represents the sum of all the expenses connected with product sales. Relative level of distribution costs is calculated as the ratio of the absolute sum of distribution costs to the commodity turnover and is expressed as percentage. This is an indicator of the economic assessment of the efficiency in the sphere of distribution. Yr 

Distribution costs × 100% Commodity turnover

(9.9)

For studying the dynamics of the level of distribution costs, index method is applied.

9.5 Indicators of Level and Dynamics of Product Unit Cost Price The indicator of costs per 1 ruble of manufactured production is estimated as the ratio of full product prime cost to the product value. Applying the previously used symbols, the indicator of costs per 1 ruble of manufactured production can be identified as follows:  zq (9.10) h pq This indicator can be interpreted, first, in strict conformity with his name, as the sum of expenses required for production of 1 ruble of products (for example, if h  0.8, then it means that the production of 1 ruble of products costs the enterprise 80 kopecks); secondly, as the relative value characterizing the structure of the cost of production (continuing with the example, a statement can be made that expenses constitute 80%, and profit—20% of the cost of production). The indicator of costs per 1 ruble of production can be estimated for all manufactured production, both comparable and incomparable. Comparing the actual and planned (base) costs per 1 ruble of manufactured production, index of costs per 1 ruble of manufactured production in the prices of the corresponding periods is calculated:   z 1 q1 z 0 q0 ÷ (9.11) Ih  h 1 ÷ h 0   p1 q 1 p0 q 0

124

9 Statistics of Production Costs

It is well noticeable that change of costs per 1 ruble of manufactured production can occur under the influence of three factors: – changes in the price for manufactured production; – changes of prime cost of a unit of product of each type; – changes of the volume and the range of manufactured production. Influence of each factor on the level of costs per 1 ruble of production can be estimated quantitatively as follows: – change of the volume and the range of manufactured production   z 0 q1 z 0 q0 Iq   ÷ p0 q 1 p0 q 0   z 0 q1 z 0 q0 − q   p0 q 1 p0 q 0 – change of the prime cost of production   z 1 q1 ±  z 0 q1 Iz   ÷ p0 q 1 p0 q 1 z 

  z 1 q1 ±  z 0 q1  − p0 q 1 p0 q 1

(9.12)

(9.13)

(9.14)

(9.15)

– change of the prices for manufactured production and for raw materials, materials and other elements of material costs   z 1 q1 z 1 q1 ±  Ip   ÷  pq p0 q 1  1 1  z 1 q1 z 1 q1 ±  p   −  p1 q 1 p0 q 1

(9.16) (9.17)

Interrelation between indicators characterizing the influence of individual factors, is shown below. Iq I z I p  I h

(9.18)

h 1 − h 0  q + z +  p

(9.19)

Control Questions 1. 2. 3. 4.

Give the definitions of production costs and distribution costs. What are the challenged faced by the statistics of costs of production? Which criteria of classification are used in studying production costs? What is production cost and what expenses are included in it?

9.5 Indicators of Level and Dynamics of Product Unit Cost Price

125

5. What is the difference between production cost and total cost? 6. Which indicators are studied in the analysis of the dynamics of production cost? 7. What is included in distribution costs? 8. How can the indicators of costs per ruble of produced products be interpreted?

Bibliography 1. Godin, A.M. Statistics: Textbook / Godin, A. M. – 10th edition, revised and corrected. – Publishing and trade corporation “Dashkov and K°”, 2013. 2. Edronova, V. N. Statistical methodology in system of scientific methods of financial and economic studies: Textbook / Edronova V.N., Ovcharov, A.O.; Edited by Edronova, V.N. - M.: Magistr: NITS INFRA-M, 2013. 3. Eliseeva, I.I. Statistics: Textbook / Eliseeva, I.I., Kurysheva, S.V., Egorova, I.I. – M.: Prospect, 2015. 4. Ivanov, Yu.N. Economic statistics: Textbook / Ivanov, Yu.N. – 5th edition, revised and supplemented. - M.: NITS INFRA-M, 2016. - 584 pp. 5. General and applied statistics: Textbook for students of higher professional education. / Akhunova, R.N., Askerov, P.F., Akhunov, A.V.; Under general edition of Akhunova, R.N.. – M.: NITS INFRA– M, 2013. 6. Salin, V.N.. Statistics: Textbook / Salin, V.N., Shpakovskaya, E.P. – M.: KnoRus, 2014. 7. Statistics: textbook for academic bachelor programs / Under edition of Eliseeva, I.I. 4th edition, revised and supplemented. – M.: Yurait, 2014. 8. Economic statistics: Textbook / Moscow State University named after M.V. Lomonosov (MGU); Under edition of Ivanov, Yu.N. – 4th edition, revised and supplemented. – M.: INFRA – M, 2011. 9. Economic statistics: Textbook / Edited by professor Ivanov, Yu.N. – 4th edition, revised and supplemented. – M.: NITS Infra– M, 2013. 10. Encyclopedia of statistical terms. In 8 volumes. Methodological basics of statistics. Moscow, the Federal State Statistics Service, 2011.

Chapter 10

Statistics of Financial Outcomes of Company Operations

After studying this chapter, you will be able to know: key definitions and methods of analysis of indicators of level and dynamics of profit, profitability and business activity; database for calculating the system of indicators used in the analysis of financial and economic activity of enterprises and organizations; Skills to be acquired: calculating factorial models; applying methods of mass observations, statistical groupings and tables, structural analysis, time series, index method, correlation regression analysis. Key points: 1. 2. 3. 4. 5. 6.

Concept of gross profit and profit. Types of profit. Concept and types of profitability indicators. Statistical analysis of profit from product sales. Factor models in profit analysis. Index methods of profitability analysis. Factor models in analysis of profitability indicators. Indicators of business activity. Breakeven point.

10.1 Concept of Gross Income and Profit. Types of Profit Effectiveness of the operations of enterprises and organizations is expressed in achieved financial results which form a system of indicators. The system includes: gross revenue—proceeds from sales of production; profit; profitability. Sales proceeds characterize the overall financial result from product sales, they are among the most important indicators of economic activity of enterprises and organizations. Sales proceeds include: revenue (income) from sales of finished goods, © Springer International Publishing AG, part of Springer Nature 2019 E. V. Sibirskaya et al., Economic Systems Analysis: Statistical Indicators, Studies in Systems, Decision and Control 158, https://doi.org/10.1007/978-3-319-91247-9_10

127

128

10 Statistics of Financial Outcomes …

semi-finished products of own production; works and services; purchased products purchased for forming a complete set, construction, research and development works; goods in trade, procurement and sale enterprises; services on transportation of goods and passengers in transport companies. Sales proceeds are accounted from the point of time when money reaches the settlement account or the cash desk. The final financial result of the activity of enterprises and organizations is the profit (loss) of the financial year calculated with consideration of all incomes and expenses of the enterprise. Because of the variety of income and expenses, and also because of different interests of the persons having direct or indirect relation to the enterprise various indicators of profit are estimated. Gross profit from selling products (works, services) is calculated as the difference between the proceeds (net) from sale of goods, production, works, services (without VAT, excises and similar obligatory payments) and the expenses included in production cost. Gross profit is the indicator of the performance of the enterprise production divisions. Sales profit is calculation by subtraction current recurring costs (selling and management expenses) from gross profit. According to the international accounting standards, such recurring costs in full are subtracted from gross profit from the sale of production, and because of this, it looks like the state shares the risk of the businessman from possible failure to sell the products. Sales profit is an indicator of the performance of the primary activity of the enterprise, i.e. production and product sales. The final financial result of the activity of the enterprise is profit (loss) before tax which is the algebraic sum of the profit from primary activity (Pr pa ) and other profit (Pro ) and expenses (Prex p ). Profit before tax is the indicator of the effectiveness of the entire economic activity. Prbt  Pr pa + Pro − Prex p

(10.1)

Net profit is calculated by subtraction from profit before tax of the current income tax and other obligatory payments from profit (for example, fines and penalties from settlements with the budget), as well as the amounts of deferred tax assets and by addition of deferred tax liabilities (which were earlier accounted in the current income tax). The current income tax accounts deferred tax assets (+) and obligations if those take place. Net profit is the main indicator of the financial results of the enterprise characterizing its economic outcome; it is profit which remains at the disposal of the team of the owners of the firm. Retained earnings of the reporting period are identified by subtraction from the net profit of the sum of distributed profit. A part of net profit is used for formation (replenishment) of the obligatory funds set forth by constituent documents, as well as reserves (for example, the reserve capital), and the remaining part can be potentially distributed among owners. The net profit which is not withdrawn by owners and not used for formation of funds and reserves, is reflected in the balance by accrual procedure in the liabilities item “Retained Earnings (Uncovered Loss)”.

10.2 Concept and Types of Profitability Indicators

129

10.2 Concept and Types of Profitability Indicators Indicators of profit characterize absolute efficiency of the economic activity of the enterprise. Along with the absolute indicators, relative indicators are identified—profitability indicators. There are several indicators of profitability: Profitability of production is the ratio of the balance profit to the average value of production assets: Pp 

BP BP or Ppr  PA As + C A

(10.2)

The indicator characterizes the profit size per 1 ruble of the value of production assets. Profitability of production is the ratio of profit from the sale to the prime cost (the costs on production of the sold products), it shows the profit obtained from each ruble of the incurred expenses: Pp 

Prs PC

(10.3)

Profitability of the primary activity is the ratio of the profit from the product sales to the sales proceeds. It shows the amount of profit yielded by each ruble of the prime cost of sold products: Ppa 

Pr ps SP

(10.4)

Profitability of individual items is the ratio of the profit from the sales of the production of specific type to the proceeds from its sales: Pii 

Prsp PC

(10.5)

Profitability of own capital and profitability of fixed (advance) capital are identified for characterizing the profitability of investments in activity: Poc 

BP I n act

(10.6)

where I n act is the average annual cost of investments in assets; Poc 

BP OC

where C K is the average annual cost of own capital.

(10.7)

130

10 Statistics of Financial Outcomes …

10.3 Statistical Analysis of Profit from Product Sales. Factor Models in Profit Analysis As in the structure of balance profit, profit on product sales has the largest specific weight, the main attention in the analysis is paid to this indicator. For analyzing profit on product sales, the following indicators are considered: growth or decrease in selling prices of sold products; dynamics of the prime cost of the sold products; increase (reduction) in the volume of sold products; change of the structure (composition) of sold products. It is necessary to make recalculation of the proceeds from sales of the reporting period at the prices of the base period and of the prime cost of actually sold products in the reporting period at prime cost of the base period for identifying individual impact of these factors. 1) Impact of prices (tariffs):   z 1 q1 q 1 p1 −      − q 1 p0 − q 1 p1 − z 1 q1  q 1 p0

 Pr( price) 



(10.8)

2) Impact of the change of the prime cost of the sold products: 

 q1 z 1      − z 0 q1 − q1 z 0  q1 z 1 q 1 p0 −

 Pr(Z ) 

q 1 p0 −



(10.9)

Positive value of this factor indicates profit growth. 3) Impact of the change of the volume of sold products is estimated by means of the index of the physical volume of sales:  q 1 p0  Iq  q 0 p0

(10.10)

The value of the index shows the increase (reduction) in profit since change of profit is believed to be proportional to the change of volume. Change of profit due to the change of volume is calculated as follows:   Pr(q)  Pr0 Iq − 1 4) The impact of the change of the structure of sold products:

(10.11)

10.3 Statistical Analysis of Profit from Product Sales. Factor …

  Pr p Pr p0  Pr(ss)   − q 1 p0 q 0 p0

131

(10.12)

  where Pr p —is by the plan for the actually sold products. One more way of analyzing the profit for taxation is based on the application of the indicator—coefficient of change (utilization) of profit to taxation (balance profit)—Cupt Cupt 

BP Pr p

(10.13)

Thus, balance profit can be presented in the form of the model: B P  Pr p × Cupt

(10.14)

B P  B P1 − B P0

(10.15)

including by means of: – change of profit from product from product sale:   B P Pr p  Pr p − Cupt0

(10.16)

  B P Cupt  Cupt − Pr p1

(10.17)

– change Cupt

It is a simple two-factor multiplicative models. If Cupt should be presented as the sum of summands, we will obtain: Cupt  where

Pro Pr p

Pr p + Pro + Pl BP Pro Pl  1+ + Pr p Pr p Pr p Pr p

(10.18)

is the profit from other sales per 1 ruble of profit from product sale;

Pl —non-sale Pr p

incomes (losses) per one ruble of profit from product sale. Change of Cupt , depending on singled out factors, has the following form:   Pro0 Pro1 Pl1 Pl0 − 1+ + + Cupt  Cupt1 − Cupt0  1 + Pr p1 Pr p1 Pr p0 Pr p0   Pl1 Pro1 Pro0 Pl0 + (10.19)  − − Pr p1 Pr p0 Pr p1 Pr p0

132

10 Statistics of Financial Outcomes …

Respectively, each bracket will characterize the change of k ibp because of the change of singled out factors.   If we take into account that B P Cupt  Cupt × Pr p1 , then by substituting each of the brackets instead of Cupt , it is possible to calculate the change of balance profit caused by the change of profit from other sales per 1 ruble, the profit from product sales and the change of non-sale profits (losses) per 1 ruble of profit from product sales.

10.4 Index Methods of Profitability Analysis For studying the dynamics of profitability of functioning the enterprise (firm), indices are calculated indexes of profitability of variable, constant composition and of the influence of structural shifts. a) index of profitability of variable composition I

cw

  P1 C1 P0 C0   ÷  C1 C0

(10.20)

Index of variable composition characterizes relative change of the average profitability level b) index of profitability of constant composition I

fw

  P1 C1 P0 C1   ÷  C1 C1

(10.21)

The index of constant composition reflects the change of the average level of profitability due to change of profitability of individual types of production c) index of profitability of structural shifts I

ss

  P0 C1 P0 C0   ÷  C1 C0

(10.22)

Index of profitability of structural shifts reflects the change of the average level of profitability because of the shifts within the expenses on manufacturing products with different profitability.

10.5 Factor Models in Analyses …

133

10.5 Factor Models in Analyses of Profitability Indicators Analysis of profitability is most often carried out for the following indicators: profitability of manufacturing and profitability of products. The factors influencing manufacturing, include: profitability of products, products capital intensity (capital productivity), coefficient of fixing of current assets (coefficient of turnover of current assets). If all the indicators are divided by the size of the sold products, then: Ppr 

BP  As + C A

BP Q As Q

+

CA Q



Pp  Ci + C f

1 Cp

Pp + C1t

(10.23)

For assessing the influence of the factors of the obtained mixed model, calculations are made of changing manufacturing profitability by means of: – changes in the products profitability:   Ppr Pp 

Pp1 Pp0 Pp0 −  Ppr1 − Ci1 + C f1 Ci0 + C f0 Ci1 + C f1

(10.24)

– changes in products capital intensity (capital productivity): Ppr (Ci ) 

Pp0 Pp0 − Ci1 + C f1 Ci0 + C f1

(10.25)

– changes of coefficient of fixing of current assets (coefficient of turnover of current assets):   Ppr C f 

Pp0 Pp0 Pp0 −  − Ppr0 Ci0 + C f1 Ci0 + C f0 Ci0 + C f1

(10.26)

Profitability of manufacturing can be analyzed by means of the four-factor multiplicative model: BP As + C A Pr p SP CA BP × ×  × Pr p SP CA As + C A  Cupt × Pp × Ct × dca

Ppr 

(10.27)

In this case, the impact of factors is assessed as follows: 1) change of the coefficient of use of balance profit:   Ppr Cupt  Cupt × Pp1 × Ct1 × dca1

(10.28)

134

10 Statistics of Financial Outcomes …

2) change of profitability of products:   Ppr Pp  Cupt0 × Pp × Ct1 × dca1

(10.29)

3) change of coefficient of turnover: Ppr (Ct )  Cupt0 × Pp0 × Ct × dca1

(10.30)

4) change of the share of revolving funds in the total value of production assets: Ppr (dca )  Cupt0 × Pp0 × Ct0 × dca

(10.31)

Summation of all the four factors represents the total absolute change of the profitability of manufacturing. Relative change is calculated by dividing the value of the factor of the reporting period by the value of the basic period, for example, the change of the efficiency of balance profit corresponds to the relative change of the profitability of production: i p pr (Cupt ) 

Cupt1 Cupt0

(10.32)

The product of all calculated relative values will show the relative change of the profitability of manufacturing. Profitability of separate products depends on their market prices and prime cost. Calculation of the profitability of separate products is as follows: Ppi 

Pr ip S Pi



pq − zq pq

(10.33)

On the base of the obtained formula, the following factors are singled out: – change of the prices:    p1 q 1 − z 1 q 1 p0 q 1 − z 1 q 1   Pp ( p)  − pq p0 q 1  1 1 p0 q 1 − z 1 q 1   Pp1 − p0 q 1 

(10.34)

– change of the prime cost:  Pp (z) 

     p0 q 1 − z 1 q 1 p0 q 1 − z 0 q 1 z 0 q1 − z 1 q1    −  p0 q 1 p0 q 1 p0 q 1 (10.35)

10.5 Factor Models in Analyses …

135

– change o the composition of products:    p0 q 1 − z 0 q 1 p0 q 0 − z 0 q 0   − Pp (q)  p0 q 1 p0 q 0   p0 q 1 − z 0 q 1  − − Pp0 p0 q 1 

(10.36)



 p1 q1 − z 1 q1  Pp1 is the actual profitability of products; p1 q1   p0 q1 − z 1 q1   Pp1 is the actual profitability of products in v target prices; p0 q1   p0 q1 − z 0 q1   Pp0 is the base profitability of products expressed by the actual p0 q1

where

composition of products; 

 p0 q0 − z 0 q0 p0 q0

 Pp0 is the base profitability of the products.

10.6 Business Activity Indicators. Break Even Point Stability of the financial standing of the enterprise is caused in considerable degree by its business activity which depends on the breadth of sales markets of products, its business reputation, the extent of the fulfillment of the plan by the main indicators of economic activity, the level of efficiency of using the resources and the stability of economic growth. Business activity of the enterprise in financial aspect is manifested first of all in the speed of the turnover of its funds. The analysis of business activity is the study of the levels and the dynamics of various coefficients of turnover, the main of them are: 1) Coefficient of turnover of assets; Ct.A 

SP A

(10.37)

2) Coefficient of turnover of current assets; Ct.C A 

SP CA

(10.38)

SP R

(10.39)

3) Receivable turnover coefficient; Ct.C A 

136

10 Statistics of Financial Outcomes …

4) Payable turnover coefficient; Ct.C A 

SP P

(10.40)

Ct.C A 

SP S

(10.41)

SP FA

(10.42)

SP OC

(10.43)

5) Stocks turnover coefficient;

6) Fixed assets turnover coefficient; Ct.C A  7) Own capital turnover coefficient; Ct.C A 

Breakeven point indicator is connected with the concept of business activity. Breakeven point is such volume of product sales at which the gained income provides compensation of all the expenses at zero profit. Breakeven point can be calculated in 2 ways: in analytical and graphic methods. Analytical method of calculation: Br eak. poin. 

Cf . p − Cv

(10.44)

where Break.poin. is the critical sales volume when the profit is equal to 0; C f is fixed cost for the entire volume of production; p is the price per unit of products; Cv is variable cost per unit of products. Profitability threshold: T p  p × Br eak. point

(10.45)

Financial safety margin is the amount for which the company can afford to reduce the proceeds without leaving the profit area, calculated by deducting the proceeds from sales from profitability threshold (in money terms): M f s  S P × Tp

(10.46)

10.6 Business Activity Indicators. Break …

137

Graphical method of calculation:

Proceeds Expenses, rubles. Profit area

Expenses total

Breakeven point Variable cost Loss area

Fixed cost

Volume of production, physical units Control Questions 1. Name the goals of statistical studies of financial results of enterprises and organizations. 2. Explain the system of statistical indicators of financial results of enterprises and organizations. 3. Describe the procedure for calculating the indicators of the financial condition of enterprises and organizations. 4. Describe the indicators of business activity. 5. Name sources of data on the financial condition of enterprises and organizations.

Bibliography 1. Brusov, P.N. Financial management. Financial planning: schoolbook / Brusov, P.N., Filatova, T.V. – M.: KNORUS, 2012. – 226 pp. 2. Busov, V.I. Estimate of company (business) value: textbook for bachelor degree students / Busov, V.I., Zemlyansky, O.A., Polyakov, A.P.; edited by Busov, V.I. – M.: Yurite, 2013. – 430 pp. 3. Gracheva, E.Yu. Financial law: diagrams with comments: textbook / Gracheva, E.Yu. – 2nd edition, revised and supplemented. – M.: Prospect, 2013. – 110 pp. 4. Grigorieva, T.I. Financial analysis for managers: estimate, forecast: textbook for master degree students / Grigorieva T.I. – 2nd edition, revised and supplemented. – M.: Yurite, 2012. – 462 pp. 5. Gusarov, V.M., Kuznetsova, E.I. Statistics: Textbook. 2nd edition, revised and supplemented. M.: YUNITI– DANA, 2012.

138

10 Statistics of Financial Outcomes …

6. Dianov, D.V. Statistics of finance and credit: textbook / Dianov, D.V., Radugina, Stepanyan, E.A. – 2nd edition, stereotypical. – Moscow: KnoRus, 2012. – 326 pp. 7. Dianov, D.V., Radugina, E.V., Stepanyan, E.N. Statistics of finance and credit: Textbook. M.: KnoRus, 2012. 8. Eliseeva, I.I. Statistics: Textbook / Eliseeva, I.I., Kurysheva, S.V., Egorova, I.I. – M.: Prospect, 2015. 9. Zhilyakov, D.I. Financial and economic analysis (company, bank, insurance company): textbook / Zhilyakov, D.I., Zaretskaya, V.G. – M.: KNORUS, 2012. – 368 pp. 10. Investment analysis: textbook and practice book for academic bachelor programs / Kuznetsov, B.T., Russian Economic University named after G.V. Plekhanov. – M.: Yurite, 2014. 11. Kabantseva, N.G. Finance: schoolbook / Kabantseva, N.G. – Rostov– on– Don: Fenix, 2012. – 349 pp. 12. Quantitative analysis in economics and management: Textbook / Malugin, V.A., Fadeeva, L.N., – M.: NITS INFRA– M, 2014. 13. Course of social–economic statistics: textbook for university students studying “Statistics” major / edited by Nazarov, M.G. – M.: Omega– L, 2006. 14. Mathematical methods in business and management [Electronic resource]: schoolbook / Pokrovsky, V.V. – 3rd edition. (el.). – M.: BINOM. Laboratory of knowledge, 2012. 15. Melkumov, Ya.S. Social and economic statistics: Textbook / Melkumov, Ya.S. – M.: INFRA–M, 2013. 16. Neshitoi, A.S. Finance [Electronic resource]: Neshitoi, A.S., Voskoboinokov, Ya.M. – Moscow: Dashkov and K°, 2012. – 528 pp. –http://ibooks.ru. 17. Neshitoi, A.S. Finance, cash flow and credit [Electronic resource] / Neshitoi, A.S. – M.: Dashkov and K°, 2013. – 640 pp. –http://ibooks.ru. 18. Basics of national accounts (international standard of SNA of 2008.): Textbook / Edited by professor Ivanov Yu.N. – 2nd edition. – M.: NITS INFRA-M, 2013. 19. Basics of statistical analysis. Practice book on statistical methods and research operations with application of packages STATISTICA and EXCEL: Textbook / Vukolov, E.A. – 2nd edition, revised and supplemented. – M.: Forum: NITS Infra– M, 2013. 20. Podyablonskaya, L.M. Finance [Electronic resource]: electronic textbook / Podyablonskaya, L.M. – M.: YUNITI– DANA, 2011. – 1 electronic disc. 21. Prosvetov, G.I. Statistics. Problems and solutions: textbook. – practice book / Prosvetov, G.I. – M.: Alpha–Press, 2013. 22. Salin, V.N.. Statistics: Textbook / Salin, V.N., Shpakovskaya, E.P. – M.: KnoRus, 2014. 23. Social and economic statistics: Textbook / under edition of Efimova, M.R. – M.: Yurait, 2014. 24. Statistics (+ CD) / Edited by Eliseeva I.I. – SPb.: Piter, 2013. 25. Statistics: Schoolbook / Shumak, O.A., Geraskin, A.V. – M.: ITS RIOR: NITS Infra– M, 2012. – M.: Yurite, 2012. 26. Management of finance. Finance of companies: textbook / edited by Volodin A.A.– 2nd edition. – M.: INFRA– M, 2012. – 509 pp. 27. Federal law of November 29, 2007 No. 282– FZ “About official statistical records and system of state statistics in the Russian Federation” (version of July 23, 2013). 28. Finance: textbook for bachelor degree students / edited by Berzon N.I.; National research university Higher School of Economics. – M.: Yurite, 2013. – 450 c. 29. Finance of organizations (companies): textbook for universities / edited by Kolchina N.V. – 5th edition, revised and supplemented. – M.: YUNITI– DANA, 2011. – 407 pp. 30. Economic statistics: Textbook / Moscow State University named after M.V. Lomonosov (MGU); Under edition of Ivanov, Yu.N. – 4th edition, revised and supplemented. – M.: INFRA – M, 2011. 31. Economic statistics: Textbook / Edited by professor Ivanov, Yu.N. – 4th edition, revised and supplemented. – M.: NITS Infra– M, 2013. 32. www.budget.ru – Financial Treasury of the Russian Federation. 33. www.cbr.ru – official website of the Central bank of the Russian Federation. 34. www.gks.ru – Official website of the Federal State Statistics Service.

Bibliography 35. 36. 37. 38.

www.minfin.ru – Ministry of Finance of the Russian Federation. www.ec.europa.eu/eurostat –Eurostat. www.imf.org – International Monetary Fund. www.unstats.un.org – UN statistical department.

139