INTRODUCTION TO UK STANDARD INDUSTRIAL CLASSIFICATION OF ECONOMIC ACTIVITIES
UK SIC(92)

Introduction

1.   A Standard Industrial Classification (SIC) was first introduced into the United Kingdom in 1948 for use in classifying business establishments and other statistical units by the type of economic activity in which they are engaged. The classification provides a framework for the collection, tabulation, presentation and analysis of data and its use promotes uniformity. In addition, it can be used for administrative purposes and by non-government bodies as a convenient way of classifying industrial activities into a common structure.

Classification changes

2.   Since 1948 the classification has been revised in 1958, 1968, 1980, 1992 and 1997. Revision is necessary because, over a period of time, new products and the new industries to produce them emerge and shifts of emphasis occur in existing industries. It is not always possible for the system to accommodate such developments and after a period of time updating the classification is the most sensible action. The 1997 changes were not a full scale revision but a response to user demand for a limited number of additional subclasses together with some minor renumbering.

3.   The need for change is equally true for all international classifications and they are revised from time to time to bring them up to date. Thus, a new International Standard Industrial Classification of All Economic Activities (ISIC Rev 3) was agreed in the Statistical Commission of the United Nations in February 1989.(1) Whilst on 9 October 1990 the European Communities' Internal Market Council (of Ministers) passed a regulation to introduce a new statistical classification of economic activities in the European Communities (NACE Rev 1).(2)

International classifications

4.   From the outset, the UK SIC followed the same broad principles as the relevant international systems. UK statisticians played an important part in the formulation of the first ISIC, issued by the United Nations in 1948 and revised in 1958, 1968 and 1989. Nevertheless, there were differences in detail between the two as ISIC reflected the structure of economic activity in the world as a whole rather than that in one particular country.

5.   In 1980, one of the principal objectives of the revision of the SIC was to examine and eliminate differences from the activity classification issued by the Statistical Office of the European Communities (Eurostat) and entitled 'Nomenclature générale des activités Économiques dans les Communautés européennes', usually abbreviated to NACE. This 1970 NACE could be rearranged to agree with ISIC at aggregated levels but departed from it in the details. The 1980 revision of the SIC applied NACE as closely as was practicable to the structure of British industry.

6.   In 1990, however, the first revision of NACE was made by EC regulation and this presented a different set of circumstances.

EC REGULATION

7.   A European Community regulation is directly applicable in all member states. It does not have to be confirmed by national parliaments in order to have binding effect. The NACE regulation, therefore, in effect made it obligatory on the UK to introduce a new Standard Industrial Classification, SIC(92), based on NACE Rev 1, and to use it where the UK is required to transmit to the European Commission statistics on economic activity.

8.   The NACE regulation gives effect to the wish of Eurostat to establish a common statistical classification of economic activities in order to promote comparability between national and Community classifications and therefore between national and Community statistics. The regulation applies to the use of NACE Rev 1 for statistical purposes only, although a country can also use NACE for administrative purposes. The regulation does not oblige Member States to collect, publish or supply data. NACE Rev 1 is only a language and all requests for data collection, transmission and publication must be specified elsewhere.

9.   As already indicated, NACE was originally an acronym but for the future all countries will refer to "NACE" so that it is now intended to be English, German, Spanish etc. for the European Community Classification of Economic Activities.

UK SIC Structure

10.    UK SIC(92) is based exactly on NACE Rev 1 but, where it was thought necessary or helpful, a fifth digit has been added to form subclasses of the NACE Rev 1 four digit classes. Thus, UK SIC(92) is a hierarchical five digit system. However, at the first or highest level of aggregation, unlike the SIC(80) which had 10 divisions, UK SIC(92) is divided into 17 sections, each denoted by a single letter from A to Q. Some sections are, in turn, divided into subsections (each denoted by the addition of a second letter). The letters of the sections or subsections can be uniquely defined by the next breakdown, the divisions (denoted by two digits).

There are 17 sections, 16 subsections, 60 divisions, 222 groups, 503 classes and 253 subclasses. The full structure of UK SIC(92) is shown on pages 5-30.

11.   As with SIC(80), the full number of arithmetically possible subdivisions at each level is not necessarily created, varying according to the diversity of activities. For example, section A (agriculture, hunting and forestry), has no subsections and only two divisions, 01 and 02, whereas section D (manufacturing) is divided into 14 subsections and contains 23 divisions. The use of 0 as the final digit for a group or class normally indicates that it is the only subdivision at that level. Thus division 16 (manufacture of tobacco products) has only one group, 16.0 and only one class, 16.00. On the other hand, division 17 (manufacture of textiles) has 7 groups and so is numbered 17.1 through to 17.7.

Links to international classifications

12.   To the four digit level, UK SIC(92) follows NACE Rev 1 exactly. The difference is in the UK SIC(92) subclasses. For example, in both NACE Rev 1 and UK SIC(92), class 55.11 represents "Hotels and motels, with restaurant". In UK SIC(92), however, two subclasses are added so that 55.11/1 is "Licensed hotels and motels" and 55.11/2 is "Unlicensed hotels and motels". The first two digits, the divisions, of UK SIC(92) and NACE Rev 1 are exactly the same as in ISIC Rev 3 in content and in coding. Beyond this, and shown after a decimal point in the SIC and NACE codes, the three digit groups and the four digit classes can be directly converted to the ISIC headings but may have different code numbers (eg ISIC class 6519 = SIC/NACE class 65.12) or have to be combined to reach the ISIC heading (eg ISIC class 6022 = SIC/NACE classes 60.22 + 60.23).

Change from 1980 SIC

13.   In addition to the change in the numbering system, there are also some changes in the sequence in which different industries are listed. For example, SIC(80) division 1 (Energy and Water Supply Industries) has been split in UK SIC(92) into fuel extraction (section C, Mining and Quarrying); fuel processing and production (section D, Manufacturing) and energy production and distribution (section E, Electricity, Gas and Water Supply). Also of note is section D in UK SIC(92) which encompasses parts of SIC (80) divisions 1 and 2 and all of divisions 3 and 4, thereby being much larger as a section than it initially appears. Not surprisingly, therefore, section D is the most highly divided having 14 subsections of manufacturing. The most marked change from SIC(80) is the increase in headings in the services sector, This can be seen by looking at SIC(80) division 9 "other services" which splits, principally, between eight of the new section headings.

14.   The following table gives a broad comparison between the sections of UK SIC(92) and the former divisions, although the correlation is not exact as relatively minor differences in coverage are ignored.

15.   The table cannot show changes within sections.Within section G retail outlets are now classified by type and not, mainly, by goods sold, as they were in SIC(80). A more detailed table of the main changes between the 1980 classification and the present revision has been produced by the Office for National Statistics.(3) Re-issuing that correlation to incorporate the new subclasses and the limited renumbering of subclasses appearing in this publication was not considered to be justified. It must be stressed that it is not possible to automatically to re-code between classifications where activities previously covered by one code are now covered by several.

Related classifications

16.   There are other classifications, both national and international, which may be used in conjunction with the industrial classification. These include, for example, the classification of occupations, which relates to the jobs performed by individual workers rather than to the industry in which they work. The workers classified to a particular industry will fall into a number of different categories of an occupational classification and similarly the workers in some occupations may be found in many different industries. The UK uses the Standard Occupational Classification.(4)

17.   A second classification, used mainly in the national accounts, is by institutional sector. In the UK, this is the Sector Classification for the National Accounts.(5) This groups units according to their organisation or ownership, that is, it distinguishes between unincorporated businesses, companies, public corporations (nationalised industries) and central or local government. The industrial classification does not make such distinctions but brings together units engaged in similar activities, irrespective of ownership.

18.   A third classification is that of products, often a listing of individual products or products grouped according to the industries in which they are principally produced. The number of entries depends on the level of detail required in terms of characteristics such as materials used, quality, size and shape. The amount of detail needed for statistical purposes is much less than would be required for, say, a manufacturer's catalogue. The classification can also be extended to cover not only the production of goods but also economic activities such as distribution, transport and services, although the number of different types of service will normally be much less than the number of different products of the production industries. Each product (good or service) is, in general, classified to only one industry, that in which it is mainly produced. In practice, many units produce not only the goods or services which are principal products of the industries to which the units are classified but also products mainly produced in other industries.

19.   At the international level, the United Nations has the Provisional Central Product Classification (CPC).(6) The main aim of the CPC is to provide a general framework for international comparisons of product statistics. It applies to tradeable and non-tradeable goods and services. The CPC was agreed at the UN Statistical Commission in February 1989 for review in four years time, after use. An updated CPC, Version 1.0, has recently been produced by the Voorburg classifications group. The UN documentation of the CPC provides direct links to the Harmonized System (HS) and the Standard International Trade Classification (SITC) described below. The European Community, however, preferred a product classification that was closer to the industrial activity classification and devised the Classification of Products by Activity (CPA).(7) The CPA relates directly to the classification structure in NACE Rev 1, first four digits are the same, and has links to CPC via the fifth and sixth digit. So, the CPA provides detailed lists of products under each economic activity. The explanatory notes for the CPA have recently been finalised.

20.   The CPA is linked to the PRODCOM list, which extends the CPA code structure from six to eight digits. PRODCOM is from PRODucts of the European COMmunity, and is a list of some 4,800 products, developed by Eurostat, for which production data was required from all Member States from 1993.(8) PRODCOM covers only sections C, D and E of the NACE Rev 1 classification.

21.   The product lists associated with industrial activity classifications contrast with the classifications recording imports and exports. The United Nations Standard International Trade Classification (SITC Revision 3) and the Harmonized Commodity Description and Coding System (HS) with which it is correlated have been widely adopted throughout the world as the basis for national classifications both for tariff and trade statistics purposes. The HS was devised by the Customs Cooperation Council to support international trade and to meet the requirements of Customs authorities, statisticians, carriers and producers. The SITC is the most commonly published format for foreign trade statistics. The Member States of the European Community used the more detailed Combined Nomenclature (CN) to collect trade data through their Customs procedures. The CN was developed directly from the HS and was used for the collection of both intra-Community and external trade statistics.

Use of the UK SIC(92)

22.   SIC classifications are determined according to the principal activity of a unit. Ideally, this is based on value added; in practice a proxy, such as turnover or employment, is frequently needed. In general, SIC(80) rules on, for example, how to apply the SIC, on what types of statistical units are appropriate and on how to assess the secondary and ancillary activities will continue to apply. However, the UK SIC 1992 Methodological Guide (44Kb pdf) (9) sets out the detailed requirements.

Future developments

23.    A further minor revision of SIC(92) will take place in January 2003 to reflect changes in NACE Rev.1 and to meet user demand for additional detail at the UK Subclass level. No further changes are then envisaged before 2007 when a major revision of NACE Rev.1 and other international classification systems is planned.

REFERENCES

(1)   ISIC Rev 3 was published by the Statistical Office of the United Nations as Statistical paper Series M No 4 Rev 3 (ISBN 92-1-161319-0).

(2)   NACE Rev 1 Regulation was published in the Official Journal of the European Communities L 293 Volume 33, 24 October 1990 (ISSN 0378-6978).

(3)   Business Monitor PO1009, Standard Industrial Classification of economic activities, Correlation between SIC(92) and SIC(80) (ISBN 0-11-536311-4).

(4)   The SOC was published in 2000 (Volume 1; ISBN 0-11-621388-4).

(5)   The UK Sector Classification for the National Accounts is Business Monitor MA 23.

(6)   The CPC was published as United Nations Statistical papers Series M No. 77 (ISBN 92-1-161329-9).

(7)   The CPA Regulation (EEC) No 3696/93 was published in the Official Journal of the European Communities L342 Volume 36, 31 December 1993.

(8)   The PRODCOM Regulation (EEC) No 3924/91 was published in the Official Journal of the European Communities L 374/1, 31 December 1991.

(9)   The UK SIC 1992 Methodological Guide was published in 1996 (ISBN 0-11-620817-1).

(10)   The Indexes to the UK Standard Industrial Classification of economic activities 1992 were published in 1997 (ISBN 0 11 620 9240).

Office for National Statistics
Classifications and Harmonisation Unit
Segensworth Road
Titchfield
Hampshire
PO15 5RR

Classifications Helpdesk
Tel: 01329 444970
e-mail: classifications.helpdesk@ons.gov.uk

Contents Page

top

This page last revised: Friday, 4 April 2008