1.
GENERAL
This publication presents a revised summary of the national accounts for 2003. The
summary is based on updated and detailed data for the entire year. In addition, estimates of
previous years were adjusted after receipt of updated figures and specifications (see
Chapter 5 - Comparison with Previous Publications), and as a result of the continued
adjustment of accounts to the new System of National Accounts (SNA93).
In addition to the annual data, quarterly data are provided on the development of the product
and its components - original data and seasonally adjusted data1 - until the last quarter of
2003. Diagrams describing the developments in the main items of the accounts are
presented as well.
Tables 1 to 32 present annual data on the product, the real income, labour productivity,
public and private consumption, fixed capital formation, export and import of goods and
services, capital stock, employed persons, national disposable income, general government
sector accounts, disposable income of households, etc.
Most of the data in the tables are presented at current and constant prices. In addition,
quantitative changes, nominal changes and implicit price changes were all calculated.
Tables 33 to 38 present chained quarterly data on the product and its components,
seasonally adjusted1 in 2000 prices, up to the last quarter of 2003.
Tables 39 to 44 present quarterly data on the product and its components in current prices,
and chained data at 2000 prices.
The series in the printed publication include data for 1997-2003, whereas the series on the
CD contain data for 1995-2003.
2.
MAIN FINDINGS
The Gross Domestic Product (GDP) in constant prices increased by 1.3% in 2003, after
decreasing by 0.7% in 2002 and 0.9% in 2001. The GDP is equal to the net value of all
goods and services produced in Israel.
The Gross Domestic Product per capita in constant prices decreased by a relatively
moderate rate of 0.5%, in 2003, following a 2.7% decrease in 2002, and a 3.2% decrease in
2001.
Seasonally adjusted data on the development of the product during the year show a rise at
an annual rate of 1.7% during the first half of 2003, following increases of 1.2% during the
first half and 1.2% during the second half of 2002.
The total resources available to the economy in 2003 rose by a relatively low rate of 0.3%,
following a 1.8% decrease in import of goods and services. Data on use of resources
point to increases of 6.2% in export of goods and services, and 1.3% in private
1
The seasonally adjusted data are updated for every estimate that is added or changed.
- XIII -
consumption expenditure. However, fixed capital formation decreased by 4.9%, while
general government consumption expenditure decreased by 2.0%.
The increase in exports contrasted with the decrease in imports in 2003, resulted in a
balance in the Goods and Services Account, excluding defense imports; compared with
deficits of 1.8 billion dollars in 2002, and 1.5 billion dollars in 2001.
Real domestic income (GDP plus gains or losses from changes in terms of foreign trade)
increased by 0.3% in 2003 - 1.0% less than the GDP, because of losses due to deterioration
in the terms of trade; and following the years 2001 and 2002, in which the change in real
income was similar to the change in the GDP.
Following is an additional breakdown of the findings:
The gross domestic product of the business sector (product of all industries excluding
general government sector and housing services) increased by 1.7% in 2003, following
decreases of 2.6% in 2002 and 2.4% in 2001.
The increase in the product of the business sector in 2003 mainly reflects the increase in
the product of the services industries:
Relatively significant increases were recorded in the product of the financial and business
services (14.8%), in the transport and communications services (7.6%), and in the
personal services industries (1.6%). The product of the commerce and food services
industries remained stable.
The product of the manufacturing industry remained almost unchanged in 2003, after
decreases of 2.8% in 2002 and 15.1% in 2001. An increase of 2.1% was recorded in 2003 in
the production of High Technology Industries, whereas in Low Technology Industries a
decrease in production was recorded, and the production of Medium Technology Industries
remained stable. Production in the construction industry decreased by 3.2% in 2003,
following decreases of 1.6% in 2002, and 5.1% in 2001. The decline in production in 2003
was mainly influenced by the reduction in residential construction and in development
activities in economic industries.
The product of the general government and community services industry, estimated by
wage payments of the government, local authorities and non-profit institutions which are
mainly financed by the government, decreased in 2003 by 0.9%, after increases of 3.7% in
2002 and 2.9% in 2001.
Income and Savings
National disposable income at market prices, which includes income from the domestic
product plus entrepreneurial income and income from labour from abroad and net current
transfers, reached approximately NIS 66,000 per capita in 2003.
Net national savings, equal to disposable national income less general governmentand
private consumption, was negative in 2003, and constituted 0.6% of the national disposable
income; following nil savings in 2002, and compared with savings of 4.3% in 2001 and 6.27.0% per annum in 1997-2000.
Private disposable income per capita, after deduction of the rise in private consumption
prices, increased by 2.4% in 2003, following a decline of 6.5% in 2002.
- XIV -
The net private savings rate reached 8.2% of private disposable income in 2003,
compared with 5.5% in 2002, 10.9% in 2001, 11.1% in 2000 and 13.5-13.7% per annum
during 1997-1999. The gross private savings rate (savings before deduction of consumption
of fixed capital) totaled 26.5% in 2003, compared with 24.9% in 2002 and 26.9-27.2% per
annum in 2001 and 2000.
General Government Sector
The deficit in the current account of the general government sector totaled NIS 29.0
billion in 2003, approximately NIS 12.2 billion higher than the deficit in 2002. The deficit was
5.7% of the GDP in 2003, compared with 3.4% in 2002 and 3.1% in 2001. The current
account deficit equals current income less current expenditure of all agencies in the general
government sector: the central government, local authorities, national institutions, and nonprofit institutions which are mainly financed by the government. The increase in the current
deficit in 2003 is attributed to a decrease of 5.5% in current general government revenue,
compared with stable current expenditure. In tax collection (income tax and taxes on
domestic production and imports), there was a 1.5% decrease, following stability in 2002 and
2001, and in contrast to a sharp increase of 13.1% in tax revenue in 2000.
The total deficit in the general government sector, which also includes the capital
account deficit, reached 6.2% of the GDP in 2003.
General government consumption expenditure, including wage payments and purchases
of goods and services, amounted to NIS 151.6 billion or 30.2% of GDP. General government
consumption shrank in 2003 by 2.0% in constant prices, after increases of 5.0% in 2002 and
3.5% in 2001.
51.8% of consumption expenditure was for collective services - defense, public order and
civilian administration services - compared with 52.4% in 2002. The rest was for individual
services intended for individual consumption, such as education and health. The share of
collective consumption out of total consumption expenditure decreased in 2003 due to a
decrease in the defense expenditure.
Consumption
Private consumption expenditure in constant prices increased by 1.3% in 2003, following
an increase of 1.1% in 2002.
Private consumption expenditure per capita decreased by 0.5% in 2003, following a
decrease of 0.9% in 2002 and an increase of 0.4% in 2001.
Purchases of durable goods per capita decreased in 2003 by 1.6%, following sharper
drops of 10.4% in 2002 and 9.9% in 2001. Purchases of furniture for household use
decreased by 6.8% per capita and purchases of motor vehicles for private use decreased by
5.7% per capita; whereas purchases of household equipment (refrigerators, air-conditioners,
washing machines, etc.) increased by 6.3% per capita.
Current private consumption expenditure (excluding durable goods) decreased by 0.4%
per capita, after stability in 2002 and an increase of 1.6% in 2001.
Total individual consumption, including private consumption expenditure and general
government individual consumption expenditure (general government expenditure for
education, health and other services consumed by households on an individual basis),
- XV -
decreased by 0.8% per capita in 2003, following a decrease of 0.6% per capita in 2002 and
an increase of 0.5% in 2001.
Total consumption, which is composed of individual consumption (82.5%) and collective
consumption (17.5%), decreased in 2003 by 1.6% per capita.
Fixed Capital Formation
Fixed capital formation (GFCF) decreased by 4.9% in 2003, following decreases of 7.0%
in 2002 and 3.3% in 2001. Fixed capital formation, excluding ships and aircraft, decreased
by 3.9% in 2003.
Fixed capital formation in various industries of the economy (non-residential building,
machinery, equipment, motor vehicles and software), which comprise 75% of fixed capital
formation, decreased by 5.1% in 2003, following decreases of 9.3% in 2002 and 2.8% in
2001. Itemized capital formation by type shows a 12.1% decrease in expenditure on
commercial motor vehicles and buses, in addition to a 1.1% decrease in expenditures on
machinery and equipment.
Capital formation in non-residential building and other construction work - industrial
buildings, offices, education institutes, roads, etc.- decreased by 6.3% in 2003.
Capital formation in residential building decreased by 4.2% in 2003, following stability in
2002 and a decrease of 4.7% in 2001. Inventories of materials, work in progress, and
finished goods decreased by 0.7% of GDP in 2003, after an increase of 0.4% in 2002.
In 2003, the reduction in gross domestic capital formation was greater than the reduction in
gross national saving. As a result, the share of the savings in financing gross domestic
capital formation increased to 100.7%, compared with 92.5% in 2002. This sum was offset
by the surplus in the current foreign transactions account (0.7%).
Imports and Exports of Goods and Services
Exports of goods and services, in constant prices, increased by 6.2% in 2003, following
decreases of 2.4% in 2002 and 11.2% in 2001. The increase in exports in 2003 reflects rises
in all the components of export - exports of services rose by 9.8%; manufacturing exports,
excluding diamonds, rose by 4.7%; agricultural exports rose by 5.8%; and in exports of
diamonds a rise of 5.3% was recorded.
Imports of goods and services, in constant prices, decreased by 1.8% in 2003, following a
similar decline in 2002, and a decline of 4.7% in 2001. The decrease in imports was
concentrated in the first half of the year, in which imports dropped at an annual rate of 7.4%,
compared with the second half, in which imports rose at an annual rate of 10.4%. Total
imports, excluding defense imports, ships, aircraft, and diamonds, decreased by 1.6%
in 2003, following a decline of 6.4% in 2002 and 4.4% in 2001. The decrease in imports in
2003 reflects a decline of 3.8% in travel abroad and of 4.0% in imports of goods (excluding
defense imports, ships, aircraft, and diamonds). However, a rise of 5.5% was recorded in
imports of diamonds and of 2.6% in imports of other services.
Prices
Prices of goods and services in the economy (domestic product and imports of goods
and services) increased by 0.5% in 2003, compared with a rise of 6.6% in 2002 and 1.9% in
2001. Import prices increased by 0.8% in 2003, compared with a rise of 0.4% in gross
domestic product prices.
- XVI -
3.
DEFINITIONS AND EXPLANATIONS1
Gross domestic product (GDP) at market prices2: The net value of all goods and
services, before the deduction of provisions for consumption of fixed capital, which were
produced by resident economic units. It equals to the sum of private and general
government consumption expenditure, gross capital formation (private and general
government) and the net exports of goods and services. It is also equal to the sum of
primary incomes distributed by resident producer units.
Real gross domestic income is equal to the sum of gross domestic product at the previous
year’s prices plus the trading gain or loss resulting from changes in the terms of trade, at the
previous year’s prices, Term of trade is the rate at which exports may be traded against
imports from the rest of the world. If the prices of a country’s exports rise faster (or fall more
slowly) than the prices of its imports, the terms of trade improve.
Net domestic product, at market prices, equals the gross domestic product, at market
prices, after deduction of consumption of fixed capital.
Net domestic product, at basic prices, equals the net domestic product, at market prices
after deduction of taxes on products and addition of subsidies of products.
Private consumption expenditure: is the aggregate of private consumption expenditure of
households and of the consumption expenditure of non-profit institutions serving
households, whose expenditure is not mainly financed by the government?
Final consumption expenditure of Israeli Households: expenditure by resident
households, on goods and services, including durable goods but excluding dwellings, in
Israel and abroad.
Final consumption expenditure of households in the domestic market: due to lack of
detailed current statistics on consumption of Israelis, the breakdown of consumption into its
components relates to the combined domestic expenditure of all households (both of Israeli
residents and of foreign residents) in the domestic market.
General government consumption expenditure includes consumption expenditure by the
government sector: the government, the National Insurance Institute, local authorities,
national institutions and non-profit institutions, where the above-mentioned bodies financed
the major part of their expenditure.
1
The definitions are based on the new System of National Accounts ( SNA 93), which was prepared
by five international organizations: The United Nations, the International Monetary Fund, the World
Bank, OECD, and EUROSTAT. The new system is presented in: the System of National Accounts
1993, Commission of the European Communities, International Monetary Fund, Organization for
Economic Cooperation and Development, United Nations, World Bank, Brussels/Luxembourg, New
York, Paris, Washington D.C. 1993.
2
The definition of the product, at market prices, differs from the SNA 93 definition: (a) The value of
the product does not include net taxes on imports; (b) The value of the product includes other
revenue components received by the exporters.
- XVII -
General government consumption expenditure is equal to the value of its intermediate
consumption of goods and services, compensation of employees, taxes on production
(including tax on wages and employers’ tax), and provision for the consumption of fixed
capital. Compensation of employees includes imputed expenditure, which reflects the
government’s obligation to pay pensions to its staff after retirement.
General government consumption expenditure consists of 2 items:
a) The value of individual general government final consumption expenditure;
b) The value of collective government final consumption expenditure.
Total actual individual consumption expenditure includes private consumption
expenditure and the value of individual consumption financed by the government sector.
Collective government final consumption expenditure includes expenditure on defense
and public order and general public administration expenditure.
Total final consumption expenditure is the sum of total actual individual consumption
expenditure and the collective government final consumption expenditure.
Gross domestic capital formation is the sum of changes in inventories and gross fixed
capital formation, as defined below:
Increase in inventories: the market value of the physical change in: (a) stocks of raw
materials, work-in-progress and finished products held by resident industries; (b) emergency
stocks of vital products held by the government. The value of work-in-progress of buildings,
roads and other construction works is regarded as "gross fixed capital formation" and not as
increase in stocks.
The value of the physical change in stocks in the period under review is calculated as the
difference between the value of these stocks at the end of the period and their value at the
beginning of the period, both valued at the average prices prevailing in the period.
Gross fixed capital formation: expenditures (purchases and own production) of industries,
general government and non-profit institutions, for the addition of new durable goods to their
stocks of fixed assets. Included are acquisitions of durable goods (except land and mineral
deposits) for civilian use, work-in-progress on construction projects, major improvements;
road construction and other infrastructure projects; outlays on the improvement to land and
fruit plantations. Also included are intangible assets (mainly expenditures for production of
software for own use and expenditures for oil exploration). Excluded are government
expenditures for buildings and equipment for military use.
Exports and imports of goods and services: the value of goods and services that Israeli
residents sold to or purchased from the rest of the world. These goods and services include
merchandise, transportation, insurance and other services. They do not include income of
Israeli producer units from activities abroad or payments to foreign production units
operating in Israel.
The value of exports includes other revenue components received by exporters. The value of
imports of goods is recorded as F.O.B., i.e., excluding expenditure on transport and
insurance of goods. Expenditure on transport by foreign companies is included in imports of
services, whereas expenditure on transport by Israeli companies is not included in imports at
- XVIII -
all. Income of Israeli companies from transport of imports is also not included in exports. Net
taxes on product are included in the net value of imports.
Net income paid to the rest of the world includes payments of income from labour and
income from property (interest, rent, dividends and profits from direct investment of
enterprises and earnings of residents working in Israel), taxes less subsidies for production
and on imports and current transfers of payments to residents abroad, less corresponding
payments received from the rest of the world.
This does not include payments and receipts of interest of the Government sector and of the
Bank of Israel, which are defined as transfer payments.
The product of the business sector includes the product of all industries of the economy,
except general government services, services of private non-profit institutions and housing
services.
Capital stock includes tangible productive capital as well as intangible productive capital
(software). Accordingly, capital stock does not include non-productive capital or financial
assets. It also excludes changes in inventories of raw materials, finished goods and work-inprogress.
Gross capital stock: according to this approach, capital stock is measured as all the fixed
assets whose economic life has not yet ended. This stock increases every year by the
addition of gross domestic investment and decreases by the value of assets whose
economic life has ended. By this approach, discard is deducted from fixed capital stock (the
investment in the first year of the economic life of any kind of asset).
Net capital stock: In contrast to the above method of gross stock, in the net capital stock
method, consumption of fixed capital is deducted each year from the capital stock. For each
type of asset, consumption of fixed capital is estimated as a fixed percent of the original
value, which is determined according to the length of the asset’s life span. In the calculation
of fixed capital consumption we assumed the percentage to be constant - linear consumption
of fixed capital.
Consumption of fixed capital: represents the reduction in the value of the fixed assets
whose economic life has not yet ended, as a result of physical deterioration, normal
obsolescence and accidental damage.
Employed persons: persons who worked at least one hour in the determinant week in any
work for wages, profit or other compensation; all workers in kibbutzim (whether in services or
other industries); family members who worked in their family owned business and institution
workers who worked without pay for more than 15 hours per week; persons temporarily
absent from their regular work who didn’t seek other work.
Employees: persons who were employed by someone else for daily, monthly or contractual
wages or for any other compensation. Data on the number of employed persons, employees
and work hours of employed persons and employees in Israel were usually based on the
findings of the Labour Force Survey in Israel. The estimates relating to workers from the
Palestinian Authority who work in Israel were based on data from the employment service.
The estimates on the number of foreign workers were based on the net number of persons
- XIX -
arriving from developing countries who are not tourists, new immigrants, diplomats or
students.
Compensation of employees comprises the direct payments of wages and salaries to
employees and employers’ contributions to funds on behalf of their employees, e.g.,
pensions, provident funds, social security, parallel tax, etc.
Operating surplus is the difference between the net product at factor cost and
compensation of employees and property income.
Gross national income, at market prices, is equal to the Gross Domestic Product less
primary incomes (compensation of employees and property income) paid to non resident
units operating in Israel plus primary incomes received by resident units from the rest of the
world. Thus it is the sum of gross primary incomes receivable by resident institutional
units/sectors1.
Net national income excluding net taxes on production is equal to the gross national
income at market prices, after deducting consumption of fixed capital and net taxes on
domestic production.
National disposable income, at market prices, is the sum of national income at market
prices, net taxes on domestic production and on imports and exports and net current
transfers received from abroad, including net interest received by the general government
and the Bank of Israel.
Private disposable income is equal to national income less income from property of the
government sector, less taxes on income from work plus net transfers to households from
the government and from abroad.
Adjusted private disposable income is equal to the private disposable income plus social
transfers in kind to households from the government sector and from non-profit institutions.
The transfers in kind include mainly education, health, culture and welfare services.
Net national saving is the difference between national disposable income at market prices
and private and government consumption expenditure.
Net saving of the general government: in the current account it is the difference between
current receipts and current expenditures of the general government.
The net surplus of the government sector in the national accounts differs from the overall
surplus in the Financial Statistics of the government as published in the government Finance
Statistics Yearbook of the International Monetary Fund2.
The main differences are:
a)
1
A different basis of recording: in the national account - on accrual basis, in the
government financial statistics - on cash flow basis.
The definitions of the income and the payments to the economic units differ from the definitions of
SNA 93. Payments and interest receipts of the government sector and the Bank of Israel were not
included.
2
Government Finance Statistics Yearbook, IMD.
- XX -
b)
Coverage: in the national account the definition of the government sector in is
broader, and includes other institutions as well as the government.
c)
Transactions included: in national accounts, current saving is computed as current
income less current expenditure. In financial statistics, total saving is computed as
receipts less disbursements in both the current and capital accounts as well as in
granting and repayments of loans.
Net private savings is defined as the difference between private disposable income and
private consumption expenditure. It includes the savings of households and savings of
private non-profit institutions which are not financed mainly by the government, and
undistributed profits of the business sector.
Surplus in current transactions with the rest of the world is calculated as the excess of
current receipts over current disbursements in the account of current transactions between
Israel and the rest of the world.
A positive surplus means that the amount of national savings is higher than the domestic
capital formation. In this case, Israel participates in financing (directly or indirectly) capital
formation abroad. This is done through net capital transfers, net purchase of intangible
assets and/or net acquisition of foreign financial assets. In the reverse case, when
expenditures are higher than receipts, Israel uses foreign sources to finance the domestic
capital formation.
Financing of gross domestic capital formation: gross domestic capital formation is
financed by provision for consumption of fixed capital, the net national savings and the deficit
in the current transactions with the rest of the world account.
Current transfers: transfers from the current income of the payer, which are added to the
current income of the recipient for the purpose of current purchases (e.g., for consumption
expenditure). Transfers received from abroad or paid abroad are converted into Israeli
currency at the official exchange rate.
Current transfers in kind: goods and services for individual consumption produced or
purchased by government units and non-profit institutions serving households, and provided
to households by these institutions free of charge.
Capital transfers: transfers intended to finance investments and whose origins are the
capital or savings of the donor, or which are non-recurrent for either party to the transaction.
Taxes on income include current levies by the government, the National Insurance Institute
and local authorities:
a)
On income from wages, property, capital gains, from entrepreneurship and from
pensions, as well as levies on financial assets, on net-wealth of enterprises, and on
ownership of goods.
b)
Payments to the National Insurance Institute - both by the insured and by the
employer. From 1995, also includes health tax paid by households.
c)
Mandatory payments for Israeli passports, court fees, etc.
- XXI -
Taxes on production and imports consist of taxes on goods and services when they are
produced, transferred, delivered, or otherwise used of by the producers or the importers.
Taxes and duties on imports are paid when the goods cross the border to Israel, or when
services are delivered by non-resident units.
Taxes on products: taxes that are payable per unit of goods or services. The tax is specific
per unit of quantity of goods or services when they are produced, sold, imported, exported,
transferred or used for own capital formation. Examples of taxes on products: V.A.T., sales
tax, gasoline tax, and customs.
Other taxes on production: all taxes except taxes on products that enterprises incur as a
result of engaging in production such as taxes on payroll, recurrent taxes on land and
buildings, business licenses, stamp taxes, taxes on international transactions, etc.
Capital taxes: taxes levied at irregular and infrequent intervals on the values of the assets
or net worth owned by institution units or on the values of assets transferred between
institutional units as gifts, legacies, or other transfers.
Subsidies consist of all grants on current account given by the government and the local
authorities to private industries and public corporations, as well as operation deficits of
government enterprises, such as the Israeli railways. In addition to the direct current
subsidies, this item also includes the subsidy component in loans, such as loans from export
funds which are granted by the government to the producers under preferred conditions
(lower than market interest rates), for financing current activities. On the other hand, the
subsidy component embodied in non-recurrent loans or in loans that are not given on a
regular basis, is not included in this item. The grant components in these loans are defined
as capital transfers.
Subsidies on products: subsidies payable per unit of goods or services produced, sold,
imported, or otherwise used; and calculated as a specific amount of money per unit of
quantity, as a specific percentage of the price per unit or as the difference between a
specific target price and the market price actually paid by other buyer, etc.
Investment grants: capital transfers in cash or in kind made by the government to other
resident or non-resident institutional units to finance part or all of the costs for acquiring fixed
assets.
Market output: output that is sold at prices intended to cover the cost of production.
Non-market output: goods and services produced by the government or by non-profit
institutions and are supplied free of charge or at prices that are not intended to cover the
cost of production.
Non-produced non-financial assets: non-financial assets that are needed for production
but have not themselves been produced.
Primary income: accrued income of institutional units as a result of their involvement in the
production process or as a result of the ownership of assets that may be used for that
process.
Imputed pension payments are equal in value to the sums that should have been
transferred to provident funds in order to insure the de facto entitlements to the social
benefits they accumulate.
- XXII -
Net lending is the net amount a unit or sector has, which can be used to finance, directly or
indirectly, other units or other sectors. It is a balancing item in the capital account and is
defined as: (Net saving plus capital transfers receivable minus capital transfers payable)
minus (the value of acquisitions less the value of disposals of non-financial assets, less
consumption of fixed capital). Negative net lending may also be described as “net
borrowing”.
Government gross disposable income: the balancing item in the secondary distribution of
income account. It is derived from the balance of primary income account of the general
government sector plus current taxes on income and wealth, social security contributions,
and all current transfers, (except social transfers in kind, received), and less all such
transfers paid.
Net value added: the balancing item in the production account: the value of output less the
value of both intermediate consumption and consumption of fixed capital. Value added is
intended to measure the additional value created by the production process.
Intermediate consumption: the value of goods and services consumed as inputs in a
production process, excluding fixed assets whose consumption is recorded as consumption
of fixed capital. The goods and services may be either transformed or used up by the
production process.
Treatment of value added tax in the product account, at market prices: the value of
domestic uses of resources - private and general government consumption and investment,
as well as the value of imports, including net V.A.T. (i.e., V.A.T. paid less V.A.T. refunded).
Treatment of net taxes on imports and exports: in the production accounts, the imports
and exports are valued using the effective exchange rate. This means that these flows
include net taxes charged on them. Consequently, the domestic product at market prices
does not include net taxes on exports and imports. In the national disposable income at
market prices, income from net taxes on imports and exports are included as an adjustment
item in income from transfers from abroad.
Classification of product in the national accounts is based on the Classification of
Economic Activities, 1993, with the following differences:
Agriculture: In the national accounts, the agricultural product is the difference between
agricultural output of goods defined as agricultural produce, and inputs purchased from other
industries. The classification is by goods and not by establishments (agricultural farms),
which are classified in the Standard Classification of All Economic Activities by their main
activity.
Imputed housing services. (An item that does not exist in the Classification of Economic
Activities, 1993). This item comprises income deriving from housing services in residential
dwellings owned by their tenants. In rented dwellings, receipts from rent are included in the
deduction of current operating expenses, and in dwellings owned by their tenants or in keymoney dwellings - rent is imputed.
Estimates at constant prices: the estimates are calculated each year, at the prices of the
previous year, and are presented in the tables as chained estimates at 2000 prices, to allow
- XXIII -
comparisons between non-consecutive years. Because of chaining, estimates for each
category of the product components do not add up to the total expenditure for the product.
The quantity changes obtained from these estimates are Laspeyres indices. On the other
hand, the weighting of the implicit changes in prices (obtained at any level of summing as
the ratio between the nominal and the quantity change) is of the Paasche type, e.g.,
weighted at the current value: the prices of each item receive weights which differ in
accordance with the composition of the expenditure at the current period. These implicit
changes in prices reflect both price changes and changes in the composition of the
expenditure, unlike price indices, in which the weights of each item are fixed, such as the
Consumer Price Index, the Wholesale price index of the manufacturing production to
domestic uses, etc. When comparing the annual change in prices of private consumption
expenditure with the change in the Consumer Price Index, one should also take into account
that some of the differences are due to the fact that in the national accounts the price
changes are weighted at monthly or quarterly weights, whereas in the Consumer Price Index
an arithmetic average is used.
Another difference is due to the method by which price changes for housing services are
calculated. The price changes in this item are based on a quarterly survey of prices of
dwellings obtained about three months after the end of the surveyed period. The results of
this survey are reflected in the Consumer Price Index for the month in which the survey
results are obtained, whereas in the product account they are reflected in the period to which
the data relate.
Private consumption expenditure estimates at constant prices were obtained directly by
using quantity data or through deflation of the current values according to the corresponding
price indices. For general government consumption expenditure estimates, quantitative
changes in the expenditure on wages were computed according to the change in the number
of workers. Other current expenditures were usually deflated by the wholesale price index of
manufacturing output, which was weighted in accordance with the characteristic production
industries of the various expenditure items.
The estimate of gross capital formation, at constant prices, was based on the price index of
building cost and on the price index of equipment in Israel and in the main countries from
whom Israel imports.
Estimates of exports and imports of goods at constant prices are obtained by multiplying the
dollar value of the exports or imports, at constant prices, by exchange rate effective during
the base year. In order to calculate the data on dollar values at constant prices, dollar price
indices were used, which are listed according to main goods. Estimates of exports and
imports of services at constant prices are obtained by deflating the current price estimates
by the price indices specified according to type of services.
Annual price changes: the tables present annual quantity and nominal changes and implicit
price changes derived from the ratio between the annual nominal changes and the
quantitative changes.
Seasonally adjusted estimates are obtained by dividing the original quarterly estimate by:
a) The seasonal factors for the regular seasonal adjustment;
b) The prior adjustment factors for trading day and festival effects.
- XXIV -
4. DEFINITIONS OF WAGES AND LABOUR COMPENSATION
1.
Wages and salaries/wages: Wages and salaries are defined as remuneration in cash
or in kind by the employer to the employee for work carried out during the period of the
report, including wages based on units of work time or on a monthly salary.
Wages and salaries include all types of gross payments, as specified below:
a. Basic wages, cost of living allowances, seniority payments, back pay, advance
payments, overtime, on-call and shift allowances.
b. Bonuses and special allowances such as education and proficiency allowances, “13th
month” salary, retirement pay and compensation for unused sickness day quota.
c. Transportation allowance, vacation allowance, car
compensation, per diem expenses, clothing allowance, etc.
allowance,
telephone
d. Payments in kind (only subject to income tax), such as: meals, housing services,
holiday gifts, etc.
2.
Supplementary expenses for wages and salaries/employers’ social contributions
include social contributions payable by employers, such: actual contributions to the
National Insurance Institute, to pension plans, provident funds, study funds, etc. In
addition, these expenses include imputed contributions to pension expenses for
employees, which derive from the employer’s obligation to pay the workers’ retirement
pensions instead of contributing to pension funds, for example, imputed contributions to
budgetary pension schemes for civil servants.
3.
Taxes on wages and salaries: Taxes levied on employers for wage and salary
expenses, such as payroll tax and employers’ tax.
4.
Other components of labour cost: Expenses for vocational training, welfare,
recruiting workers, and providing work clothes, maintaining a cafeteria, payments to
professional organizations, etc.
5.
Compensation of employees: Compensation of employees is defined as the total
expenditure for wages and salaries and supplementary expenditures for wages and
salaries (items 1 + 2).
6.
Imputed compensation of non-employees: Compensation of non-employees
(employed persons who are not employees - employers, self-employed persons,
members of cooperatives, kibbutz members, and unpaid workers in household
enterprises) is the imputed value estimated as the number of work hours multiplied by
average compensation of employees per hour in the industry that they are employed in.
7.
Compensation of employed persons: Compensation of employed persons includes
compensation of employees and the imputed value of compensation of non-employees
(items 5 + 6).
8.
Labour Cost: Labour cost includes compensation of employees, taxes on wages and
salaries, and other components of labour cost (items 4+3+5). There may be cases in
which reported labour costs include only compensation of employees and taxes on
wages and salaries (items 3 + 5). In those cases, it is recommended to classify the item
as a labour cost for employees as well.
- XXV -
5. SOURCES OF THE DATA
General government consumption expenditure is estimated by the analysis of the
Accountant General’s reports, and of the budget provisions, also using complementary data
received from the Ministries of Finance and of Defence. The estimate of expenditures by
local authorities, national institutions, and non-profit institutions is based on data obtained
from analysis of financial and budget accounts.
Private consumption expenditure: as of 1964 private consumption estimates were
combined with the results of household expenditure surveys, which include (as of 1968/69)
all urban households. Estimates for previous years were based on household expenditure
surveys that included only urban households of employees. The tables contain two estimates
for 1964, which serves as a connecting year.
Food consumption is estimated on the basis of marketing data of agricultural products, and
on production and marketing data of industrial food products and their prices. Expenditure on
industrial products, excluding food, is estimated on the basis of the household expenditure
survey, reports of establishments on domestic production and on foreign trade statistics.
Housing consumption is estimated on the basis of the growth of residential construction
areas, and the rise in prices of housing services.
Under “Other Services” a significant part of the estimates is based on findings from
household expenditure surveys and extrapolation by various indicators in the years between
surveys. Another part of the estimates (e.g., supply of electricity, person-nights in hotels,
visits to movie theaters, hospitalization days in commercial hospitals, etc.) is based on
appropriate data of quantities and prices.
The consumption estimate for foreign residents in the country and Israelis abroad, is arrived
at from the “Foreign Travel” section in the balance of payments, after deducting the estimate
for business expenditure.
The value of services of non-profit institutions is estimated on the basis of data on
payment of wages and other current expenditures. These data are received from
questionnaires transmitted to institutions or on the basis of financial statements.
Estimates of gross capital formation in fixed assets are based mainly on the following:
a)
Data on imports of machinery, equipment and motor vehicles.
b)
Reports on revenue from sales of domestically produced investment goods;
c)
Quarterly estimates on areas of building begun and building completed;
d)
Financial data on investment in residential building carried out by the Ministry of
Construction and Housing;
e)
Data received from government ministries, public institutions, and major enterprises
on the extent of their investments.
Estimates of change in stocks are based on:
a)
Data on quantities of stocks of agricultural produce, stocks of fuel and stocks of vital
products held by the government;
- XXVI -
b)
Data from the Manufacturing and Commerce Surveys on the value of stocks held by
enterprises;
c)
The change in the stocks of diamonds, based on the difference between exports and
imports, in constant prices.
d)
The value of output which has not yet been sold in software start-up companies and
for R&D, which is estimated on the basis of data of investments by capital venture
funds in those companies.
Imports and exports of goods and services are estimated on the basis of data from the
balance of payments, adjusted to the definitions of the National Accounts.
Estimates of changes in the number of employed persons and employees, and work
hours of employed persons and employees in Israel are generally based on findings
from the Labour Force Survey. Estimates related to workers who are residents of the
Palestinian Authority working in Israel are based on data from the Labour Force Survey of
the Palestinian Authority. Prior to 1996 the data were based on findings from the surveys of
Jewish families in Judea, Samaria and the Gaza Area and on data from the Employment
Service.
The estimate of the number of foreign workers is constructed from processing based on the
net number of foreigners entering Israel from underdeveloped countries, who are not
tourists, immigrants, diplomats or students.
Compensation for the work of employees is arrived at by summing up the payments of
labour expenses in each industry based on industry surveys, such as the manufacturing
survey. In industries for which surveys are not conducted, estimates are arrived at from
administrative report, such as employers’ reports to the National Insurance Institute or
reports from the Accountant-General.
Compensation for the work of non-employees (employed persons who are not employees employers, self-employed, members of a cooperative and kibbutz members, and unpaid
workers in family businesses) was estimated according to the number of work hours of the
non-employees, multiplied by the average hourly compensation to employees in the industry
in which they are employed.
Estimates of the net domestic product of Agriculture, at current and constant prices, are
obtained every year by deducting the estimate of inputs bought (from other industries), from
the estimate of agricultural output, which is received from the agriculture surveys.
Estimates of the net domestic product of Manufacturing, excluding diamonds, are
based on annual manufacturing surveys. Estimates for years in which an annual survey has
not been conducted, are based on monthly manufacturing indices.
Net domestic product of diamonds, at current and constant prices, is obtained using data
on imports and exports of diamonds of the various types. Estimates of the output are
calculated for each type of diamond separately.
The estimates of the net domestic product of the Construction industry are obtained
according to changes in the main components of the industry’s output: investments in
buildings and in other construction works (roads, pipe lines, railway tracks, cable laying and
other building works) and construction for defence purposes.
- XXVII -
For this calculation, it was assumed that there was a constant ratio between input and
output, at constant prices, in the main types of construction.
Estimates of the product of Electricity and water are based on input-output tables for
years for which a table is available, as well as on data on revenue from V.A.T. for other
years. Changes of product, at constant prices, are obtained by using indicators of the output:
water output measured at cubic meters and electricity supplied at k.w.h.
Estimates of the product of Commerce, accommodation services and restaurants use
base-year data from surveys of revenue and input in that industry, which were conducted in
order to prepare input-output tables. For the years in which commerce and services surveys
were conducted, the estimates are obtained by extrapolating base-year estimates from the
data of this survey. For the years in which commerce and service surveys were not
conducted, the estimate is based on extrapolation of revenue data from VAT or on data from
hotel surveys. Product, at constant prices was obtained by deflating the product at current
prices by appropriate price indices.
Estimates of product of Transport, storage and communications are mostly obtained by
analyzing financial reports. In the case of buses, taxis and lorries, the product is obtained by
a calculation based on the amount of travel. Changes of product, at constant prices, were
obtained by using measures of the output: kilometers travelled by taxis and lorries, loads
hauled by ships, number of passengers in Israeli airlines.
For Banking services, the product is obtained from a review of the financial reports of the
banks published by the Supervisor of Banks. The output of the banks includes two
components. One component of the output is fees, which banks charge their customers for
services provided. Another component of output derives the higher interest that banks
charge on the loans they extend compared with the interest they pay on deposits. The
product is calculated as the difference between the banks’ outputs and inputs. The output
from fees at constant prices is obtained by deflating income from fees at constant prices by
a bank services price index. Income from interest at constant prices is the difference
between interest on loans at constant prices and interest on deposits at constant prices.
Interest on deposits at constant prices is obtained by multiplying the deposits by the interest
on deposits in the base year. Interest on loans at constant prices is obtained by multiplying
the loans by the interest on loans in the base year. Inputs at constant prices are obtained by
deflating inputs by the Consumer price index.
For Insurance services, the product is based on a review of the financial reports of the
insurance companies prepared by the Ministry of Finance. The output of insurance
companies is the sum of the net premiums paid by customers and the profits on investing
the actuarial reserves. The product is the difference between the outputs and inputs of the
insurance companies. The product at constant prices is obtained by deflating the product at
current prices by the implicit price index of the business product.
Estimates of the product of Business services at current prices in the base year are based
on surveys of revenues and inputs, conducted in the process of preparing the input-output
tables. For other years, the estimates of the product are based on extrapolation of the
estimates from the base year using data on revenue from V.A.T.
- XXVIII -
Estimates of product in Personal services are based on indicators of private consumption
of these services.
For the following industries, the labour input was estimated differently:
In Manufacturing, the estimate of changes in the number of employees and their work
hours were based on the Manufacturing and Crafts Survey for years in which a survey was
conducted (the most recent survey is for 1998), and as on monthly manufacturing indices for
other years. Estimates of workers in the diamond industry and data on workers hired by
temporary employment agencies were added to the above-mentioned data. Furthermore, an
estimate of workers from the Palestinian Authority not reported in the manufacturing indices
was also added.
In the Hotels and restaurants industry, estimates are based on workers in food services, on
Labour force survey and on estimates of the number of workers from the Palestinian
Authority and foreign workers. The data on workers in hotel services industry are based on
the findings of the hotels' survey.
6.
COMPARISON WITH PREVIOUS PUBLICATIONS
Compared with data published in the previous publication, the estimates for the years 1995
to 2002 were revised, following the receipt of updated data. In addition to these updates, this
year a number of methodological improvements were introduced, in order to adjust the
national accounts of Israel to international requirements. The main revisions to the estimates
are:
1.
Estimates of private consumption expenditure for the years 1995 to 2002 were
revised, after integrating of the findings of the Household Expenditures Survey for
2002, and after transferring expenditures for on food and medicine by the
government and non-profit institutions, from private consumption to public
consumption. Additionally, data series on consumption of tourists and foreign workers
in Israel were revised following an update of the method of calculating of those data.
2.
Estimates of civilian public consumption were revised as of 1995, primarily due to
methodological changes which were introduced into the public sector accounts:
-
Government health institutions, which sell most of their services to sick funds and
households, were transferred to the business sector.
-
Expenditures for food and medicine made by the government, which used to be
included in private consumption, were added to public consumption.
In addition, the general government consumption estimates as of 2001 were
adjusted, following receipt of financial reports from the government, local authorities
and non-profit institutions.
3.
As a result of the above-mentioned methodological changes, series of transfer
payments by the government to households and subsidies for domestic production
were also updated. In addition, revisions were made in series of fixed capital
formation and capital transfers to establishments.
4.
The series on gross capital formation in construction and in machinery and
equipment was revised as of 1995. The main revisions introduced in the series were:
- XXIX -
a) Estimates of capital formation in construction from 2001 were adjusted,
according to updated data on the area of building completed in various industries
and according to the building data reported by government ministries, local
authorities and private and public companies;
b) Estimates of investments in building and in machinery and equipment from 1995
were adjusted following reclassification of investment items in the reports of
establishments in the water production and agriculture industries.
5.
Estimates of imports and exports of goods and services were updated as of 1995,
according to the revisions entered into the balance of payments.
6.
This publication presents summary of definitions of wages and compensation for
labour which appear in various chapters of the Statistical Abstract. These definitions
are based on international guidelines regarding entries of wages expenditure and
labour costs which appear in the guidebook for national accounts SNA93, and in
publications of the International Labour Organization – ILO (see Chapter 4).
A database of the national accounts is available on magnetic diskette at the Central Bureau
of Statistics. The database contains approximately 4,000 annual and quarterly series as of
1950.
Quarterly estimates of expenditure on the Gross Domestic Product are published every
month in the Monthly Bulletin of Statistics, published by the Central Bureau of Statistics. A
preliminary annual summary is usually published in Current Statistics.
- XXX -