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Definition

Definition

The Statistical Classification for Institutional Sectors (SCIS) provides a standard system for classifying institutional units (eg enterprises, households) by broad economic sectors. Units are grouped together to form institutional sectors on the basis of the role they play in the functioning of a modern market economy. That is, on the basis of their principal functions, their behaviour and their objectives.

Operational issues

A number of operational issues are involved in applying the classification, such as defining boundaries, applying the control classification, and placing individual institutional units into the correct subsector or group. These issues arise at the subsector and group levels, as at the sector level the SCIS corresponds to the previous institutional sector classifications.

Explanatory notes

The SCIS is an economic statistical classification, not a legal one. The legal character of a unit may influence its economic role, but does not determine it. The legal structure of a unit is currently classified using a related, but separate, classification called business type.

Institutional unit

An institutional unit is an economic entity that is: 

  • able to make economic decisions and engage in economic activities for which it is held to be directly responsible and accountable by law 
  • entitled to own goods or assets in its own right and is able to exchange the ownership of goods or assets in transactions with other institutional units 
  • able to incur liabilities on its own behalf, to take on other obligations or future commitments, and to enter into contracts 
  • able to produce a complete set of financial statements, including a balance sheet of assets and liabilities, or it would be possible and meaningful (from an economic viewpoint) to compile a complete set of financial statements if required.

Two main types of units qualify as institutional units: households, and legal and social entities.

Households

A household is defined as a group of people who share the same living accommodation; who pool some, or all, of their income and wealth; and who consume certain types of goods and services collectively, mainly housing and food. From an economic perspective, the most important characteristic of a household is that the members pool some of their income and wealth and consume some goods and services together as a group. A household as the decision maker, rather than the individuals in it, is treated as an institutional unit. The definition includes institutional households such as hospices, retirement homes, convents, and prisons, where groups of people stay for long periods.

Groups of people form households for mutual support, protection, shelter, companionship, and shared consumption. Households are the main private consuming unit in the economy, but they can also produce and accumulate assets.

Legal and social entities

Legal and social entities are distinct units that are engaged in economic activities in their own right, regardless of whether or not they are recognised in law, and which are independent of their owners. These are units that may not have a legal status but can still have formal structure and role. For example, sole traders and trusts that have no legal status but have economic status are included here. A feature of these types of units is that they may be producers or consumers of goods and services.
Many types of legal and social entities qualify as institutional units. These include: 

  • businesses, in the form of companies and limited liability partnerships 
  • incorporated societies, building societies, and credit unions 
  • incorporated crown entities owned by government 
  • government departments and crown agencies, such as universities and hospitals 
  • registered charities 
  • unit trusts.
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