Household Production and Consumption in Finland 2001

7.2 Integration with the whole national
economy
International comparability is an important aim of the national accounts.
Figures describing the extended economy open up a new dimension of
comparability, bringing non-market production into the equation and in this
way providing a clearer picture of the true size of different national economies.
Extended figures also help to form a clearer assessment of GDP growth from a
welfare point of view, since services produced in household production are
specifically intended for household consumption. International comparability
requires household satellite accounts to be compiled on the basis of
harmonised principles and methods. As yet no such recommendations are in
place in the European Union.
Table 3 in Appendix 9 integrates non-SNA household production with the
national economy accounts (goods and services account, production account
and generation of income account). The columns in this table represent the
whole economy (column 1), the whole economy less SNA own-account
production (6) and the extended economy (7). Table 4, then, shows the
relative proportions with which the whole economy is extended when
non-SNA household production is incorporated.
The inclusion of household production in the national accounts causes
various changes of various magnitude in different elements of production.
GDP increases by 40 per cent and real individual consumption by almost 60
per cent. The biggest increase at 79 per cent is recorded for employee
compensation; this is because the value of labour in household production has
been added to these figures rather than to the operating surplus (in following
the logic of the input method). The relatively high proportion of labour in
household production as compared to market production is reflected in the
fairly modest, 10 per cent increase in intermediate consumption. Figures for
gross fixed capital formation (+ 14 per cent) and for fixed capital consumption
(+ 13 per cent) also underline the labour intensiveness of household
production.
The impacts of incorporating household consumption in the structure of
the whole economy could also be shown from the vantage point of the figures
for the extended economy. In this case the share of household production
would be one-third and that of non-SNA production 28.7 per cent (see
Chapter 5.1).
The inclusion of household production in the national accounts drives up
the share of service production. This growth derives from the increase in
services related to housing, meals, clothing care and the care of children and
adults. It would be particularly interesting to know how large a proportion of
these services are produced by business companies, the public sector and
households and what kinds of shifts occur between these different sectors.
Answers can be obtained by continuing to integrate household production into
the supply and use framework of the national accounts and by producing
relevant time series.
National Consumer Research Centre Statistics Finland 67