The Classification of Socio-economic Groups is used in welfare surveys when examining the living conditions of different social groups and changes in them. The classification functions as a general indicator of the social and economic environment. In statistics use, the Classification of Socio-economic Groups is applied generally to population statistics, Labour Force Surveys, income distribution statistics and Household Budget Surveys.
Socio-economic status as a concept
The classification of socio-economic groups aims to form such socio-economic groups whose members live with equal statuses in society's structural functional sub-systems.
The socio-economic status is thus formed by means of several different classification criteria, because when using an individual distribution basis, not all key factors that affect the person’s status can be taken into consideration. The classification takes into account the person's stage in life (family member, student, economically active, pensioner, etc.) and occupation and occupational status (self-employed, wage or salary earner, assisting family member) for the economically active. The classification is also supplemented by divisions describing the nature of the occupation and work (employees and workers). The basis of the division used is also partly industry and the number of wage and salary earners.
Review of the classification
The classification standard describing the socio-economic groups was first published in 1983, when the classification was based on the Classification of Occupations 1980. The classification was revewed in 1989 as a result of the revision of the Classification of Occupations (1987) and the Standard Industrial Classification (1988).
The Finnish national Classification of Occupations changed in line with the EU standard in 1997 and a revised version of the Classification of Occupations was completed in 2001. The latest revision of the Classification of Occupations is from 2010. They did not cause a need to review the Classification of Socio-economic Group.
Groups according to the Classification of Socio-economic Groups (1989) were defined for the groups of the Classification of Occupations 2010. The classification conversion key between the Classification of Occupations and the Classification of Socio-economic Groups is available on the Metadata services’ web page.
Levels of the classification
The Classification of Socio-economic Groups can be used on several alternative detailed levels (see Handbook). The following shows three alternative levels. Factors influencing the selection of the level are such as the nature of the survey (total, sample survey), sample size, scope of data content and number of variables to be classified.
Level A is the classification standard on the most detailed level. It includes all groups of the Classification of Socio-economic Groups on the 2-digit level. Level A is recommended for use in total surveys, such as population censuses and large sample surveys.
On level B of the classification self-employed persons are divided into two groups, farmers and other self-employed persons. In addition, unemployed persons without prior work experience are combined to the group of others not elsewhere classified. Level B can be used in fairly large sample surveys.
Level C is the least detailed level of the Classification of Socio-economic Groups. The classification specifies wage and salary earners and others (economically inactive) from the main groups of the classification of status in occupation on the 1-digit level. Level C can be used in small sample surveys and such surveys where the socio-economic status is cross-tabulated with multiple-group variables. Such surveys are the Quality of Work Life Survey and the Leisure Survey, for instance.
If a less detailed level needs to be used (grouping), the main groups of the classification of status in occupation can be used:
Wage and salary earners
Others (economically inactive).
Determination of the socio-economic status
Principle and application of the classification
Classification of persons
In determining the most detailed level of the socio-economic status, the following information on a person is needed:
Main type of activity
Status in occupation
Occupation on the 4-digit level according to the Classification of Occupations 2010
Industry on the main group level according to the Standard Industrial Classification 2008.
Economically active persons are classified into socio-economic groups based on the Classification of Occupations. The most detailed level groups (4 or 5-digit level) of Statistics Finland's Classification of Occupations form a socio-economic group to which the occupational titles of the occupational group in question are included.
The socio-economic group of self-employed persons is primarily determined by whether the self-employed practises agriculture, forestry or fishery or not. Another determining criterion is whether the self-employed person has paid labour force or not. The description of the socio-economic group of farmers can be specified if needed by a sub-division concerning the production line and/or the cultivated area.
If the person is a farmer and has paid labour force in his/her service, he/she and assisting family members are included in farmers etc. employers (11). Employers working as other than farmers are further divided, in addition to the number of paid labour force, into small employers and other self-employed persons. Small employers (21) are those self-employed persons who employ fewer than five employees. Other employers (22) are those self-employed persons who have at least five paid employees in their service.
Own-account workers are self-employed persons who do not have any paid labour in their service.
The group of self-employed persons in liberal professions usually includes self-employed persons with academic education similar to upper-level employees in scientific, artistic or other creative occupational groups, such as doctors, lawyers, engineers, journalists, authors, artists, actors and so on. This group includes only self-employed persons with no paid labour force. When these occupational groups have paid labour force, they are included in groups 21 to 22.
Wage and salary earners are divided into employees and manual workers. In principle, the boundary between employees and manual workers is that employees in their work handle symbols, such as money, information or the media or the focus of work is a human being. The boundary between employees and manual workers has blurred in tasks using much information and communication technology, for example. However, the aim has been to keep the boundary and several factors are used as criteria. Thus, so-called intellectual work that often takes place in an office, school, hospital, etc. is regarded as employee work, while physical work in a factory, goods production, transportation of goods and people and protection and security work requiring physical performances are regarded as manual worker work. The division has been retained as such to make the continuity of comparisons possible.
Upper-level employees include all those working in management tasks of public administration, enterprises or organisations, all those working in planning, research and presentation, those working in education and other employees generally with higher university degrees. Upper-level employees are classified into four categories:
Those employed in management positions
Those employed in planning and research
Those employed in education
Other upper-level employees.
Such upper-level employees that cannot be included in any of the groups mentioned are classified into non-specified upper-level employees.
Lower-level employees include employees in management and employees in clerical, sales, care and other tasks. Of lower-level employees, those employed in management positions are divided into a group of their own. Similarly, those employed in clerical and sales work are separated from others because the division of tasks in these fields has mostly already been made. Further, a group where the job description is close to that of a manual worker is separated from those in clerical and sales (that is, employee groups having slid to some extent over the employee/manual work boundary). The work of those belonging to this group is mechanical, like production line work and performance of tasks does not require decision making or management of wholes.
Manual workers are classified into four categories:
Other production workers
Distribution and service workers.
Workers in industries A (Agriculture, forestry and fishing) are included in farmers, workers in industries B (Mining and quarrying), C (Manufacturing), D (Electricity, gas steam and air conditioning supply), E (Water supply, sewerage, waste management and remediation activities) and F (Construction) are either manufacturing workers (52) or other production workers (53).
Manufacturing workers include those working in the manufacturing occupations of the production process, when the employer's industry is engaged in manufacturing or construction (Standard Industrial Classification 2008 groups B, C, D, E, F). Those working in packaging, warehousing, transportation, stevedoring and other tasks in manufacturing are included in the group of other production workers.
Regardless of the industry, other production workers include labourers, cooks and kitchen helps.
When workers in packaging, warehousing, transportation, stevedoring and other tasks work in other industries than B, C, D, E, F, they are distribution and service workers (54).
A specific group (59) is reserved for manual workers whose industry is not known.
The socio-economic status of unemployed persons depends on the length of the unemployment period. Persons whose unemployment has lasted for at least six months are grouped in 81 (Long-term unemployed), while unemployed persons whose unemployment has lasted for under six months, but who have previously worked, are classified according to the occupation and workplace before unemployment. Those unemployed persons who have not yet been at work at all are classified in 82 (Others not elsewhere classified).
The starting point for classifying the inactive population is the classification of main type of activity. Thus those aged 0 to 14 are classified by socio-economic group according to the head of the household. The head or reference person refers to the person who is mainly responsible for the livelihood of the unit in question. The classification takes place primarily by household, secondarily by the family’s economically responsible person. The classification of the inactive population primarily goes by the activity on which most time has been spent. If the person is in military or non-military service, a family member without occupation, living on property income or savings or an institutional prisoner, he or she is placed in group 82 (Others not elsewhere classified).
Students form a group of their own regardless of whether they are economically independent of their parents. Students (60) include all students and pupils aged 15 or over, though not comprehensive school pupils.
Pensioners are classified by the economically active stage applying the less detailed level of the classification. Long-term unemployed include persons whose unemployment has lasted continuously for at least six months. Pensioners are classified further into sub-groups by the socio-economic group of their previous occupation.
Those doing domestic work by their main activity and those aged under 15 can be classified either by the head of the household or of the family.
If no socio-economic group can be defined for a person, he or she can also be placed in group 99 (Socio-economic status unknown).
Classification of households
In addition to individual persons, socio-economic status can also be determined for households. This is done in Statistics Finland's income distribution statistics, the Household Budget Survey and population censuses, for example. All members of the same household are assumed to belong to the same socio-economic group. The household’s socio-economic status is, however, determined based on the status of one person, the reference person or the head. The starting point is that the socio-economic status has first been determined for each (economically active) member of the household.
The person who best represents the status of the household in society's division of labour is chosen as the reference person. He or she is considered to be mainly responsible for the commodities for the household’s joint consumption, e.g. the acquisition and maintenance of the dwelling. He or she is not necessarily the person with the highest income in the household, because members’ relative input in joint expenses varies. In selecting the reference person, information is needed on the family connections and ages of the household (or family) members and on their economic activity.
The key differences between the Nordic (NORD-SEI) and Statistics Finland's classifications of socio-economic groups:
NORD-SEI divides workers into professionally trained and untrained, while Statistics Finland's classification groups workers by occupational group and industry.
NORD-SEI divides employees into three groups: lower-level salaried employees, intermediate salaried employees and upper-level salaried employees. Statistics Finland's classification does not have a group for intermediate employees, but lower-level and upper-level employees are divided into several sub-groups using as the criterion whether the person is in management or not and the quality and independence of the job.
For the economically inactive, NORD-SEI has groups for those doing domestic work at home and those in military service, which Statistics Finland's classification does not differentiate.
Changes from the 1980 version:
The main group of self-employed persons is divided into the sub-groups of farmers and other self-employed persons. A new group is also formed for self-employed persons in liberal professions.
The division into those working in general government and in other corporations was removed from the employee groups. A separate group was set up for long-term unemployed persons.
Groups 91 (Unemployed persons without previous work experience), 92 (Other economically active/employed whose occupation is not known) and 93 (Other economically inactive/not in the labour force) in the 1983 standard are combined into new group 82 (Others not elsewhere classified).
The following individual occupational groups were changed from workers into employees: (1911) opticians, (9042) customs inspectors, frontier guards and coast guards, (9052) prison guards, (9911) travel stewards and travel attendants.
The numbering of the groups was simplified. The 3-digit code of the 1983 standard was shortened to two digits. Residual groups ending in the number 9 were placed after the main groups.
To make the use of the classification easier, various alternative levels were connected to it for making the most detailed level of the classification into less detailed.
Headings of some groups were changed shorter without changing the content of the groups. Such headings are (the new heading last):
121 (Other employers) 1-4 employees - 1 Small employers
122 (Other employers) At least 5 employees - 22 Other employers
21 Farmers etc. on own account - 12 Farmers etc. on own account
32 Senior officials and employees in preparatory, presentation, research and planning - Senior officials and employees in research and planning
41 Supervisors - 41 Supervisors
42 Lower-level employees working in independent or diverse office work - 42 Clerical and sales workers, independent work
43 Lower-level employees working in non-independent or routine office or sales work - 43 Clerical and sales workers, routine work
51 Workers in agriculture, forestry and commercial fishing - 51 Workers in agriculture, forestry and commercial fishing
The Classification of Socio-economic Groups 1989 is based on international recommendations. The United Nations Economic Commission for Europe (ECE) has given general statistical recommendations for population censuses to form the classification of socio-economic groups. The latest one is for the 2010 population census.
The UN’s valid statistical recommendation for the classification of socio-economic groups in the income distribution statistics and in the Household Budget Surveys (Provisional Guidelines on Statistics of Distribution of Income, Consumption and Accumulation of Households. United Nations, 1977) follows the principles of population census recommendations with small differences.
In 1988, the joint Nordic population and social statistics committee (NUSD) published a Nordic classification of socio-economic groups NORD-SEI (Förslag till Nordisk socioekonomisk lndelning: Nordiska utskottet för sociodemografisk statistik. NUSD 1989-02-03.). The aim of the Nordic classification is to enable joint Nordic comparisons mainly in statistics as the living conditions survey, where different Nordic countries use their national classifications.