Manual on Statistics of International Trade in Services

Movement of persons and BPM5 
19. As described in paragraph 7 above, BPM5
m
 
provides several measures related to the movement of 
natural persons. Although BPM5 recommends a 
breakdown of resident/non-resident trade in services by 
component (a breakdown that is further broken down in 
the present Manual), it does not recommend any 
breakdown of compensation of employees  or workers’ 
remittances according to the services components or 
activities. The definition of residency for data collection 
in the 1993 SNA and BPM5 stems from the need for 
consistent statistical practice throughout all statistics 
within a country and between countries. These and other 
international statistical frameworks, such as the 
Recommendations on Statistics of International 
Migration, Revision 1, specify one year as the threshold 
for determining “residency” for both natural and 
institutional persons. However, because GATS 
commitments made by member countries are generally 
based on criteria contained in national laws and 
regulations, both commitments and national statistics are 
normally derived from the same framework of 
definitions. As a result, when available from 
administrative sources, statistical data on the movement 
of persons in accordance with GATS can often be 
expected to be compatible with the national 
commitments made.  
20. 
BPM5 labour-related payment flows do not 
distinguish between compensation of persons working in 
the service-producing activities and those working in 
other industries. BPM5 records the earnings of non-
residents as compensation of employees, while their 
expenditure in the host economy is placed in the travel 
component. Compensation of employees comprises 
                                                           
l
 
See annex VI. 
m
  This is also discussed in the main text of the Manual. 
wages, salaries and other compensation received by 
individuals - from employing enterprises resident in 
economies other than that in which the employee is 
resident - for work performed for residents of those 
economies.  Compensation of employees is classified 
within income in BPM5, but it reflects mode 4-related 
trade in services. This measure tends to underestimate 
mode 4-related trade because it covers only persons 
employed by employers resident in the host economy. In 
addition, the specification of a one-year benchmark is 
not formally established in GATS and may lead to an 
over- or under-estimation relative to the national 
commitments. Compensation of employees broken down 
according to the services activities would be especially 
important in obtaining additional detail for mode 4-
related statistics. 
21.  Individuals who stay abroad for one year or more, or 
who intend to do so, are regarded in the 1993 SNA and 
BPM5 as residents of the foreign economy, so their 
earnings and expenditures are not recorded in the 
balance of payments because these flows are domestic 
transactions within that foreign economy.
n
   Workers’ 
remittances in BPM5 are goods and financial 
instruments transferred by migrants living and working 
in new economies to residents of economies in which the 
migrant formerly resided.  
22.  Workers’ remittances as information on mode 4 
trade in services refers in principle to the residual of 
income earned in the migrants’ new economies after 
allowance for expenditure and savings of the migrants in 
their new home economies. In that sense, workers’ 
remittances underestimates the value of services 
supplied through mode 4. Though remittances record 
transfers by residents in the BPM5 sense, these are not 
necessarily residents in the GATS sense because GATS 
does not provide precise guidelines for the definition of 
temporary presence and most member countries’ 
commitments refer to a several years of stay for a few 
categories of persons. However, including all resident 
workers leads to the overestimation of the mode 4-
related trade flows. However, workers’ remittances may 
serve as a useful complement to the information 
provided by compensation of employees. In addition, this 
measure may be used as a proxy not for identifying the 
mode 4-related trade as such  but to establish in which 
                                                           
n
 
The one-year rule does not apply to students, medical patients 
and employees working in government enclaves, such as 
embassies and military bases, who remain residents of their 
economies of origin even if the length of stay in another 
economy is one year or more. 

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78 
mode of supply a particular country holds comparative 
advantage.