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 suchbut 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.
78
mode of supply a particular country holds comparative
advantage.