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`INTRODUCTION 1. THE NATURE OF THE CLASSIFICATION
1.1 The SIC is a classification of economic activities of industries.
An industry consists of establishments engaged in the same or a closely
related kind of economic activity based mainly on the principal class
of goods produced or services rendered. The term "industry"
is used in the widest sense to cover all economic activity from the primary
industries of agriculture, forestry, fishing and mining to the rendering
of social, recreational, cultural and personal services.
1.2 The SIC is not a classification of commodities. Commodities are the
products of industries (including the services rendered) or the materials
and consumable stores used by industries or the products (including the
services) bought and sold by particular industries or goods bought by
consumers. Commodities are commonly associated with particular industries,
e.g. the clothing industry and the rubber industry, but it must be borne
in mind that each industry generally turns out a variety of commodities
which, although related, could nevertheless be accommodated separately
in a commodity classification.
1.3 The SIC must also be distinguished from the classification of occupations,
the aim of which is to classify persons according to the nature of the
work in which they are employed (e.g. accountant, typist and boilermaker)
and often without taking into account the industry in which the persons
concerned are employed. A standard classification of occupations is obtainable
from the Stats SA.
2. THE STATISTICAL UNIT
2.1 The objective of the SIC is to classify collected statistical information
as far as possible according to categories of activities which are as
homogeneous as possible. The appropriate unit for the collection of the
data, and hence for its classification according to kind of economic activity,
is either the establishment-type or the kind-of-activity unit.
These basic statistical units are defined in the following two paragraphs.
3. ESTABLISHMENT-TYPE UNIT
3.1 "Establishment" is defined as the smallest economic unit
which operates as a separate entity and for which all elements of the
basic industrial statistics which would allow the calculation of the operating
surplus, can be reported.
3.2 In most cases, an establishment is co-extensive with a firm, that
is it is an economic unit which engages under a single ownership or control,
i.e. under a single legal entity, in one or predominantly one kind of
economic activity at a single physical location (e.g. an individual farm,
mine, factory, workshop, store or office). However, many firms have more
than one establishment as defined. In some cases, the establishments controlled
by a single firm engage in the same kind of economic activity at different
locations, sometimes in the same town or magisterial district and sometimes
in different towns or magisterial districts. In other cases, the establishments
controlled by a single firm engage in different kinds of economic activity,
even at the same address. These activities may be classifiable under different
major divisions of the SIC, for example a firm with an establishment engaged
in fishing - classifiable under Major Division 1 - and another which processes
fish - classifiable under Major Division 3; or they may be classifiable
under the same major division, for example a firm controlling an establishment
which tans leather and another which manufactures footwear.
3.3 Establishments engaged in different activities but for which the basic
industrial statistics cannot be reported separately are classified on
the basis of the principles set out hereunder.
3.3.1 In the case of establishments that are engaged in activities assigned
to more than one major division of the SIC, cognisance is taken of the
main activity. For example an establishment may manufacture goods and,
in addition to selling its manufactured goods to wholesale and/or retail
establishments, also buy goods for resale. If its principal activity is
manufacturing, the establishment is classified under Manufacturing; on
the other hand, if an establishment is principally engaged in trading,
wholesale or retail, it is classified under Trade.
The principal activity is determined from the net values added by each
different activity, i.e. the net value added in the case of manufactured
goods and gross profit in the case of purchased goods resold (factored
goods). Where this is not practicable, the gross output associated with
each kind of activity is used as basis. In the case of establishments
operating in the same major division the basis of classification is the
gross income obtained from the various final products produced or products
dealt in or services rendered.
3.3.2 With regard to the classification of certain establishments whose
production activities are vertically integrated, cognisance is taken of
the nature of the final product. For example a clay pit may be combined
with the production of pottery, china and earthenware and structural clay
products. Such establishments are classified under the industry indicated
by the final product. This principle is, however, not applied to limeworks
which, for historical reasons, are classified under Major Division 2 (Mining
and Quarrying). Other exceptions are the production of gold bullion by
smelting on gold mines, which is included with gold mining, whereas the
crushing of stone (which is normally carried out in conjunction with quarrying)
is classified under major Division 2 (Mining and Quarrying), irrespective
of whether such activities are carried out at stone quarries or elsewhere.
3.3.3 In cases where the different activities of an establishment have
a significant bearing on the statistics concerned, the principle is adopted
that the activities concerned are regarded as separate establishments
and estimates of the basic industrial statistics are made if separate
data are not available. For example an establishment that is engaged mainly
in trading could also be manufacturing certain products. The significant
contribution of its manufacturing activities to the total production statistics
in the manufacturing subgroup concerned may necessitate the separating
of the particular information from the other data and its inclusion in
the subgroup concerned.
4. THE KIND-OF-ACTIVITY UNIT
4.1 The kind-of-activity unit differs from the establishment (as defined
in paragraph 3 above) in that there is not the same restriction in respect
of the geographical area in which a given kind of activity is carried
on by a single legal entity. The kind-of-activity unit serves as a statistical
unit, especially in the fields of construction, transportation and electricity,
since in these industries a single legal entity may carry on its activities
over a wide geographical area. In such cases, the kind-of-activity unit
(used as a statistical unit) is the controlling branch office in the case
of construction and transportation, and the network of producing units
or the undertaking as such in the case of electricity production and distribution.
In such cases some information (e.g. employment and salaries and wages)
may be available for individual projects and consequently it is sometimes
collected on a magisterial district basis (as in the case of construction).
5. ECONOMIC, ADMINISTRATIVE AND ANCILLARY ACTIVITIES
5.1 Economic administration and activities cannot be carried out without
the support of a number of ancillary activities such as bookkeeping, transportation,
storage, purchasing, sales promotion, cleaning, repair and maintenance,
security, etc. Ancillary activities are therefore those that support the
main productive activities of an entity by providing non-durable goods
or services entirely or primarily for the use of that entity. Outputs
resulting from ancillary activities are sold on the market only incidentally.
When some of these products are sold on the market, however, such products
become secondary products; for instance, if an enterprise, which generally
consumes its computer services internally, incidentally sells some of
these services on the market, these services become secondary products.
5.2 Since production processes are generally not viable without administration
and the support of a certain number of ancillary activities, the latter
should not be separated to form separate entities even though these activities
may be carried out in a separate location and even though separate records
may be available. Also, these activities should not count in determining
the classification of the entity to which they belong. Apart from administrative
entities (head offices), examples of entities carrying out ancillary activities
are sales departments, warehouses, distribution depots, repair shops and
accounting or computer departments which primarily serve their parent
units. A practical solution to cases where these activities are carried
out by separate entities is to assign to such entities the classification
of the firm as a whole. This can be dealt with in the records of the establishments
making use of the services of these entities, as charges for administrative
and ancillary services.
5.3 Under the description given in paragraph 5.1 above, the following
activities are not to be considered ancillary:
(i) The production of goods or doing work that is part of fixed capital
formation. The type of units most affected are those doing construction
work on the account of their parent unit. This approach is in accordance
with the classification of own account construction units for which data
are available, to the construction industry.
(ii) Activities, of which the output although used as intermediate consumption
by the economic activity, is for the greater part sold on the market.
(iii) The production of goods which become a physical part of the output
of the economic activity, e.g. the production of boxes, tin cans or the
like by a division of an enterprise, as packaging for its own products.
(iv) Research and development. These activities are not universal and
they do not provide services that are consumed in the course of current
production.
In all these cases, if separate data are available in respect of these
activities, separate units should be distinguished and they should be
classified according to their own activities.
6. THE CLASSIFICATION OF GOVERNMENT ESTABLISHMENTS
6.1 In this Classification government-owned and operated establishments
are classified according to the same general principles as those governing
the classification of establishments in the private sector. The aim is
to classify as "Public administration and defence" (Division
91) only those establishments engaged in activities of a purely governmental
nature, such as the administration of justice, the collection of tax and
defence. Examples of departments and divisions of departments of the Central
Government classified under industries other than "Public administration
and defence" include the Government Printing Works and the vaccine
production of the Department of Agricultural Development. In the case
of local authorities the activities of abattoir, electricity, gas, housing,
market, passenger transport and water and sewerage divisions and cleaning
services are grouped with similar business activities of the private sector.
7. THE CLASSIFICATION OF ACTIVITIES CARRIED OUT ON A FEE OR CONTRACT
BASIS
7.1 Repair services
7.1.1 The principle adopted for classifying repair services is that all
establishments specialising in, or primarily engaged in any given type
of repair work should be classified in the same division of the SIC as
establishments which, in addition to their main activity, undertake such
repair services to a significant extent. In this manner the greater part
of each type of repair service is brought together in the same category.
7.1.2 In accordance with this principle, establishments primarily engaged
in or specialising in the following repair services are classified under
Retail Trade: The repair of footwear, luggage, handbags and other leather
goods; the repair, servicing and installation of electrical household
and personal appliances such as radio and television receivers, sound
recording equipment, gramophones, radio transmitting equipment and antennas
in homes, household refrigerators, washing machines, irons and vacuum
cleaners, bread and other food toasters and electric razors; watch, clock
and jewellery repairs; the repair of lawnmowers; locksmithing; the repair
of bicycles; and the repair of other consumer and personal goods such
as binoculars, cameras and other photographic equipment, musical instruments
and toys; the repair of motor vehicles and motor cycles, including work
done by panelbeaters and spraypainters and automotive electricians.
7.1.3 Establishments specialising in or primarily engaged in the repair
and servicing of office and accounting machinery and of computers and
computer peripheral equipment are classified under Division 86 (Computer
and related activities).
7.1.4 Establishments specialising in the repair of furniture (including
upholstery), factory equipment, ships and boats, railroad equipment and
aircraft are classified under the same group as the establishments manufacturing
the class of commodity being repaired. Automotive engineering establishments
primarily engaged in reconditioning and/or rebuilding engines and other
automotive parts (irrespective of whether this is done primarily for the
trade or on own account) are included under Manufacturing.
7.1.5 The renovation/repair of buildings is included under Construction.
7.2 Other activities
Except in cases where there are special categories (e.g. transport, storage
and packaging) establishents carrying out activities on a fee or contract
basis (e.g. irradiation) are classified under the same group as establishments
that do such activities for own account and at own risk.
8. PRODUCTION BY THIRD PARTIES
Establishments that sell goods under their own name and on their own risk
but that have the actual production done by others are classified as if
they produce the goods themselves, provided that they have considerable
influence on the conception of the products or, in the case of the manufacturing
industry, they own the materials to be transformed.
9. CODING SYSTEM
The numbers used to identify the major divisions, divisions, major groups,
groups and subgroups are arranged according to a decimal system. Each
subgroup consists of five digits - the first digit denotes the major division,
the first and second digits together the division, the first three digits
together the major group, the first four digits together the group and
the full five digits the subgroup.
In cases where a given level of the classification is not further divided
into categories of the next level of classification "0" is used
in the code position for the next more detailed level. For example the
code for major group "Mining of gold and uranium ore" is 230
since the division "Mining of gold and uranium ore" (code 23)
is not divided into major groups. The code for the group "Mining
of iron ore" is 2410 since the major group "Mining of
iron ore" (code 241) is not divided into groups. The code for the
subgroup "Chrome" is 24210 since the group "chrome"
(2421) is not divided into subgroups. On the other hand the group "Mining
of chemical and fertilizer minerals" received the code 2531
since the major group "Mining and quarrying n.e.c." (253) is
divided into more than one group.
An exception to this rule has been made in major division 3. In order
to accommodate 10 codes for divisions in this major division, it
was necessary to use a code 30 in stead of 31 for the first
division code.
10. DIFFERENCES BETWEEN THE SIC AND ISIC (REV. 3)
10.1 Differences in the coding system
With the revision of ISIC a new coding system was used. A separation was
introduced in the coding structure in order to make the classification
responsive to the tabulation needs of certain users. A letter was used
for the first digit to single out broad tabulation categories, in contrast
to the coding itself which remained purely numerical at the two, three
and four-digit levels. The SIC grouping was, however, retained in 10 major
divisions as before. A list of SIC divisions with corresponding ISIC tabulation
and division codes appears in table
of differences.
10.2 Other differences between the SIC and ISIC
In this issue of the SIC it was endeavoured to follow ISIC as a rule.
The following deviations were, however, necessary:
(i) A further division "Service activities incidental to mining of
minerals" was established under Mining for the classification of
establishments providing such services to mines on a fee or contract basis.
(ii) A further major division was established (Major division 0) to cover
(over and above the activities of private households and exterritorial
organisations which are also grouped in different divisions in ISIC) the
activities of foreign governments stationed in South Africa as well as
other activities not adequately defined.
11. DIFFERENCES BETWEEN THE FIFTH AND FOURTH EDITIONS OF THE SIC
While the fourth edition of the SIC which was based on ISIC Rev. 2, this
edition of the SIC is based on ISIC Rev. 3. Since that ISIC Rev. 3 departs
from ISIC Rev. 2 in many instances, differences also occur between this
and the previous edition of the SIC.
11.1 Major differences
11.1.1 Agriculture, hunting, forestry and fishing
This major division was extended to distinguish the growing of crops from
the farming of animals and from mixed farming.
11.1.2 Manufacturing
A new major group was created under this major division to provide for
the recycling of waste and scrap.
11.1.3 Construction
This division has been regrouped to provide separately for site preparation,
the construction of buildings and civil engineering structures, building
installation, building completion and the renting of construction machinery
with operators.
11.1.4 Trade
A distinction has been made between specialised and non-specialised stores,
between shops dealing in new and used goods and between retail in stores
and not in stores.
11.1.5 Transport
Supporting and auxiliary transport activities are grouped regardless of
the mode of transport they serve.
11.1.6 Financial intermediation, insurance, real estate and business
services
11.1.6.1 A new division (85) has been created for the renting and leasing
of machinery and equipment without operators.
11.1.6.2 A further new division (86) has been created for all computer
related activities. It includes the repair and maintenance of computers
and office machines.
11.1.6.3 Provision has been made for packaging activities on a fee or
contract basis (Group 8895).
11.1.6.4 Research and development activities that were previously classified
under community, social and personal services have been transferred to
division 87 of this major division.
11.2 Minor changes
Minor changes occurring on a group or subgroup level are included in the
correspondence tables.
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