Harmonsed Labour Cost Index Methodology March 2013
Index 1 Introducton 3 2 Scope, coverage and reference perod 4 3 Defntons 5 4 Sources of nformaton 7 5 Formulae employed 9 6 Results obtaned 10 7 Seres adjustment 11 Natonal Statstcs Insttute 2
1 Introducton The Harmonsed Labour Cost Index (HLCI) s a quarterly contnuous statstcal transacton whose man object s to provde a common and comparable measure of the laboral costs for the whole of the European Unon, whch allows for a follow-up of the evoluton of sad laboral costs. The legal bass for the process of the harmonsaton of the Labour Cost Index (HLCI) s European Parlament and Councl Regulaton 450/2003 of 27 February 2003, that establshes a common framewor for the complaton, transmsson and assessment of comparable labour costs ndces. The harmonsed labour cost ndex s a Laspeyres Index of the labour cost per hour wored, lned annually and based on a fxed structure of the economc actvty broen down by sectons of the CNAE-09. It s calculated from the results of the Quarterly Labour Costs Survey (QLCS) and DARETRI fle (whch provdes the remuneraton of the publc admnstraton personnel). The delay n publshng s 70 days after the reference quarter. Natonal Statstcs Insttute 3
2 Scope, coverage and reference perod The populaton scope s formed by all local unts, rrespectve of ther sze, whose economc actvty s classfed n Sectons B to S of the CNAE-09. It excludes agrcultural, lvestoc and fshng actvtes, Publc Admnstraton, Defence and compulsory Socal Securty, domestc personnel and extraterrtoral bodes The geographcal scope of the study encompasses the entre country. For the temporal scope, the reference perod s the calendar quarter. Natonal Statstcs Insttute 4
3 Defntons 1 Labour Cost The Labour cost s the total quarterly cost ncurred by the employer for usng the wor factor. The cost should be measured n net terms for the employer, n other words, deductng the dfferent subsdes receved. The Labour Cost comprses a large set of tems that the survey ncludes n two man blocs: Cost of Wages and Other Costs. The total wage cost comprses all remuneratons, both n cash and n nd, made to worers for the performance of ther wor servces for others, whether t rewards effectve wor, whatever the method of remuneraton, or the rest perods accounted for as wor. Consequently, the Wage Cost ncludes the base wage, wage supplements, overtme payments, bonuses and delayed payments. All these components are consdered n gross terms,.e. before deductons or payments to Socal Securty on behalf of the employee. Other Costs nclude Non-Wage Payments and oblgatory Socal Securty Contrbutons; Non-Wage Payments are remuneratons receved by the employees not for ther wor actvty, but rather as compensaton for expenses resultng from carryng out ther wor or to cover needs or stuatons of nactvty not attrbutable to the worer. They nclude drect corporate contrbutons (payments for temporary ncapacty, unemployment, ndemntes for dsmssal etc.), compensaton payments (currency devaluaton, wear and tear of tools, acquston of wor clothes, dstance and urban transport allowance, relocaton ndemntes, contract termnaton ndemntes etc.) and other non-wage payments. Oblgatory Socal Securty Contrbutons are legally establshed contrbutons that employers mae to the Socal Securty System n favour of ther employees to cover the benefts set up by the system and whch are those derved from llness, maternty, wor accdent, dsablty, retrement, famly, survval, unemployment, vocatonal tranng, wage guarantee or any other contngency covered by the Socal Securty System. 1 For futher nformaton see Quarterly Labour Cost Survey Methodology Natonal Statstcs Insttute 5
Effectve hours of wor These are the hours that were actually wored, durng both normal worng hours and overtme hours, ncludng the perods of tme whch have not been completed but are consdered effectve tme n vrtue of the vald regulatons. They are obtaned as the sum of agreed hours, plus overtme and/or complementary hours, mnus hours not wored, from whch are excluded hours lost n the worplace, snce they are consdered worng hours. Natonal Statstcs Insttute 6
4 Sources of nformaton The source of nformaton for complng the HLCI for all sectons of the CNAE-09 except O (Publc Admnstraton, Defence and Socal Securty), are the provsonal results of the Quarterly Labour Cost Survey (QLCS). The cost per hour wored n the dfferent sectons s obtaned by tang the aforementoned survey, as are the annual weghtngs necessary for calculatng the Laspeyres ndex. In Regulaton no. 224/2007 of the Commsson, approved on 1 March 2007, ncorporaton nto the ndex of economc actvtes Publc Admnstratons, Educaton, Health and Personal Servces must be establshed by tang the data referrng to the frst quarter of 2009, and at least startng from the frst quarter of 2007. For Span t mples the ncluson of Publc Admnstratons (P.A., secton O). Spansh publc sector worers are grouped under dfferent socal protecton systems: the General Socal Securty System and the Specal Retrement Scheme for Cvl Servants, as well as the Government Insurance system. Therefore, startng wth the frst quarter of 2009 and from the frst quarter of 2006 onwards, the followng sources of nformaton have been used: - The QLCS ncludes n ts scope P.A. worers afflated to the General Socal Securty Scheme snce the frst quarter of 2006. - The DARETRI System: ts creaton s approved n Order PRE/390/2002 of 22 February. Its am s obtan data on remuneraton of effectves at the servce of the state publc servce sector. The purpose of the aforementoned system s the automated capture of remuneraton data covered n artcles 11 to 15 of chapter I of the General State Budgets Expenses Budget. From ths source are obtaned the number and salary costs of State effectves afflated to the Specal retrement scheme for cvl servants. - The regulatons n force each quarter and the effectves obtaned from DARETRI for estmatng the effectve contrbutons from ths group. - The General State Interventon Carryng out of the Budget statstcs for obtanng Specal retrement scheme for cvl servants contrbutons for estmatng the Imputed corporate contrbutons. - The Economcally Actve Populaton Survey for obtanng the hours wored per worer n the P.A Two labour cost subndces are compled usng these sources of nformaton: - The frst of these ncludes worers covered by the General Socal Securty Regme usng the QLCS as n other economc actvtes. - The second comprses publc employees subject to the Specal retrement scheme for cvl servants usng the other sources mentoned. Natonal Statstcs Insttute 7
Lastly, both subndces are aggregated n a sngle weghted ndex usng the number of worers n each one as a weghtng varable. Natonal Statstcs Insttute 8
5 Formulae employed The followng formulae are defned: w tj = labour cost per hour wored by the employees performng actvty durng quarter t n year j. ω = labour cost per hour wored by the employees performng actvty durng year. h = hours wored by employees performng actvty n year. W = ω * h = labour cost for employees performng actvty n year. The basc Laspeyres formula used to calculate the HLCI durng quarter t of year j, for base year, for combnatons of sectons of the CNAE-09, results from the followng expressons: LCItj() = tj tj tj w h ( w ω ) ω h ( w ω ) W = = ω h W W W where W are the weghts to calculate the ndex and where tj ( w ω ) are the smple or elemental ndces n a specfc secton. The followng coeffcent s defned to ln year l and year l+1: Ll, l + 1 = l + l ω 1 h l l ω h where 0 l < l+1 < j Therefore, the formula for the chaned laspeyres ndex for quarter t, n year j and wth reference to base year =0, beng m the requred nterval to process and use the necessary annual weghts, where 1 m 2, are defnted as: LCI tj(0) = 100. (L 0,1). (L 1,2)... (L J-2,J-1). LCI tj(j-1) where 1 m 2 Natonal Statstcs Insttute 9
6 Results obtaned The labour cost ndces correspondng to the followng labour cost categores are provded separately: Total labour cost per effectve hour of wor Defned as the quotent of the total labour cost between the number of hours actually wored. Total Wage Cost per effectve hour of wor Ths s the result of dvdng the total wage cost by the number of hours actually wored. Other costs per effectve hour of wor Defned as the quotent of other costs between the number of hours actually wored. Labour cost excludng extraordnary payments and delays per effectve hour of wor. Ths results from dvdng the total labour cost mnus bonuses and delayed payments by the number of hours actually wored.. Natonal Statstcs Insttute 10
7 Seres adjustment In order to perform a comprehensve nterpretaton of the results, the seres of ndces are obtaned as follows: a) Gross seres: the orgnal seres, wthout adjustments. b) Seres corrected for calendar effects: seres adjusted by worng days (ncludng the Easter effect) c) Seres seasonally adjusted and corrected for calendar effects: seres corrected both for calendar effects and for perodcal or seasonal effects (bonuses, holdays,...). The seasonal adjustement of these ndcators has been realsed accordng the INE standard for the correcton of seasonal and calendar effects on short-term seres that s avalable n Methods and Standards secton of the INE webste. Ths standard s the result of the INE Seasonal Adjustment Wor Group, whch was created by the Board of Management of the INE n May 2012, and follows the recommendatons of the European Unon provded for n ESS gudelnes on seasonal adjustment Natonal Statstcs Insttute 11