Statistical Office of the Republic of Serbia

Earnings Statistics Group

5 Milana Rakića, Belgrade

The Labour Cost Index (LCI) shows the development of labour costs per hours actually worked. Labour costs expressed hourly are an important factor for the analysis of short-term and medium-term indicators of economic development. Data on the labour cost index provide insight into the movement of labour costs in the domestic labour market and their comparison with the international labour market, and also show the impact of legislation on the amount and structure of labour costs.

The labour cost index is calculated by the Laspeyres formula for the following variables:

1. Total labour cost (including bonuses) index– D;
2. Wages and salaries cost index – D11;
3. Total social security contribution index – D12;
4. Total labour cost (excluding bonuses) index – D-TXB.

Classification of Activities (2010), which was adopted by the Government, based on the Law on Classification of Activities (“Official Gazette of RS”, No. 104/09), on the basis of regulation as of 29 July 2009 (“Official Gazette of RS”, No. 54/10). This classification is comparable with the classification of activities of the European Union (NACE Rev. 2).

Activity sections from section B – Mining and quarrying to section S – Other service activities are covered.

In the context of the Labour Cost Index, Labour Costs are defined as core expenditure borne by employers for the purpose of employing staff. Labour costs (D) include compensation of employees with wages and salaries with corresponding taxes and employee contributions (D11), as well as employers' contributions (D12), after deduction of received subsidies (D5).

D=D11+(D12-D5)

In D11, in addition to the earnings which are defined by the Labor Law, payments that are considered as earnings by the Law on Personal Income Tax are also included.

In accordance with to the Labor Law, earnings include all remunerations for the  work performed and time spent at work, earnings that are based on the contribution of the employee to the business success of the employer (awards, bonuses) and other earnings based on employment (in accordance with the general act and the employment contract).

In accordance with the Law on Personal Income Tax, wages also include payments above the non-taxable amount for the following items:

• reimbursement of travel expenses for arrival and departure from work,
• daily subsistence allowance for traveling locally and abroad,
• solidarity assistance,
• jubilee awards.

Given that there is no reliable way to identify bonuses from Tax Administration’s (TA) data, their amount is estimated. The estimate is done at the level of a business entity, so that the amounts deviating from the quarterly average are considered bonuses.

The amount of severance payments paid in case of retirement of employees is estimated based on the number of employees who have retired in a given quarter taken from The Central Register of The Compulsory Social Insurance records.

Data on the subsidies granted are taken from the National Employment Service. Subsidies also include incentives for employers for newly employed workers and newly established companies, which are related to the reduction of contributions and income taxes.

Actual hours worked (effective hours of work) are calculated as the difference between the total number of paid hours worked and the sum of hours paid but not worked and the estimated number of hours of daily break (short rest period).

Hours paid but not worked include: hours of sick leave up to 30 days, hours of annual leave, hours of daily break (30 minutes), hours of holidays and other non-working days.

The statistical unit is any accrued type of income that has the character of earnings and which is reported by a legal entity or physical person through the PPP-PD form, regardless whether that income relates to employees with indefinite or fixed-term employment contract or employees in temporary or occasional employment.

LCI applies to activity sections from B to S of CA 2010. All business entities from the Statistical Business Register (SBR) that submitted an electronically filled-in tax return form (PPP-PD form) with accrued salaries and wages to the Tax Administration are included in the survey.

Republic of Serbia

Data are available since the first quarter of 2011.

Base year is 2016.

• Ministry of Finance – Tax Administration, Individual tax return on accrued taxes and contributions (PPP-PD form)
• Statistical Business Register (SBR)
• National Employment Service
• The Central Register of The Compulsory Social Insurance (CROSO)

Data are collected monthly, but data are processed for the quarter.

Data from Tax Administration. Tax Administration's data are transmitted electronically, through web service, i.e. FTP service (File Transfer Protocol), via a secured network of the Administration of General Affairs of government bodies of the Republic of Serbia. Data are taken on the 15th day of the month.

Data from SBR. Data on economic activity, type of ownership and status of a business entity are taken from the SBR database.

Data from the National Employment Service are obtained via e-mail.

Data on retired people are collected from the CRCSO ( The Central Register of The Compulsory Social Insurance) database.

Since the data on the labour cost index are based on the same data source as the data on average monthly salaries and wages in the Republic of Serbia, the criteria for the first level of data validation for LCI are contained in the criteria for controlling data on average earnings. This control consists of the following stages:

• Contingent control is conducted (comparison of number of records, mass of accrued salaries and wages and number of recipients for current and previous month is performed);
• Comparison and analysis of data on the number of business entities and employees from the registers of CRCSI, SBR and TA are performed;
• The contingent of records that meets the established criteria enters the processing of data on average salaries and wages;
• In the contingent of records which is allocated for the processing of data on average salaries and wages, control and analysis of relevant data is carried out in order to identify potential errors and check the data quality;
• Extreme values (outliers) are detected and excluded.

Data checks are performed by automated procedures and by experts’ data analysis. Data is compared with data from the previous period.

About 3% of records are excluded from the contingent allocated to the processing of data on average salaries and wages. These records do not fully meet the requirements necessary to be taken into account when calculating average earnings (tax return records that do not contain all the necessary elements of earnings: tax, contribution, net earnings as well as outliers).

After the first level of validation of data, data on the basis of which LCI is calculated are transferred to a separate database, where the contingents are formed to obtain data D11, D12, bonus, in accordance with the relevant EU regulations regarding LCI. Also the data on subsidies are added and the data on severance pay are estimated. Afterwards, the second level of automatic data validation is carried out, which controls only the data on which the LCI is calculated.

Before sending data to Eurostat, additional mathematical and logical control of the final results is carried out.

The data, obtained from the Tax Administration, are stored in a separate database in which the preparation and transformation of data for calculating the labour cost index is carried out. The data on subsidies and the number of employees who have retired are also stored into the same database. Based on all data, the indicators D, D11, D12, D-TXB are calculated according to the definitions and requirements of the Eurostat’s Regulations.

Data are seasonally and working-day adjusted.

The SORS quality management system is relied on the Serbian official statistics mission and vision, as well as on the European Statistics Code of Practice – CoP and the Total Quality Management – TQM principles, which together make the common quality framework of the European Statistical System (ESS).

For more information, please see the documents at http://www.stat.gov.rs/en-US/o-nama/sistem-upravljanja-kvalitetom.

Data on labour cost index are based on reliable data from appropriate administrative sources. Before publishing and sending data to Eurostat, extensive mathematical and logical control of data is performed. Data on labour cost index are internationally comparable, because the relevant EU regulations are followed in respect to the international concepts, definitions and classifications.

A comparative analysis of data on average salaries and wages obtained through the Monthly statistical survey RAD-1 and the data from the Tax Administration records for 2016 and 2017 showed high compliance of data. This confirms quality of data obtained by the RAD-1 survey, as well as quality of data from the Tax Administration records (PPP-PD form), which is used as a source of data on average salaries and wages starting from 2018.

The use of administrative sources for obtaining data on average salaries and wages is in line with international recommendations, standards and practices.

For now this indicator is only delivered to Eurostat.

On biennial basis (once in two years), by the means of web interview, implemented is the User Satisfaction Survey. The survey results are available at SORS website: http://www.stat.gov.rs/en-US/o-nama/sistem-upravljanja-kvalitetom.

The EU Regulation regarding LCI is fully implemented since 2018, which means that labour costs of entrepreneurs and their employees are also included. Labour costs of persons who work on the basis of a contract for performing temporary or occasional jobs, as well as of employees of the Ministry of Defence and the Ministry of Interior of the Republic of Serbia are also included.

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The survey is based on data from administrative sources, which ensures high level of data quality.

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Data are seasonally and working-day adjusted.

The SORS general revision policy constitutes the global frame ensuring that each statistical domain shall define its own revision policy in compliance with its specific nature. 

The general SORS revision policy determines:

- general rules of revisions of the published data,

- forms of informing users as regards the possible causes of revisions,

- categories of revisions, and

- documents covering all aspects of revisions.

The general SORS revision policy is available at http://www.stat.gov.rs/media/2332/general-revision-policy.docx.

A possible revision is carried out no later than 120 days after the reference period. Upon expiry of that period, previous results for which no revision has been carried out, as well as data revised in the meantime are considered as a final data.

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Data are transmitted to Eurostat according the deadline, not later than 70 days after the reference quarter.

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The given deadlines are respected.

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When calculating LCI, the adjustment of the national wage definition is done in order to be in line with the relevant EU regulations regarding LCI. In contrast to the national definition of earnings, wages and salaries in this survey also include amounts of compensation of travel costs to and from work, daily allowances for business trip in the country or abroad, compensation for accommodation expenses on a business trip, compensation of travel expenses on а business trip, as well as solidarity aids, jubilee awards, which are paid above the non-taxable amount. These compensations are not included in the national definition of earnings because the corresponding social security contributions are not paid, while the tax is paid only on the amount above the non-taxable part. The allowances for sick leave up to 30 days, which are paid by the employer, are included in social contributions (D12) in accordance with the relevant EU regulations, and not in earnings, as defined by the national definition.

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Until 2018, the survey was carried out on the basis of the Monthly survey on employees and their salaries and wages (RAD-1).  From January 2018, the labour cost index is calculated on the basis of data from the Tax Administration records, which are collected through the electronic form of Individual tax return on accrued taxes and contributions (PPP-PD).

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Results of LCI survey are available only in the online database of SORS.

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Database

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Microdata are accessible at user’s demand in accordance with principles defined in Official Statistics Law http://www.stat.gov.rs/media/2322/zakon_o_statisticie.pdf   and rules defined by “Rulebook on the method of using and providing the data produced by the Statistical Office of the Republic of Serbia” http://www.stat.gov.rs/media/2344/rulebook-on-the-method-of-using-and-providing-the-data-produced-bythe-sors.doc

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The methodology for the quarterly survey on the labour cost index can be found on the 

https://www.stat.gov.rs/en-us/istrazivanja/referentni-metapodaci/

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Data are taken from administrative sources (Tax Administration records), thus reducing the survey costs to a minimum. Also, the reporting units are no longer obligated to fill in and submit data

Data confidentiality is stipulated by:

- Official Statistics Law (Official Gazette of RS, number 104/2009), Articles 44, 45, 46, 47, 48, and 49.

(https://www.stat.gov.rs/en-us/o-nama/dokumenti/)

- Rulebook on statistical data protection in the Statistical Office of the Republic of Serbia

(https://www.stat.gov.rs/en-us/o-nama/dokumenti/)  

- Guidelines on measures of data and information protection in the Statistical Office of the Republic of Serbia

(https://www.stat.gov.rs/en-us/o-nama/dokumenti/)

Confidential data are treated according to the confidentiality related policy rules. See Official statistics law.

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