Ministry for National Economy

Labour Market Department

1051 Budapest, József nádor tér 4.

Hungary has more than 30-years of tradition in conducting surveys similar to the Structure of Earnings Survey. Since 1992 it is a yearly survey, with the reference month of May.

The requirements of the Structure of Earnings Survey were fulfilled by a few modifications and the development of the traditional survey. All the necessary modifications were made to SES-2002, and since than all surveys have been conducted according to the EU requirements regarding the Structure of Earnings Survey.

The most important modifications were:

• The scope of the survey was extended to non-profit organizations;
• It was also extended to part-time workers (earlier they were excluded);
• Some new variables were introduced including working time, overtime, length of service and paid vacation.

In 2010 the survey was conducted by the National Employment and Social Office, a background institution of the Ministry of Social Policy and Labour. The successor of the National Employment and Social Office is the National Labour Office which is the head office of the Public Employment Service in Hungary and – together with the Labour Centres– belongs to the Ministry of National Economy (the successor of the Ministry of Social Policy and Labour).

In 2010 the survey included micro-enterprises as well (with more than 2 employees) for the first time in the history of the Earnings Surveys. Even though the response rate was quite low, the Ministry decided to include micro enterprises in the survey every four years.

The main uses of the survey:

• It serves as a common database in the wage bargaining process;
• It provides a sound basis for model computations to prepare minimum wage decisions and other wage agreements on the macro and medium levels;
• It helps prepare important decisions concerning the development of different wage scale systems for public employees and civil servants;
• It supplies the government and all interested parties with useful data for the analysis of wage rates of different groups of employees;
• Certain international statistical obligations are fulfilled from this database such as the October Inquiry of ILO and some Eurostat and OECD data requests;
• It is an extremely good basis for different research projects on national and international level;
• It provides useful information for potential Hungarian and foreign investors.

The use of the survey in the wage negotiation process explains why it is so important to keep May as the reference month: it makes possible the use of the latest figures as early as in November or December of the same year in the wage agreements for the next year.

Since we kept May as the reference month, the limitation remains that we can not collect the annual non-regular payments of the reference year, therefore, we collect the non-regular yearly earnings of the previous year. As described in the quality report of SES-2002 in great details this is not a serious setback, because the difference caused by this limitation is certainly less than the sampling error.

In the case of SES-2002 we had difficulties to determine the main activity of the local units if it was different from the activity of the whole company. We tried to collect this information from the local units and asked for help from the Central Statistical Office as well. The problem was partly solved.

In the case of SES-2006 and SES-2010 the situation was similar because the business register of CSO did not contain the local units with their own NACE codes in these years either. However, our survey requests companies to provide the NACE code of local units, so the problem has been reduced.

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New concept added with the migration to SIMS 2.0.
Information (content) will be available after the next collection.

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New concept added with the migration to SIMS 2.0.
Information (content) will be available after the next collection.

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New concept added with the migration to SIMS 2.0.
Information (content) will be available after the next collection.

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New concept added with the migration to SIMS 2.0.
Information (content) will be available after the next collection.

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New concept added with the migration to SIMS 2.0.
Information (content) will be available after the next collection.

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New concept added with the migration to SIMS 2.0.
Information (content) will be available after the next collection.

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New concept added with the migration to SIMS 2.0.
Information (content) will be available after the next collection.

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New concept added with the migration to SIMS 2.0.
Information (content) will be available after the next collection.

Probability sampling

Two different methods are used for the sampling:

• All employers over 50 employees are obliged to report about a sample of their employees: those who were born on specific dates in any month, in any year.* (One date means a 3,29% perfect probability sample, two dates 6,57% and three dates 9,86%)
• From those employers who have less than 50 employees a 20% random sample is chosen using the business register of the CSO, and those who were chosen have to report about each of their employees. The second method is based on a stratified random sample which is drawn by the CSO. The method is described in details in the Quality Report of the Labour Cost Survey (LCS-2008) compiled by the CSO.
• In 2010 the CSO selected a 8% representative sample of micro enterprises (with more than 2 employees but less than 5 employees) as well which we included in the survey for the first time.

For budgetary institutions, which report individually, the first sampling method is the same. However, most of these institutions are incorporated in a central payroll system and thus, for these institutions we get all the necessary data of each individual employee. (Now about 85-90% of public employees and 95% of government employees are reported this way.)

* We use three birthdates in the case of white-collar workers: the 5th, 15th and 25th day of any month in any year. Three times twelve days in a year results in a 36/365=0,0986 sampling ratio. For blue-collar workers within the business sector we use only two birthdates: the 5th and 15th of any month in any year, which results in a 24/365=0.0657 sample size. Within the budgetary sector we use three birthdates both for white and blue collar workers (the 5th , 15th and 25th).

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New concept added with the migration to SIMS 2.0.
Information (content) will be available after the next collection.

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The main objective of the survey is to create a common database for social partners for the reconciliation of interests. The main users are the three parties participating in the wage negotiation process on the macro level, i.e. the representatives of the government, the employees and the employers. One of the main users of the database is the Ministry of National Economy, but most of the computations made for the Ministry serve the other two parties as well. The organizations of employees and employers can influence the contents of the survey, their opinion is important and taken into consideration in evaluating the results of the survey. There is a huge set of standard tables, agreed upon by the three parties, which is given to all participating trade unions every year, free of charge.

The main uses are:

• Analyses of wage rates
• Minimum wage and guaranteed minimum wage[1] computations
• Model computations for the development of wage scale systems to determine the expected impacts of the different modifications in the public sector

Another important user is the Central Statistical Office. It takes over the whole database each year to fulfill different international statistical reporting obligations. The OECD demands wage dispersion indicators and the proportions of low wage earners which are sent to them each year. The ILO is interested in getting the data for the October Inquiry, which are produced for them by the CSO, based on this database.

In 2008 the IMF also used the SES data on the budgetary institutions to prepare their country report on Hungary.

The Local Labour Centres use the average earnings by occupations to determine the unemployment benefit in special cases and to help judgment on work permit applications of foreign citizens.

The National Directorate of the Pension Fund also uses the average earning by occupations to determine pensions in special cases according to international agreements.

The juries of justice also use earnings data to calculate claims for compensation in case of accidents on the work place and other debates.

Other requests: universities, research institutions, students working on their thesis, embassies, individual companies, etc. Most of these are fulfilled free of charge, in some cases with reimbursement of costs.

An important user is the media. The media can reach the most important results on the internet.

Potential Hungarian and foreign investors are also interested in basic wages and earnings data. In most cases they can find the requested data on the website of the Public Employment Service (www.munka.hu ) in English as well.

[1] The guaranteed minimum wage is the required minimum wage for positions with secondary or tertiary degree.

In most cases we can satisfy the specific requests, the only occasional limits are the lack of capacity and the rules of data protection.

SES-2010 is complete and contains all the compulsory variables required by the Commission Regulation. All the necessary breakdowns are provided (NACE, ISCO, ISCED, NUTS), the transcoding was made on the required levels (NACE sections, ISCO-88 first digit, ISCED 0-6 and NUTS level 1).  This means that SES-2010 Hungary is completely comparable on EU level. The only difference, that we use May as our reference month instead of October, however, this doesn’t cause serious problems.

What is also important is that our survey is conducted every year, even though EU regulations require the survey only every four years. All surveys are conductedaccording to the EU regulations.

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Probability sampling - Bias

Due to the probability sampling method, there is no systematic bias in the estimations.

Non-probability sampling

This is not applicable in our case.

Probability sampling - Variance

The coefficients of variation for monthly and hourly earnings of full-time and part-time employees, according to the breakdowns required were computed and presented in Attachments C and D. The CVs are high because the dispersion of wages is much bigger among individuals than in the case of company averages.

Non-probability sampling

This is not applicable in our case.

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Possible under-coverage may occur because of new units: birth, mergers and demergers of old units. To avoid this to the possible rate, we use the latest updated version of the sampling frame, the business register of the CSO.

Under- or over-coverage may occur because of misclassification of the number of employees by bands. In most cases this does not cause any problems, because for grossing up we use the actual total number of employees, given on the cover-sheet of the report by each employer. (This grossing up method is used for firms over 50 employees.)

Misclassification can also occur if the main activity (NACE code) of the local unit is incorrect. Although we did our best to eliminate this problem, probably a few misclassifications remained.

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In our case measurement errors are reporting errors. The most important sources of these include:

• The misinterpretation of the questionnaire (the reason in most cases is that the respondents do not read the instructions);
• Erroneous coding of the firm identification number or the activity code
• Data entry errors by respondents;
• Data entry errors during the data entry process;
• Possible errors during data transmission or transformation;
• Possible errors during data processing at NLO;
• Possible errors during the transformation of national codes of education into ISCED codes.

Measurement errors are checked and amended through a lengthy and thorough checking process:

• missing variables: sometimes missing data are collected from the respondents personally, in other cases they are imputed
• slipped fields: they can be detected through the checking process and in most cases can be corrected
• detecting and excluding duplicate reports or records
• checking the possible minimum and maximum values for each field containing elements of earnings
• checking the identifiers and code values, whether they are existing codes (using control tables and control digits): erroneous identifiers are amended using the register
• logical checks and amendments by comparing different fields within the individual records, like education, occupation and wage category.

A special feature of the survey in Hungary is that the majority of data in the budgetary sector come from a central payroll system. It means that theoretically measurement errors are not possible, unless some variables are missing from the central system or there are errors in the system.

The central payroll system uses the same terms and definitions that are determined and used by the Central Statistical Office for statistical purposes. (CSO’s labour statistics surveys are also based on the central payroll system.)

At the time of the SES 2002 survey the variable of paid holidays was missing from the central payroll system. The problem was solved by imputing the figures for each individual by using the length of holiday determined by law for each age category. In 2010 the problem did not exist any more.

The survey is part of the annual National Programme of (obligatory) Statistical Reports. It is compulsory for all firms over 50 employees, for all budgetary institutions and for firms in the business sector with less than 50 employees which were selected for the sample.

In spite of obligatory reporting, some of the larger companies do not respond to the survey. (Each gets the questionnaires and the instructions by mail, escorted with a letter and some of the results of the previous survey.)

By using arrival lists we try to collect data from the most important respondents by calling them on the phone. In most cases we succeed, however, a few remain missing from the survey. The lack of our capacity limits these efforts.

For smaller firms, especially under 20 employees, the non-response rate is higher. However, this problem can partly be corrected by using a different grossing up method. Where a 20% sample is selected from the complete list of smaller companies, the grossing up factors are determined for the individual size bands by using the total number of employees in the appropriate size band according to the CSO’s establishment based labour statistics.

The response rate in the business sector is changing from 94 to 53 per cent from the largest to the smallest companies in case of organizations with 5 employees or more. In 2010 the CSO selected a 8% representative sample of micro enterprises as well which we included in the survey for the first time. However, out of the 12,000 micro enterprises only 23% answered the data sheet. Although the response rate was quite low, the Ministry decided to include micro enterprises in the survey every four years in the future as well.

In the budgetary sector the response rate is excellent (99,9%) thanks to the well functioning central payroll system. It certainly improved substantially since SES-2002.

The non-response rate causes biases concerning the total number of employees and their distribution by size bands, but these biases are small concerning the estimates of monthly or annual earnings and for hours paid, which are the most important results of the survey.

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This is not applicable in our case, because we don’t use model assumptions for the Structure of Earnings Survey.

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• Preliminary results given to the social partners to use during wage negotiations: December 2010
• Final results: February 2011 (on CD)
• Transforming the database of SES 2010 according to the requirements and sending it to the Eurostat through the CSO: October 2011

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The reference month of the Hungarian survey is the month of May. Key data collection dates are as follows:

• the questionnaires and instructions were sent out to the respondents at the beginning of May 2010
• the deadlines for sending back the questionnaires:

- for companies with less then 300 employees:   7^th July 2010

- for companies over 300 employees:                14^th July 2010

- for all budgetary institutions:                          14^th July 2010

• post collection phases:

- receiving the reports, manual checks, recalling missing responses by using computerized arrival lists: continues until the end of August

- data entry and compiling the reports received via e-mail and on CDs: parallel with the previous phase

- logical checks, data corrections using the phone where programmed corrections are not possible: September – October 2010

- data entry for late arrivals and data corrections: October 2010

- quality check before data processing: November 2010

• Preliminary results given to the social partners to use during wage negotiations: December 2010
• Final results: February 2011 (on CD)
• Four volume publication: August 2011
• Transforming the database of SES 2010 according to the requirements and sending it to the Eurostat through the CSO: October 2011
• Sending the final version of the database to Eurostat through the CSO: July 2012
• Data processing for the quality report: August-September 2012 (in cooperation with the CSO, concerning the harmonization with the Quality Report of the Labour Cost Survey)
• Quality report writing:  September 2012
• Checking, correcting the report: October 2012
• Sending the quality report to Eurostat: October 2012

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The national concepts, terms and definitions are harmonized with the European ones. The industrial classification corresponds with the NACE coding system generally used in the EU.

The Hungarian classification of occupations (FEOR-93) is similar to ISCO-88. The structure and principles are the same, but they are equivalent only on the 1^st digit level. Transcoding is possible on the two and three-digit levels and not possible on the 4-digit level.

There is no generally used classification of education in Hungary, but the level of education may be transcoded to ISCED (0 to 6).

The statistical unit of the survey is the local unit.

The industrial classification comes from the register of employers of the Central Statistical Office. The register is updated monthly, which is a very difficult task in the case of smaller enterprises. The set up of new companies can be tracked easily because new companies have to request for an identification number. However, data tracking is much more difficult in the case of company closings.

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The structure of the survey has not changed since 2002, therefore comparability is assured. However, as new NACE codes were introduced in 2008 comparison between SES-2006 and SES-2010 data broken down by industry is not possible.

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According to Commission Regulation 698/2006 we investigated the coherence regarding the compensation per employees between SES and SNA-based figures. The results can be found in the table below.

The table shows that in almost all NACE sections the SNA based compensation per employee figures are higher than the average earnings data from the Structure of Earnings Survey. However, despite the differences, in 2010 the figures of the two surveys are much closer to each other than they were in 2006. In the manufacturing sector, the largest employer in the economy, the difference is negligible. The possible causes of the difference are:

• The difference in coverage: SNA data are derived from the balance sheets of all companies while SES collects individual earnings data.
• National Account data include also estimates on the grey and black economy, which can be significant in certain sectors of the national economy.
• The data of 2006 and 2010 may differ due to the changes in the NACE coding system.

Gross annual earnings per employee (SES) and Wages and salaries per employees (SNA) from SES-2010 and SNA 2010

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a) For the open public:

• Some of the most important results are accessible for everybody, free of charge, on the website of the National Labour Office (www.munka.hu), in English as well
• Some of the aggregated results of the previous year are sent out to the respondents of the new survey  with the questionnaires

b) For the interested ministries, trade unions and employers organizations:

• he results of model computations to prepare negotiations on minimum wage decisions and macro level wage agreements are also computed

c) For selected important users (social partners, Directorates of CSO, Regional Labour Centres, Universities, Research Institutes, ministries, libraries) a four-volume publication is published every year on basic wages and earnings (cca 4*200 pages) and since 2005 data are accessible on the internet as well

• About the Hungarian economy as a whole
• About the business and the non-profit sectors
• About the budgetary sector
• By regions (counties, NUTS 3 level)

a) Users of the whole database

• Each year the CSO takes over the whole database to fulfill important international reporting obligations (ILO, Eurostat, OECD)
• Hungarian and international research institutes take over the whole database for research purposes (without the individual identifiers of the employers)
• Certain government agencies also take over the whole database (such as the Hungarian National Bank and the Ministry of Finance).

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a) For the open public:

• Some of the aggregated results of the previous year are sent out to the respondents of the new survey with the questionnaires

b) For the interested ministries, trade unions and employers organizations:

• A menu driven collection of “standard” tables are sent out on CD, defined by the representatives of social partners (the required tables by sections, wage categories, occupations, education, etc. can be easily found and printed if required)

c) Special requests

Trade unions, companies, potential investors etc. may order for special data processing on a cost reimbursement basis taken into consideration the rules of data protection.

Methodological comments and explanations are given to the users with the CD containing the standard tables and with the four-volume publication of basic wages and earnings. The same document can also be found on our website.

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The required results for tabular analyses are attached in Attachments A and B.  The distributions of full-time (FT) employees and part-time (PT) employees are provided separately according to the required breakdowns. The results of SES-2010 can be compared to the results of SES-2006, which were attached to the Quality Report of SES-2006, except for the breakdowns by NACE due to the changes in the NACE coding system in 2008.