Labour cost index (lci)

Reference Metadata in Euro SDMX Metadata Structure (ESMS)

Compiling agency: Eurostat, the statistical office of the European Union

Eurostat metadata
Reference metadata
1. Contact
2. Metadata update
3. Statistical presentation
4. Unit of measure
5. Reference Period
6. Institutional Mandate
7. Confidentiality
8. Release policy
9. Frequency of dissemination
10. Accessibility and clarity
11. Quality management
12. Relevance
13. Accuracy
14. Timeliness and punctuality
15. Coherence and comparability
16. Cost and Burden
17. Data revision
18. Statistical processing
19. Comment
Related Metadata
Annexes (including footnotes)

Eurostat and National Quality Reports according to ESQRS (ESS Standard for Quality Reports Structure)
National metadata

For any question on data and metadata, please contact: EUROPEAN STATISTICAL DATA SUPPORT


1. Contact Top
1.1. Contact organisation

Eurostat, the statistical office of the European Union

1.2. Contact organisation unit

F3: Labour market

1.5. Contact mail address

2920 Luxembourg LUXEMBOURG

2. Metadata update Top
2.1. Metadata last certified 15/06/2018
2.2. Metadata last posted 15/06/2018
2.3. Metadata last update 15/06/2018

3. Statistical presentation Top
3.1. Data description

Labour cost statistics constitute a hierarchical system of multi-annual, yearly and quarterly statistics, designed to provide a comprehensive and detailed picture of the level, structure and short-term development of labour costs in the different sectors of economic activity in the European Union and certain other countries. All statistics are based on a harmonised definition of labour costs.

The quarterly Labour Cost Index (LCI) is a Euro Indicator which measures the cost pressure arising from the production factor "labour". The data covered in the LCI collection relate to total average hourly labour costs and to the labour cost categories "wages and salaries" and "employers' social security contributions plus taxes paid minus subsidies received by the employer". Data - also broken down by economic activity, are available for the EU aggregates and EU Member States (NACE Rev 1.1 Sections C to K (1996Q1-2008Q4) and NACE Rev 2 Sections B to S), in working day and seasonally adjusted form. The data on the Labour Cost Index are given in the form of index numbers (current base year: 2016) and of annual and quarterly growth rates (comparison with the previous quarter, or the same quarter of the previous year).

On annual basis the labour cost levels (in Euro and national currency) are also published, based on the latest Labour Cost Survey inflated by the LCI.

In contrast to the information collected for the other Labour Cost domains, the labour costs covered in the LCI do not include vocational training costs and other expenditure such as recruitment costs and working clothes expenditure.

The data are estimated by the National Statistical Institutes on the basis of available structural and short-term information from samples and administrative records for enterprises of all sizes.

The labour cost index (LCI) shows the short-term development of the labour cost, the total cost on an hourly basis of employing labour. In other words, the LCI measures the cost pressure arising from the production factor “labour”. 

In addition, Eurostat estimates of the annual labour cost per hour in euros are provided for EU Member States as well as the whole EU; they were obtained by combining the four-yearly Labour cost survey (LCS) with the quarterly labour cost index. 

3.2. Classification system

Index numbers and growth rates are made available for the overall and other indices by economic activity (General Industrial Classification of Economic Activities (NACE) Rev. 1.1 at section level for Sections C to K or NACE Rev. 2 for Sections B to S).

Countries are presented with their standard ISO two-letter-codes.

3.3. Coverage - sector

NACE Rev. 1.1 Sections C to K or NACE Rev. 2 Sections B to S

3.4. Statistical concepts and definitions

In the context of the Labour Cost Index, Labour Costs are defined as core expenditure borne by employers for the purpose of employing staff. They include employee compensation, with wages and salaries in cash and in kind, employers' social security contributions and employment taxes regarded as labour costs minus any subsidies received, but not vocational training costs or other expenditure such as recruitment costs and spending on working clothes (by contrast with multiannual and annual labour cost data). These labour cost components and their elements are defined in Commission Regulation (EC) No 1737/2005 of 21 October 2005 amending Regulation (EC) No 1726/1999 as regards the definition and transmission of information on labour costs.

The quarterly Labour Cost Index measures short-term trends in "average hourly labour costs", defined as (total) labour costs divided by the corresponding number of hours worked in the quarter in question (see Regulation (EC) No 450/2003 of the European Parliament and of the Council of 27 February 2003 concerning the labour cost index). Quarterly changes in hourly labour costs are calculated first for each economic sector (NACE Rev. 2. Sections) and then aggregated to the whole economy keeping a fixed structure (i.e. fixed weights) by industry (Laspeyres index). Therefore, the LCI does not discount the compositional effect derived from a change in the composition of employment within an economic sector. This means that, for instance, the LCI may increase due to the redundancies of low paid workers within one sector. Annual LCI figures are calculated as the arithmetic mean of the quarterly values.

All labour cost indices are annual chain-linked Laspeyres indices. Trends in average hourly labour costs for an individual economic activity/country are weighted by the total labour costs associated with that activity/country, which are fixed for one year in order to obtain national or European aggregates.

LCI data are presented in the form of index numbers (current base year: 2016) and annual and quarterly growth rates (comparison with the previous quarter).

Apart from the overall Labour Cost Index, indices are also available for the labour cost components "wages and salaries" and "employers' social security contributions plus taxes paid minus subsidies received by the employer (Labour costs other than wages and salaries)". For some Member States, an index excluding "bonuses" - defined as bonuses and allowances not paid in every remuneration period is also available.

For the NACE aggregates in the LCI, item and country weights are applied. These are available as shares of 1000, i.e. for item weights, each single weight sums up to 1000 for the total labour costs in a given country for the aggregate B to S. For the country weights, they are given in relation to the total labour costs for the country aggregate.

3.5. Statistical unit

The statistical unit can be the enterprise or the local unit, regardless of size, i.e. the labour cost indices cover all units in the NACE sections considered.

3.6. Statistical population

LCI applies to all activities in sectors C to O of NACE Rev.1.1 or sectors B to S of NACE Rev. 2 and represents all statistical units.

3.7. Reference area

Data are available for the EU and Euro area aggregates and all EU Member States. For some NACE sectors, information from Norway, Iceland, Serbia and Turkey is available as well.

3.8. Coverage - Time

Data are available since the 1st quarter of 1996 for NACE Rev 1.1 (until the 4th quarter of 2008)  and since 1st quarter of 2000 for NACE Rev 2

3.9. Base period

The labour cost indices are chain-linked Laspeyres price indices which currently use the year 2016 as reference year.

The historical NACE rev. 1.1 series are published with the year 2000 as reference year.

4. Unit of measure Top

Index figures with reference year 2016 are available, as well as quarterly and annual growth rates in percentage.

5. Reference Period Top

The quarterly data provided by Member States cover the whole calendar quarter.

6. Institutional Mandate Top
6.1. Institutional Mandate - legal acts and other agreements

6.2. Institutional Mandate - data sharing

Not applicable

7. Confidentiality Top
7.1. Confidentiality - policy

Regulation (EC) No 223/2009 on European statistics (recital 24 and Article 20(4)) of 11 March 2009 (OJ L 87, p. 164), stipulates the need to establish common principles and guidelines ensuring the confidentiality of data used for the production of European statistics and the access to those confidential data with due account for technical developments and the requirements of users in a democratic society.

7.2. Confidentiality - data treatment

Not relevant

8. Release policy Top
8.1. Release calendar

The precise date of the release of the quarterly Labour Cost Index data is published on Eurostat's website (select language and release timetable).

8.2. Release calendar access

8.3. Release policy - user access

In line with the Community legal framework and the European Statistics Code of Practice Eurostat disseminates European statistics on Eurostat's website respecting professional independence and in an objective, professional and transparent manner in which all users are treated equitably. The detailed arrangements are governed by the Eurostat protocol on impartial access to Eurostat data for users. In line with this protocol and on a strictly regulated basis, data for the Labour Cost Index are sent for information to the European Central Bank (ECB)  under embargo the evening before official release of data.

9. Frequency of dissemination Top

Quarterly and annual.

10. Accessibility and clarity Top
10.1. Dissemination format - News release

News releases on-line.

10.2. Dissemination format - Publications

Quarterly press release and Statistics Explained

Labour Market Statistics Pocketbook

10.3. Dissemination format - online database

Please consult free data on-line or refer to contact details.

10.4. Dissemination format - microdata access

Not applicable

10.5. Dissemination format - other

10.6. Documentation on methodology

The latest 2-yearly report (2014) to the European Parliament and the Council is available here: 

10.7. Quality management - documentation

National quality reports are currently available in connection with this metadata.

11. Quality management Top
11.1. Quality assurance

On arrival at Eurostat, LCI data from the Member States are checked for completeness and consistency.  Mandatory Metadata from each Member State is collected with each data delivery.

11.2. Quality management - assessment

Annual quality reports from each Member State are collected and evaluated by Eurostat.

The overall quality is deemed to be good, with very limited revisions in the European aggregates.

12. Relevance Top
12.1. Relevance - User Needs

LCI responds to the needs of the European Central Bank and Commission services for monitoring price stability. However, it should be noted that the LCI is not a genuine 'labour price index' as it does not discount the "compositional effect" within an economic sector (i.e. changes in the hourly labour costs due to a change in the employment composition such as the share of low paid/high paid jobs). Indeed, it is based on average hourly labour costs by NACE section and not on a fixed basket of job profiles. This means that, for instance, the LCI may increase due to the redundancy of low paid workers within one sector as the average of the remaining workers are higher paid than the ones made redundant.

In addition, private companies may use the LCI for indexing contracts (for that purpose, a "frozen" series where data is no subject to revisions is published), wage agreements and competitiveness analysis.

Finally, Eurostat uses the LCI to extrapolate annual labour cost levels from the benchmark data collected every 4 years through the Labour Cost Survey.

12.2. Relevance - User Satisfaction

There are regular contacts with the main users (ECB and Commission services). Generally user satisfaction is high, but for some MS data, users would appreciate lower revisions and/or better timeliness. Introduction of weights in the online tables was done due to user requests.

12.3. Completeness

With very minor exceptions countries respect their reporting obligations

13. Accuracy Top
13.1. Accuracy - overall

The LCI is subject to frequent revisions, due to corrected or updated rawdata lying underneath the index. The European aggregates are rarely revised by more than 0.2 percentage points in either direction. In the LCI dedicated section a revision file is available showing frozen series.

13.2. Sampling error

Not applicable

13.3. Non-sampling error

Some MS estimate results for certain parts of the economy, e.g. business with less than 3 or 5 employees. There is no information on the impact of this under-coverage.

14. Timeliness and punctuality Top
14.1. Timeliness

According to the legal obligation, data are sent to Eurostat 70 days after the end of the reference period. The data are then made available for general distribution subject to favourable checks.

14.2. Punctuality

With very few exceptions punctuality is respected (70 days after the end of the reference period)

15. Coherence and comparability Top
15.1. Comparability - geographical

Data are comparable between countries. Note that the LCI does not give information on the level of labour cost in a specific Member State, but about its development only.

15.2. Comparability - over time

Data are comparable over time.

15.3. Coherence - cross domain

Structural Business Statistics (SBS, annual data) and the Labour Force Survey (quarterly data) are surveys that partly measure similar or identical variables, such as "number of employees" or "wages and salaries". Whilst the National Accounts (NA) and the Labour Cost Survey (LCS) are closely related, certain coherence problems should be taken into account when comparing data relating to the same variables from the four different sources (LCS, SBS, Structure of Earnings Survey (SES), NA). Some of these problems are described in paragraph 19 of the ESMS file on Labour Cost Surveys "lcs_r2_esms".

15.4. Coherence - internal

All figures are checked for internal consistency

16. Cost and Burden Top

The response burden is highly heterogenous as the amount of information gathered from respondents repectively the data based on administrative sources differs a lot between MS.

17. Data revision Top
17.1. Data revision - policy

As the data may be based to some extent on estimates, or incomplete data, the most recently available data are particularly subject to revision. Because of the numerous revisions, the data are never considered to be final.

17.2. Data revision - practice

The general public is informed about possible revisions in the news releases. Revisions occur each quarter, due to corrected or updated rawdata lying underneath the index.

In the last six quarters, the revisions for EU aggregates have never exceeded 0.2 percentage points for the headline rate.

TIn the LCI dedicated section a revision file is available showing frozen series. The frozen series are currently available for the aggregates EA-16 and EU-27 only.

18. Statistical processing Top
18.1. Source data

Member States may produce the necessary estimates by using surveys, other appropriate sources such as administrative data and statistical estimation procedures.

Different estimation methods are used, including the application of growth rates of the average hourly labour costs to the results of the latest structural survey, reference to separate growth rates for labour costs and hours worked, or the application of growth rates of some labour cost components to all or other labour cost components.

Item and country weights of the index are estimated from the weights transmitted by Member States.

18.2. Frequency of data collection

Data is collected at quarterly intervals.

18.3. Data collection

Eurostat collects data from MS. The MS use both business surveys, household surveys, administrative sources and other data to estimate their LCI's.

18.4. Data validation

Data communicated by individual countries are checked systematically for internal consistency.

A Unix-script is run which compares the current data delivery to the previous one. It focusses on the revisions for every quarter (full time series are always delivered) and any differences in the aggregate indices for B-N (business economy) and B-S for NSA, WDA (working-day adjusted) and SA (seasonally adjusted) data are shown.

The script checks the following areas:

1. Revisions (NSA, WDA, SA)
2. WDA coefficients are checked, also the consistency between the components and the total
3. B-N and B-S aggregates are compared, both value and annual rate for NSA, WDA, SA
4. The annual rates for figures used for the news release are checked for consistency, i.e. rate of total index should be in-between the rates of the components.

The validation fits with level 2 or 3 of the VIPV scale.

18.5. Data compilation

Labour costs are measured in current prices in national currencies.

EU aggregates are obtained as weighted averages of the national data. To create comparable weights, data from non-Euro countries are converted into Euros.

18.6. Adjustment

Seasonally and working-day adjusted data are also made available.

Eurostat normalises the weight information before publication. In practice, this is done in a three-step process: First the weights transmitted by each Member State are converted into euro (using the same sources as for the country weights), then weights for years with missing data are estimated using a price-updating procedure, and finally the share of a sub-index relative to the total B-N is estimated.

19. Comment Top

The basic legal acts approved in 2003 oblige the countries concerned to compile data for the first quarter of 2003 and for each quarter thereafter.

Related metadata Top
lci_esqrs - Labour cost index

Annexes Top