Statistical Service of Cyprus (CYSTAT)

Labour

Statistical Service of Cyprus

CY-1444

Nicosia

Cyprus

The Labour Cost Index (LCI) is calculated in accordance with the Commission Regulation (EC) No 1216/2003 implementing the Regulation (EC) No. 450/2003 concerning the Labour Cost Index. The main source on which the construction of the LCI is based is the Social Insurance Services' Records. The sample covers all employees in the Register excluding those who report a gross salary that is less than 50% of the minimum salary as determined in the decree issued by the Ministry of Labour and Social Insurance. Excluded also, are extremely high salaries in excess of €20,000 per month. The Social Insurance Services' Records, however, do not have complete records for all the variables needed for the compilation of the Labour Cost Index. The Labour Cost Survey has been used for the imputation of the missing variables. The number of employees and hours worked refer to the estimate for national accounts purposes. Data regarding the number and gross salaries of the public servants is derived from data provided by the Treasury of the Republic.

Statistical Classification of Economic Activities NACE, Rev. 2, of the European Union.

Sections B to S of the Statistical Classification of Economic Activities NACE, Rev. 2, of the European Union.

The Labour Cost Index (LCI) is calculated in accordance with the Commission Regulation (EC) No 1216/2003 implementing the Regulation (EC) No. 450/2003 concerning the Labour Cost Index.

The labour cost index (LCI) is defined as the Laspeyres index of labour costs per hour worked, chain linked annually and based upon a fixed structure of economic activity at NACE Rev.2 section level. The Regulation applies to all activities defined in section B to S of NACE Rev.2.

Labour cost indices are provided quarterly, separately for the four labour cost categories identified below:
(a) total labour costs;
(b) wages and salaries
(c) employers' social contributions plus taxes paid by the employer less subsidies received by the employer
(d) total labour costs, excluding bonuses

The indices produced are also seasonally adjusted.

The statistical unit is the enterprise.

All employees. (All employees in the Register excluding those who report a gross salary that is less than 50% of the minimum salary as determined in the decree issued by the Ministry of Labour and Social Insurance. Excluded also, are extremely high salaries in excess of €20,000 per month.)

Government controlled areas of the Republic of Cyprus.

Data is available from 2000 quarter 1 onwards.

The base period is 2016.

The description focuses on the sources used to obtain information for the following three main variables:

• Actual Hours Worked
• Wages and Salaries
• Labour costs not included in the Social Insurance Register

Actual Hours Worked

The Actual Hours Worked are based on the estimate of hours worked for national accounts' purposes.

Wages and Salaries

Sources used:

a. Social Insurance Services' Records

This is the main source of information for the specific variable since 2003. The Statistical Service receives the monthly data on gross earnings of employees from the Social Insurance Services.

b. Wages and Salaries Survey

The rate of increase of gross earnings per employee from the annual Wages and Salaries Survey was used for the estimation of the Wages and Salaries for the years before 2003.

c. Labour Cost Survey

The Wages and Salaries in kind and the Payments to Employees´ Saving Schemes are estimated based on the percentage distribution of this variable to gross earnings derived from the Labour Cost Survey of 2016.

The percentage distribution of the Irregular Bonuses on gross earnings for all employees was also extracted from the LCS 2016 for which data were collected on a quarterly basis.

d. Treasury of the Republic

Data regarding the number and gross earnings of the public servants is derived from data provided by the Treasury of the Republic.

Labour Costs Not Included in the Social Insurance Services' Records

The non-statutory contributions as well as other labour costs, are estimated based on the Labour Cost Survey of 2016.

The Social Insurance Services' Records are received monthly. The Social Insurance Services send to CYSTAT the data of the monthly gross earnings 3 months and 5 working days after the end of the first month of the quarter and 3 months and 10 working days after the end of each of the second and third months of the quarter. The final data are received 9 months after the end of the reference year. CYSTAT can only meet the deadlines of the LCI Regulation by sending provisional data based only on the first month of each quarter.

The Labour Cost Survey's results are available every four years. The national accounts estimates regarding the hours worked are available on a quarterly basis. Data provided by the Treasury of the Republic regarding the number and gross earnings of the public servants is derived monthly.

The series derived are checked for consistency.

Wages and Salaries for the years 2003 and onwards

• The total earnings in each quarter are divided by the number of persons to which they relate in order to arrive at the earnings per employee.
• Wages in kind are estimated based on the percentage distribution of wages in kind on earnings from the Labour Cost Survey of 2016. The estimated amount is then added to the total earnings.
• Payments to employees´ saving schemes are estimated, based on the percentage distribution of this variable to earnings from the Labour Cost Survey 2016. The estimated amount is then added to the total earnings.
• Guaranteed remuneration in the event of sickness is estimated, based on the percentage distribution of this variable to earnings from the Labour Cost Survey 2016. The estimated amount is then subtracted from the total earnings.

Wages and Salaries for the years 2000 – 2002

For the years 2000 - 2002, the rate of increase in each economic activity was taken from the annual Wages and Salaries Survey and applied on the year 2003 in order to arrive at the wages and salaries for each year backwards.

Labour Costs not Included in the Social Insurance Register

The non-statutory contributions as well as other labour costs, are estimated based on the Labour Cost Survey of 2016.

Revision of weights

The Labour Cost Index is an annually chain-linked Laspeyres index of labour cost per hour worked. The weights used are derived from aggregate labour costs in the base period – in the context of annual chain-linking the base period changes from year to year.

In 2008, after NACE Rev.2 was adopted, a new method of calculation of the LCI was introduced:

- the government was included in the calculations (broken down by NACE)

- all the social insurance services’ records were utilized (as opposed to a sample previously).

For the years before 2008 not all the above changes could be adopted due to the lack of the required data. NACE Rev.2 was adopted and the government was included in section O (the breakdown was not available).

The two periods are linked by applying the percentage change of the indices for each section up to 2008 to the new series. The weights used for the period before 2008 are constant and refer to 2007. For the first year the new methodology was adopted, i.e. 2008, the weights used refer to 2008 (as the necessary data for the calculation of the weights referring to 2007 were not available). From 2009 onwards, the weights used refer to the base period.

The two main factors for the calculation of the weights are the average labour costs and the actual hours worked. The average labour costs have been based on the information extracted from the Social Insurance Services' Records and the proportions of the missing variables are based on the results of the Labour Cost Survey of 2016. The Actual Hours Worked are based on the estimate of hours worked for national accounts' purposes. The employment figures used refer to the average employment of the base year.

The earnings are extracted from the Social Insurance Services' Records. All employees in the Social Insurance Services' Records are covered excluding those who report a gross salary that is less than 50% of the minimum salary as determined in the decree issued by the Ministry of Labour and Social Insurance. Excluded also, are extremely high salaries in excess of €20,000 per month. The Social Insurance Services' Records are the basis for the estimation of the other cost variables based on information from other sources.

The Social Insurance Services' Records pass through a control process before it is finally accepted as the basis for the Index calculation. Thorough checks take place at the enterprise level to locate the reasons for high increases or decreases in earnings, whenever they occur. Large unexplainable changes are investigated in order to locate wrong data entries, arrears or any other irregular bonuses causing these fluctuations on the earnings. Should there be any arrears or irregular bonuses, the estimated percentage distribution of the Irregular Bonuses on the Labour Costs for the particular economic activity changes accordingly to reflect the real changes taking place.

The quality of statistics in CYSTAT is managed in the framework of the European Statistics Code of Practice which sets the standards for developing, producing and disseminating European Statistics as well as the ESS Quality Assurance Framework (QAF). CYSTAT endorses the Quality Declaration of the European Statistical System. In addition, CYSTAT is guided by the requirements provided for in Article 11 of the Official Statistics Law No. 25(I) of 2021 as well as Article 12 of Regulation (EC) No 223/2009 on European statistics, which sets out the quality criteria to be applied in the development, production and dissemination of European statistics.

Links to the above documents:

• European Statistics Code of Practice:

http://ec.europa.eu/eurostat/web/products-manuals-and-guidelines/-/KS-32-11-955

• ESS Quality Assurance Framework (QAF):

http://ec.europa.eu/eurostat/documents/64157/4392716/ESS-QAF-V1-2final.pdf/bbf5970c-1adf-46c8-afc3-58ce177a0646

• Quality Declaration of the European Statistical System:

http://ec.europa.eu/eurostat/documents/4031688/8188985/KS0217428ENN_corr.pdf/116f7c85-cd3e-4bff-b695-4a8e71385fd4

• Official Statistics Law No. 25(I) of 2021:

https://www.cystat.gov.cy/en/StaticPage?id=1074

• Regulation (EC) No 223/2009 on European statistics (consolidated text):

http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:02009R0223-20150608&qid=1504858409240&from=EN

The output quality in the ESS is assessed in terms of the following 5 quality criteria: relevance, accuracy & reliability, timeliness & punctuality, coherence & comparability and accessibility & clarity. The quality indicators are assessed taking into account EUROSTAT defined methodology and recommendations. Taking into account the above criteria, the overall quality of the statistics produced is very high.

The users of the LCI data are divided into Internal and External Users.

The most important Internal Users are the following.

- Ministries – especially the Ministry of Finance

- Other Government Bodies (i.e. National Central Bank)

- Enterprises

- Trade Unions/Employers´ Associations

- Students

- Mass Media

- Research Institutes and Universities

- The seasonally adjusted index referring to total labour cost is used in compensating contractors mainly for works done for the government, for changes in labour cost.

The main external user of the Labour Cost Index is Eurostat.

Since 2008 (with the exception of 2010, 2013 and 2020) CYSTAT carries out an annual online “Users Satisfaction Survey”. The results of the surveys are available on CYSTAT’s website at the link attached below.

Overall, there is a high level of satisfaction of the users of statistical data published by CYSTAT.

• Results of CYSTAT’s User Satisfaction Surveys:

https://www.cystat.gov.cy/en/StaticPage?id=1144

Definitions
• The variables included in the Labour Cost Index comply fully with the EC. Regulation No 1726/1999 regarding the way they are defined.

Scope
• The Labour Cost Index covers all activities defined in sections B to S of NACE Rev. 2.
• The government sections are included in the corresponding economic activities they belong.

Breakdown of Variables
Full compliance with the Regulation: All four Indices are sent to Eurostat as requested with no deviations, in unadjusted, working day adjusted and seasonally adjusted form.

Frequency and Back data
The deadlines were kept for the transmission of the LCI.

100%

Since administrative sources are used, no sampling errors are presented below. Overall the accuracy of the data is considered good.

Not applicable.

Not applicable.

Error in sample estimates which cannot be attributed to sampling fluctuations are summarised below.

Table 6.3.1.1 below presents the number of employees taken from the Social Insurance Services' Records (excluding public servants) and the Treasury of the Republic data (for public servants) as a percentage of the number of employees according to ESA 2010.

TABLE 6.3.1.1

Table 6.3.1.2 below presents the main sources of the variables required for the compilation of the Labour Cost Index.

TABLE 6.3.1.2

Not available.

Not applicable.

The Social Insurance Services' Records pass through a control process before it is finally accepted as the basis for the Index calculation. Thorough checks take place at the enterprise level to locate the reasons for high increases or decreases in earnings, whenever they occur. Large unexplainable changes are investigated in order to locate wrong data entries, arrears or any other irregular bonuses causing these fluctuations on the earnings. Should there be any arrears or irregular bonuses, the estimated percentage distribution of the Irregular Bonuses on the Labour Costs for the particular economic activity changes accordingly to reflect the real changes taking place.

The description of the gross earnings extracted from the Social Insurance Services' Records does not comply fully with the definition of Wages and Salaries given in the E.C Regulation. The gross earnings extracted from the Social Insurance Services' Records do not include the Payments to Employees´ Saving Schemes or the Wages in Kind and include guaranteed remuneration in the event of sickness. The variables are estimated based on the results of the Labour Cost Survey. The distinction of Irregular Bonuses from earnings is not always made by the employer and they are instead included in the gross earnings. In such cases, the separation is made in the control process based on the estimated percentage distribution and the real changes taking place in the particular quarter.

Not applicable.

Not applicable.

Not applicable.

Not applicable.

Not applicable.

Not applicable.

The seasonal adjustment approach used is TRAMO-SEATS. JDemetra-plus software is used to derive the seasonally adjusted data. The models are revised once final data for the previous year are available (once a year). The adjustment is carried out at the indices level. All figures are aggregated indirectly. More specifically, the unadjusted index produced for each letter NACE is seasonally adjusted and then the seasonally adjusted series are aggregated using the Laspeyres chained linked index methodology (just as in the case of the unadjusted data, using the same weights).

A data revision policy is in place at CYSTAT. It is published on CYSTAT’s web portal, at the following link:

https://www.cystat.gov.cy/en/StaticPage?id=1072

CYSTAT also publishes a list of scheduled revisions (regular or major revisions), also published on its web portal, at the following link:

https://www.cystat.gov.cy/en/AnnouncementList

At first release, the data are provisional. The data become final as soon as all data used in the compilation become definite. Final data for a given year are received from the Social Insurance Department, nine months after the end of the year. Thus, the data released will be provisional until the receipt of the final data.

The revisions regarding activity BtoS for the total labour cost series (NSA data) are given in the table below. The transmissions referring to the third quarter of the year show slightly bigger revisions because in the third quarter final data are received from the Social Insurance Services’ Records for the preceding year. The transmission for the third quarter of 2022 showed bigger changes as there was revision in employment figures since 2020 and in hours figures since 2019 (National Accounts estimate).

Other revisions in employment, hours or assumptions have also affected other transmissions to a lesser degree. 

The Social Insurance Services send to CYSTAT the data of the monthly gross earnings 3 months and 5 working days after the end of the first month of the quarter and 3 months and 10 working days after the end of each of the second and third months of the quarter. The final data are received 9 months after the end of the reference year. CYSTAT can only meet the deadlines of the LCI Regulation by sending provisional data based only on the first month of each quarter.

Provisional data are available 70 days after the end of the quarter (t + 70).

Final data are available 9 months after the end of the reference year.

The data were delivered before the target date.

The delivery is scheduled at t+70.

2022Q1: t+ 63 days

2022Q2:  t+ 70 days

2022Q3:  t+ 69 days

2022Q4:  t+ 55 days

It is possible to compare the national index with that of other European countries, as full compliance with the definitions of the variables laid down in the Commission Regulation (EC) No 1216/2003 implementing the Regulation (EC) No. 450/2003 concerning the Labour Cost Index is achieved.

Not available.

The Social Insurance Services' Records are the main source for the compilation of the Labour Cost Index. The Social Insurance Services' Records provided the data on Gross Earnings from the year 2003 and onwards but the rest of the variables were estimated based on additional information from other sources. Data for previous years (2002 and backwards), was estimated based on other statistical sources. This is the main reason that for the years of 2000 and up to 2002 the rate of increase from one year to another as well as the seasonality pattern within the quarters present a stable picture as compared to the index compiled from 2003 onwards that is based on actual data.

No break in the series.

There is a cross domain consistency between the LCI and the STS indicator on Gross Wages and Salaries (based on the same sources).

Not applicable.

The quarterly time series of the labour cost index and employment are used to estimate the Income Account and more specifically the wages and salaries (D11) and compensation of employees (D1). 

The tables below show the annual unadjusted growth rates of the ESA 2010 compensation of employees per hour worked (A10 breakdown) (Table 8.5.1) and of the total labour cost index (Table 8.5.2).

TABLE 8.5.1

Percentage change of the ESA 2010 compensation of employees per hour worked by aggregation and quarter (comparison with the corresponding quarter of the previous year) 

Percentage change of the Labour Cost Index (Total Labour Cost) by aggregation and quarter (comparison with the corresponding quarter of the previous year) 

There is internal coherence as the indices for the economic activities (letter NACE) are aggregated using the Laspeyres chained linked index methodology.

Eurostat and CYSTAT issue news releases linked to the data.

The quarterly Labour Cost Index from 2000 quarter 1, (Total Labour Cost and Wages and Salaries series, as well as the percentage change of the series), together with the Labour Cost per hour of work (average for the year) are published annually in the Statistical Abstract.

Labour Cost Index database:

Eurostat's Statistics Database: http://ec.europa.eu/eurostat/data/database under theme Population and Social Conditions - Labour market (labour) - Labour costs (lc) - Labour cost index (lci)

CyStat's Database: https://cystatdb.cystat.gov.cy/pxweb/en/8.CYSTAT-DB/8.CYSTAT-DB__Labour%20Cost%20and%20Earnings__Labour%20Cost__1.Labour%20Cost%20Index/1120010E.px/

Not available.

Statistical micro-data from CYSTAT’s surveys are accessible for research purposes only and under strict provisions as described below:

Under the provisions of the Official Statistics Law, CYSTAT may release microdata for the sole use of scientific research. Applicants have to submit the request form "APPLICATION FOR DATA FOR RESEARCH PURPOSES" giving thorough information on the project for which micro-data are needed.

The application is evaluated by CYSTAT’s Confidentiality Committee and if the application is approved, a charge is fixed according to the volume and time consumed for preparation of the data. Micro-data may then be released after an anonymization process which ensures no direct identification of the statistical units but, at the same time, ensures usability of the data. The link for the application is attached below.

Link to the application for access to microdata on CYSTAT's website:

https://www.cystat.gov.cy/en/DataRequestContactForm?fid=7

Not available.

Methodological information is available on CyStat's website.

Link: https://www.cystat.gov.cy/en/MethodologicalDetails?m=2226

There are no other documents on quality management.

Not available.

Not available.

One full-time officer is involved in the compilation of the Labour Cost Index. There is no direct burden on respondents since administrative sources or the results of other surveys conducted by the Cyprus Statistical Service are used.

Official statistics are released in accordance to all confidentiality provisions of the following:

• National Official Statistics Law No. 25(I) of 2021 (especially Article 16 on statistical confidentiality).
• Regulation (EC) No 223/2009 of the European Parliament and of the Council of 11 March 2009 on European statistics and its later amendments (especially Chapter 5 on statistical confidentiality).
• European Statistics Code of Practice (especially Principle 5 on statistical confidentiality).
• Guidelines for the Protection of Confidential Data.

 Links to the above documents:

• Official Statistics Law No. 25(I) of 2021:

https://www.cystat.gov.cy/en/StaticPage?id=1074  

• Regulation (EC) No 223/2009 on European statistics (consolidated text):

http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:02009R0223-20150608&qid=1504858409240&from=EN

• European Statistics Code of Practice:

http://ec.europa.eu/eurostat/web/products-manuals-and-guidelines/-/KS-32-11-955

• Guidelines for the Protection of Confidential Data:

 https://www.cystat.gov.cy/en/StaticPage?id=1066

The treatment of confidential data is regulated by Guidelines for the Protection of Confidential Data.

Link:

• Guidelines for the Protection of Confidential Data:

 https://www.cystat.gov.cy/en/StaticPage?id=1066

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