Statistics Iceland

Wage Statistics

Borgartún 21A, 105 Reykjavík, ICELAND

The Icelandic LCI is not based on a survey of its own, but administrative data and data from already existing surveys. The index reflects the quarterly development of total labour costs for all employers with 10 or more employees. 

NACE Rev. 2.

NACE Rev. 2 Sections B-S.

The LCI measures quarterly developments in labour costs per hours worked.

The statistical units are the local units by division of the NACE Rev. 2.

Enterprises with ten or more employees.

Iceland.

First quarter of 2008 and onwards

Base year 2016=100.

The main original source for wages and salaries is based on the administrative records for Pay-As-You-Earn (PAYE). PAYE is monthly records of wages and income tax on an employee-employer level reported to the tax authorities. The dataset used is post-processed, records reviewed and classified, internally for statistical usage. The PAYE records are on average available with up to a three month lag.

The main original source for hours worked is a business survey, the Icelandic survey on wages, earnings and labour costs (ISWEL). The target population in ISWEL includes all legal units with more than 10 employees, both in the public and private sector. Data is collected directly from the business units’ pay-roll systems. Among the information which is collected which is relevant to hours worked are; normal hours, hours with shift premium, hours in piece work, overtime pay, sickness pay, and contractual working hours. The ISWEL records are on average available with a one month lag. The information from ISWEL is applied to the main micro-dataset, which is primarily based on the PAYE. 

Other major data sources include the national register (daily information about gender, marital status, legal domicile, place of birth, citizenship and child bearing), individual tax returns, the graduation register (records of school, line of study, degree, mode of teaching and date of graduation), register for days at sea (date of departure and arrival of individual on vessels), and a database of collective agreements in Iceland (terms of the agreements and parties for which it applies).

Table 1: Variables and sources

The wages and salaries component are collected monthly as part of the PAYE. All cost items as well as working hours are collected monthly as part of the ISWEL, directly from the business unit's payroll system. See further in section 3.1.

Information on sick hours paid is available from approximately fifty percent of the business units in the ISWEL survey sample. For the remaining part of the sample hours paid for sick leave are part of normal hours paid. The proportion of sick hours paid was estimated for the sample data and the same proportion then assumed to apply to the rest of the sample. The data collection is annual.

Table 2: Origin, frequency and timelag of information on labour cost components

See table in section 3.2.

Source data from the PAYE and the ISWEL goes through a standardized quality check monthly and is prepared for statistical processing. Each quarter a validation procedure analyses LCI data and final indices quality. The data is, among other things, validated by comparison between time periods and other data sets.

The raw and unprocessed pay as you earn data register (PAYE) used in LCI is not usable for statistical processing. Therefore, Statistics Iceland has built an extensive processing system to handle the data. For example, the data does not show the type of payment. A strong emphasis is made to split payments into wages and other payments. Yearly the data is consolidated with individual tax returns and statements of earnings to validate the correct classification of payments. This data check has shown that the payment classification in the processing system is of high quality and payments are correctly classified. 

Working hours are estimated with a multimodal statistical evaluation, based on various data from Statistics Iceland's surveys, taking into account parameters of individuals, legal units and jobs. The parameters are applied to the statistical population based on the sample. To evaluate the parameters, several models are used which are integrated and evaluated based on the ISWEL. Each parameter is evaluated in a multimodal manner. The data is pre-processed, adjusted and post-processed to ensure that each group of entries is consistent with pre noted criteria of internal consistency and consistency with other sources. When parameters have been predicted for each entry in the population, hours worked are evaluated with multimodal models, based on criteria in the register data

Indices are working day adjusted and seasonally adjusted.

Statistics Iceland follows the principles in the Code of Practice for European Statistics (CoP) and uses the Quality Assurance Framework of the European Statistical System (QAF) for the implementation of the principles.

Not available.

The LCI is not published by Statistics Iceland at the moment. In addition, the index is flagged as preliminary data on Eurostat's website.

Not applicable.

The Labour Cost Index is available for all NACE sections B to S, starting from first quarter 2008.

Not applicable.

The overall reliability of the index is considered to be reasonably high. The component of wages and salaries is based on administrative records (PAYE) covering the whole economy. The hours worked and labour cost other than wages is mainly based on a business survey (ISWEL) and estimations. The survey includes the economic activities C, D, E, F, G, H, I, J, K, O, P, and Q in 2019. Data for economic activity I (Accommodation and food service activities) dates back to 2018, while data for other economic activities go back to 2008. Within the economic activities included in the ISWEL, there are approximately 85% of the labour market (B-S, enterprises with 10 or more employees) covered. In some economic activities certain sub-groups are missing. In the economic activity J small enterprises and enterprises in information technology (divisions 62 and 63) are missing. Economic activities O, P, and Q include only the public sector.

The ISWEL-data goes through thorough validation checks before the production to make sure to sort out observations with errors. This is especially true for the largest NACE sections of economic activity. However, for the smallest sections of economic activity the accuracy is lower. E.g. economic activity B (Mining and quarrying) is a remote part of the Icelandic economy and always held confidential due to a very small population.

The information from ISWEL is applied to the main micro-dataset, which is primarily based on the PAYE to obtain the estimated component of the LCI, such as hours worked and labour cost other than wages.

Not available at current moment.

Not available at current moment.

See below.

Not available at current moment.

Full coverage for all NACE sections for wages and salaries. Hours worked based on sample and estimation (see section 6.1).

Not available at current moment.

Not available at current moment.

Not available at current moment.

Not available at current moment.

Not available at current moment.

See below.

There are currently no adjustments for unpaid overtime.Estimation method for hours worked:

Normal hours are generated for each job-record based on job specific characteristics. Hours paid are generated for each job-record through a process predominantly based on modelling information from business surveys. Absence due to holidays, annual leave, and sickness leave are generated for each job-record and subsequently subtracted from hours paid in order to generate hours actually worked.

Adjustments made to transform the original source to adapt it to the concept of working hours as defined:

• Accounting for holidays and annual leave:
  Holidays and annual leaves are generated for each job-record. Initial assignment of hours paid but not worked due to holidays and annual leaves (separate processes) are based on employee and employer specific characteristics within the job-record. Holidays, whether that is a national holiday or other specific holidays, and rights for annual leaves are assigned if specifications in laws or regulations and in collective agreements, are applicable to the job-record. These figures for hours paid but not worked due to holidays and annual leaves are then adjusted in relation to hours paid within the job-record and in relation to hours-paid for the employee in other jobs within the month and within the year.
• Accounting for sickness leave:
  Hours paid but not worked due to sickness leave are assigned to each job-record based on estimates from specific business surveys in relation to ISWEL.
  Currently these estimates are annual percentages for certain sections (NACE Rev. 2) from the Labour Cost Survey (LCS). Sickness leave on a more granular level is in development.
• Accounting for strikes and temporary lay-offs:
  Strikes and temporary lay-offs are monitored, but no specific adjustments are deemed necessary since their effect is reflected in the PAYE.
• Accounting for paid but unreported overtime:
  Paid but unreported overtime is estimated.
• Accounting for unpaid overtime:
  There are currently no adjustments for unpaid overtime.

Not available at current moment.

The data is seasonally adjusted with the R package RJDemetra using the TRAMO-SEATS method with specification RSA1.

No revision policy has been made, the Icelandic LCI is a preliminary series as it is still in development stage.

The Icelandic LCI is a preliminary series as it is still in development stage. Every quarter all data is revised.

Not available at current moment.

Data is published 70 days after the end of the reference period.

Not available at current moment.

Not available at current moment.

Table 3: Data transmission

Not available at current moment.

Iceland has one NUTS level.

Not applicable.

The results broken down by sections and divisions of NACE Rev. 2 are comparable in time since 2008.

From first quarter 2008.

Full comparability over all NACE Rev. 2 sections.

Estimates of the LCI and Labour Cost Levels (LCL) for labour cost variables and hours worked have complete internal consistency as they are based on the same corpus of microdata and administrative data. Moreover, they are calculated using the same methods of estimation.

The Icelandic LCI is a collaboration project with the Icelandic National accounts on hours worked.

Overall internal coherence with the 4-yearly Labour Cost Surveys (LCS) is not feasible because the Icelandic LCI is compiled with wider range of data sources (see section 3.1) whereas the LCS has one main source, the ISWEL. The LCI coverage has full comparability over all NACE sections. The Icelandic LCS 2020 includes the economic activities NACE Rev. 2; C, D, E, F, G, H, I, J, K, M, O, P, Q and R, which cover about 90% of the labour market (B-S) according to the Pay as You Earn data (PAYE). Economic activities J and M are not fully covered and therefore flagged. The economic activities L, N and S are missing in LCS 2020 for Iceland. The economic activity B is only a remote part of the Icelandic economy.

Statistics Iceland has not yet published the LCI. Eurostat is the only institution that releases the Icelandic LCI. 

Not applicable.

Eurostat's database.

Not applicable.

Not applicable.

Not applicable.

Not applicable.

Not applicable.

Quarterly LCI metadata accompanies every quarterly submission of data to Eurostat. 

Not applicable.

The Icelandic LCI is mostly based on administrative data and of existing data at Statistics Iceland. Cost and burden has not been estimated for the LCI.

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. See also Statistics Iceland's Rules of Procedure for Treating Confidential Data:  https://statice.is/about-statistics-iceland/laws-and-regulations/statistics-icelands-rules-of-procedure-for-treating-confidential-data/

In those cases where the number of legal units is less than 5, the value is not published. That is why the economic activity Mining and quarrying (B) is not published.

Currently the time series starts at first quarter 2008. Plans are for extending the time series in successions to 2005 and 2000, in accordance to breaks in the source data.