Central Statistical Bureau Republic of Latvia

Business Statistics Department Wage Section

1 Lacplesa Street, Riga, LV-1301

The aim of this report is to describe the Latvian national practice in compiling the Quarterly Labour Cost Index, according to the Regulation (EC) No 450/2003 of the European Parliament and of the Council of 27 February 2003 concerning the labour cost index, and the quality of LCI as defined by Article 2 and Annex 1 of the Commission Regulation (EC) No 1216/2003 of 7 July 2003 implementing Regulation (EC) No 450/2003 of the European Parliament and of the Council concerning the labour cost index. 

 The LCI is defined as an index measuring changes in the hourly compensation paid by the employer to employ personnel having working time registration. The LCI in Latvia is calculated by matching data from two data sources:

• Quarterly Statistical Surveys on Labour submitted by the commercial companies, individual merchants, central and local government budgetary institutions, foundations, associations and funds (developed by the Central Statistical Bureau of Latvia)
• administrative data (State Revenue Service information).

The LCI is calculated every quarter.

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

NACE Rev. 2 sections B-S

Labour Cost Index - index measuring changes in the hourly compensation paid by the employer to employ personnel having working time registration. Quarterly Labour cost index is calculated basing on average hourly labour costs of 2016, excluding professional training costs covered by the employer and recruitment costs.

Labour Costs - 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, excluding vocational training costs or other expenditure such as recruitment costs and spending on working clothes. 

Hours worked - hours actually worked during the time period. Includes also the time used for the preparation and cleaning of the workplace and equipment; for short breaks in the workplace; and includes also the time when the work is not done (idle standing of devices, short time periods without a work), but for which in compliance with the contract the payment is received. Does not include the breaks for eating and rest set in the regulatory enactments; time spent on the way from home to work and back.

Apart from the overall Labour Cost Index, indices are also available for the labour cost components:

Wages and salaries - wages and salaries in cash and in kind.

Labour costs other than wages and salaries - employers' social security contributions plus taxes paid minus subsidies received by the employer.

Labour costs excluding bonuses - total labour costs per hour excluding bonuses and allowancies not paid in every remuneration period.

LCI data are presented in the form of index numbers (current reference year: 2016) and annual growth rates.

State and local government budgetary institutions, state and local government merchants, private commercial companies, individual merchants employing 100 persons and more, foundations, associations and funds employing 1 and more persons.

LCI applies to all activities in sectors B to S of NACE Rev.2. Target population are all statistical units (state and local government budgetary institutions, state and local government merchants, private commercial companies, individual merchants, foundations, associations, and funds employing 1 and more persons) economically active in 2022. Target population of the survey does not include:

• religious organisations;
• peasant and fisherman farms;
• rural handicraft enterprises;
• family businesses;
• individuals performing economic activity.

Target population does not include also statistical units having NACE Rev.2 classification economic activity code starting with 97, 98, or 99.

* STVK – Central Statistical Bureau of Latvia Typological Classifier of Statistical Units.

Whole country

Data are available since 1st quarter of 2000 for NACE Rev.2.

2016=100

Data on labour cost index are obtained by surveying enterprises, central government institutions, local governments and institutions thereof and institutional units.

Information is acquired by compiling questionnaires developed by the Central Statistical Bureau of Latvia (CSB) – quarterly statistical reports on activities of merchants, institutions, foundations, associations, and funds (2-Labour, 2-Labour-municipalities, 2-Labour (short)), and administrative data.

Statistical report form 2-Labour (short), containing fewer indicators than form 2-Labour, is submitted by individual merchants, foundations, associations, and funds employing 0 or more persons. Form 2-Labour-municipalities submitted by local governments and municipal institutions. All other statistical units included in the sample submit statistical report form 2-Labour.

Administrative data were acquired with the help of CSB calculations based on the State Revenue Service information from the Report on state social security compulsory payments from employee income, Income Tax and Business Risk State Duty during the reference month, from the Report regarding the employment income, personal income tax, and state mandatory social insurance contributions of the payers of the income tax for seasonal farm workers and from Micro-enterprise Tax Declaration.

Information was compiled on all fields. Data by kinds of economic activity are compiled by the main kind of activity which includes also all the other activities of the respondent, except centralized accountancies of the local governments, which submit data separately on following sectors:

• Electricity, gas, steam and air conditioning supply;
• Public administration and defence; compulsory social security;
• Education;
• Residential care activities;
• Social work activities without accommodation;
• Creative, arts and entertainment activities;
• Libraries, archives, museums, and other cultural activities;
• Cleaning activities.

Statistical processing

Calculation methods

Information is obtained from the statistical surveys every quarter. The information acquired from the respondents of the sample is summarized with the help of weights given for each sample unit. Report indicators are multiplied by weights and compiled at the level of class (four-digit), group (three-digit), division (two-digit), and section (letter) according to NACE Rev. 2. Information is compiled in breakdown by main kind of activity.

In order to estimate imputations for non-responding and unsurveyed statistical units, and to assess the credibility of the data obtained through weighting, an analysis of the data is conducted each quarter. Summary indicators are then compared with those from previous periods, as well as with data from administrative sources.

The labour costs index LCI (in percent) in the period I is calculated as follows, with the average hourly labour costs in 2016 = 100 taken as the basis:

LCI_t = LC_t : LC_{average in 2016} x 100, where

LC_t – hourly labour costs in the period t;

LC_{average in 2016} – hourly labour costs on average in 2016.

Hourly labour costs LC in the period t are calculated in the following way:

LC_t = TLC_t : TH_t, where

TLC_t – total labour costs in the period t;

TH_t – total hours actually worked in the period t.

Hourly labour costs are calculated separately on each of the following labour cost categories:

• total labour costs;
• wages and salaries;
• labour costs other than wages and salaries;
• total labour costs excluding bonuses.

A table showing the frequency of collecting the different cost item information.

The variables for calculation the LCI are taken from the short-term quarterly enterprise and institution survey No 2-Labour, 2-Labour-municipalities, 2-Labour (short). The definitions of the variables are according the Commission Regulation (EC) No 1737/2005.

In 2022, 88.31% of respondents submitted their data electronically in the section Submit e-Report via CSB website.
Data from other respondents were received by mail or submitted personally to the CSB reception office.

The quarterly statistical surveys on Labour from which the LCI is calculated were designed in such a way to eliminate the survey instrument errors providing explanatory notes directly in questions and detailed explanations in the supplemented instruction for filling in the questionnaire. The data processing had been carried out using the Integrated Statistical Data Management System (ISDMS) where statistical metadata is the key element. The metadata module ensures maintenance of validation rules of statistical survey. Each validation rule description contains validation rule code, error message text and description of validation rule, validation rule conditions. It is possible to generate validation procedure automatically for each questionnaire directly after the entry of questionnaire. Main validation rules, both arithmetical and logical, were available during filling in e-questionnaire via website of CSB. Special attention is paid to comparison of the values with the corresponding data of previous period (quarter, month).

Every statistician has a definite number of enterprises from which the questionnaires are collected, entered, and verified. The responsible person could not finish the data entry of the questionnaire in case if any answer on the questionnaire’s variable was missed, or (according to the rules implemented in the data entry programme) filled in incorrectly. In such case, the responsible person contacted the enterprise once more and made the necessary changes in the questionnaire. 

Estimates for non-response

For non-responding enterprises from exhaustive strata imputation procedures are used, the data are taken from the State Revenue Service. For other non-responding enterprises the data are simply grossed up to the population by adjusting the weighting factors.

Estimates for grossing-up to population levels

The estimation procedure is based on the generalized regression (GREG) estimator using auxiliary information about number of employees from State Revenue Service broken down by NACE rev. 2 sections (except enterprises from the exhaustive strata and outliers).

Data are available in unadjusted (NSA), calendar adjusted (WDA), seasonally and calendar adjusted (SA) form. When, after the seasonal and calendar adjustment, data of the new period are added, also data on previous periods are re-calculated.  

Statistical data are seasonally adjusted using TRAMO/SEATS method.

Quality documentation is available on CSB homepage.

To ensure that NSS of Latvia has common principles and requirements, CSB has developed the Quality Policy of the National Statistical System of Latvia and imposed total quality requirements for statistical institutions which are based on European Statistics Code of Practice. 

Quality policy of the National Statistical System of Latvia is available on CSB homepage.

For implementation of Quality Policy of the NSS of Latvia, the CSB has developed a Memorandum of Understanding, by which the statistical institutions confirm their commitment to implementing and promoting quality standards in their statistical institutions.

Guidelines for Implementation of European Statistics Code of Practice were developed to facilitate common perception and understanding of the requirements imposed by the Code of Practice. Based on the situation in Latvia, the Guidelines explain principles of the Code, as well as indicators and statistical terms used, moreover, requirements are supplemented with binding national legislation, explanatory information, and examples of good practice.

The Quality Policy of CSB consists of the CSB's vision, mission, core values and commitment to meet the requirements, follow good practice and ensure continuous improvement. The quality policy is designed and implemented in accordance with the CSB strategy (3-year period) and the action plan. The document is available on CSB homepage.

The quality of the labour cost index is mainly related to the quality of the Quarterly Statistical Survey on Labour from which the LCI is calculated (see also Section 3: Statistical Processing). The data processing had been carried out using the Integrated Statistical Data Management System (ISDMS) where statistical metadata is the key element. The metadata module ensures maintenance of validation rules of statistical survey. Main validation rules, both arithmetical and logical, are also available during filling in e-questionnaire via website of Central Statistical Bureau of Latvia.  ISDMS environment provides the ability to compare the submitted data with previous periods. With an aim to estimate imputations of non-responding and directly not surveyed statistical units and credibility of data acquired by using weights, data are analysed each quarter. Summary indicators are compared with previous periods and administrative data sources. Key quality indicators are calculated quarterly.

Annual quality reports are prepared.

The main external users of the data of LCI are Eurostat and other EU institutions (including the European Central Bank).

The main national users are grouped as following:

• governmental bodies: the Ministry of Finance, the Ministry of Economy, the Ministry of Welfare, and the Central Bank of Latvia;
• mass media;
• research institutes, universities, and students;
• commercial banks;
• Latvian Construction Association;
• Producer Price Indices Section of the Central Statistical Bureau of Latvia;
• National Accounts.

We do not receive any special feedback from our users and no user satisfaction survey has been done for these statistics.

Official Statistics Portal traffic is monitored. There are website visitor opinion polls, general opinion poll on the products and services of Statistics Latvia, target user group opinion polls and other surveys.

Regulation (EC) No 450/2003 of the European Parliament and of the Council concerning the labour cost index is fully implemented.

LCI series are available broken down by labour costs components (total labour costs; wages and salaries, other non-wage costs, total labour costs excl. bonuses); NACE Rev.2 sections (B to S) and seasonal adjustment (not seasonally adjusted, calendar adjusted, seasonally and calendar adjusted).

100%.

In the form, there is no option to leave cells blank. In the case of nonresponding, the reason should be provided which is later coded and analysed separately.

The accuracy and reliability are mainly related to the accuracy and reliability of the Quarterly Statistical Survey on Labour and administrative data (State Revenue Service information) from which the LCI is calculated. LCI data are reviewed annually along with fourth quarter data. The revisions of the unadjusted total LCI quarterly growth rates by NACE Rev.2 aggregate B-S in 2022 did not exceed 2,0 percentage points.

To control sampling error, efforts are made at the design level of a survey through employment of probability sampling techniques, namely, we used a stratified random sample.

The statistical coefficient that specifically measures the sampling error is the standard error (SE). The values for the last quarter of the year 2022 were as follows:

• Standard Error (SE): 0.0288
• Relative Standard Error (RSE): 0.0024
• Relative Standard Error (RSE in %): 0.2432%

As an indication of accuracy, the coefficient of variation taking into account the sampling design was calculated for the variable "Total Labour Costs" and "Hours Worked". The quality indicators are calculated for LCI quarterly.

The estimated sampling error for variable Total Labour Costs (per hour):

For some enterprises in the sample the main economic activity can be changed during the time.

Over-coverage relates to units presented in the frame which do not belong to the target population.

These units were economically non-active enterprises (‘‘sleeping’’ or “died” ) at the respective moment of the survey. 

Each quarter of 2022 more than 5.7 thsd respondents were surveyed. Budgetary institutions, businesses with government or local government participation 50% and more and all businesses of the private sector with 100 employees and more are surveyed completely. Other statistical units are surveyed using a stratified random sample, which is carried out in earlier formed stratum by kind of economic activity and size of enterprise (by number of employees).

When building the sample, population frame includes all statistical units meeting the description of the target population. Population frame was formed based on the information in Statistical Business Register. At the moment when the sample was formed, population frame consisted of 104 808 units (1 721 of which were surveyed with the full-scope survey and made the first part target population, 9 536 of which were surveyed with a sample survey and made the second part of the target population and 93 551 of which were not surveyed directly and made the third part of the target population).

Sample, regardless all other pre-conditions, includes all general government sector institutions and enterprises (institutional sector classification code starts with S13).

Data on businesses of private sector, foundations, associations and funds employing 1 to 9 persons from the 1st quarter of 2009 are obtained from State Revenue Service administrative database using the calculations of the Central Statistical Bureau of Latvia. 

Measurement error largely occured due to the fact that respondents do not read or do not understand the instructions. The number of measurement errors is reduced mainly by consultation by telephone.

The overall un-weighted unit response rate (ratio, expressed as a percentage of the number of respondent units used in estimation to the total number of in-scope respondents) before imputation in 2022 was 91.67%.
Actions to speed up or increase the rate of response: e-mail reminders, telephone contacts.

Un-weighted unit response rate:

Weighted unit response rate: 

Optional

See below.

Data imputation is performed after the data entry process is completed and non-response is evaluated. The data is imputed to obtain the data requested in the form for those non-respondents in the sample (large enterprises), to receive the data of respondents who filled out the report 2-Labour (short, containing fewer indicators), as well as for the part of the target population not directly surveyed (statistical units with 1 to 9 employees).

Weights for responding statistical units are increased to obtain data for other non-responding statistical units.

Imputation methods:

1) use of State Revenue Service database to impute the number of employees in the main job, labour income, hours worked, business risk State duty and compulsory social security contributions;

2) calculating the average value of indicators per employee within the framework of the business activity of the reporting quarter.

Initially, information from State Revenue Service database is used for the imputation of data for large non-responding large units, for respondents who filled out the report 2-Labour (short, containing fewer indicators), and units with 1 to 9 employees not directly surveyed.

Subsequently, are imputed missing indicators calculated as mean values ​​of the corresponding sampling strata for large units, data for 2-Labour (short), according to a specially designed algorithm, data for units with the number of employees of 1 to 9, obtained from statistical units with a number of employees between 10 and 99.

 The ratio of the number of replaced values to the total number of values for a given variable is not calculated.

Optional

Seasonally adjusted data are obtained with the help of specific data processing programme DEMETRA+ using TRAMO/SEATS method. The time series are adjusted by direct assessment.

The reasons for the revisions are the following:

• New economically active enterprises were included in the population and the enterprise weights were recalculated;
• Lack of administrative data on reference quarter for statistical units with the number of employees 1-9 (micro-enterprise tax payers) when data development is carried out.  The quarter (for microenterprises), which is too late to include data in data development – therefore, data from the 2nd month of the quarter or data of previous quarter (for microenterprises) are included.
• For some enterprises in the sample the main economic activity was changed. The main economic activity of the enterprises is updated according the yearly questionnaires of the main indicators of the enterprise. 
• The data revisions for the previous quarters are allowed, obligatory and accepted by the Central Statistical Bureau of Latvia if the data delivered by the enterprises and institutions in the current quarter do not correspond to the data of the previous quarter due to mistakes. This is also the reason of the revision of the data.

Unadjusted series

Data for the current year are revised together with the last quarter of the current year.

Adjusted series

The Labour Cost Index is revised on a quarterly basis during the process of seasonal adjustment. When data of the new period are added, data on all previous periods are re-calculated.

Difference in the published year-on-year growth rates (%) caused by revisions for total labour costs (unadjusted series) - see annex. 

Optional

The data is ready 70 days after the end of the reference quarter.

65 days after the end of the reference period

70 days after the end of the reference period

The data are regularly transmitted to Eurostat according to the methodology in Regulation and Eurostat deadline. 

Deadlines for the respondents to reply, also covering recalls and follow-ups: 15 days after the end of each quarter + 25 days for recalls and follow-ups.

Period of the fieldwork: 1 month.

Period of data processing: 60 days after the reference period.

Dates of publication of first results: 70 days after the reference period.

Remarks: Data are always published according to release date.

Statistical information is comparable across the EU.

Optional

The data transmitted to Eurostat are comparable. There are no differences in concepts and methods.
Starting from the 1st quarter of 2009 data are published in compliance with the new Classification of Economic Activities NACE Rev. 2. To ensure long enough comparable time series, data on 2000–2008 were re-calculated according to the new revision of the NACE.

Data on LCI are available since 2000 Q1.

Comparability over NACE sections.

LCI data are compiled on a quarterly basis. There are not annual statistics.

The comparison of the unadjusted year-on-year quarterly growth rates of the total LCI with National Accounts (NA) variable “compensation of employees per hour worked” is presented by NACE Rev. 2 sections B-S in Table 1.

Graph 1 presents information on the year-on-year quarterly growth rates of the unadjusted total LCI and the National Accounts compensation of employees per hour worked by NACE Rev.2 aggregate B-S.

When comparing LCI and National Accounts data it is necessary to take into account methodological differences. The most important of them are the following:

• the non-observed economy is not taken into account in the compilation of the LCI, while in National Accounts it was estimated;
• the estimation of hours worked in National Accounts is based on the Labour Force Survey.

All figures are checked for internal consistency.

The unadjusted and seasonally adjusted LCI for the labour costs components: “total labour costs", “wages and salaries”, “other labour costs” as well as quarterly growth rates (in comparison with the corresponding quarter of the previous year) and labour costs per hour worked are available on the Central Statistical Bureau of Latvia website (CSB Database, Social Processes, Labour Costs, Short-term data).

2022 was the last year when a press release on labor costs per hour worked was published CSB website.

Users can access LCI data using Advance dissemination Calendar on CSB Internet website.

Specifically, the following information is available:

• Main Statistics Tables.

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

CSB database

There is no microdata access for the LCI.

Optional

Information on definitions and methodology can be found at Central Statistical Bureau of Latvia Official statistics portal at Labour costs, their structure and labour cost index

Quality documentation is available on CSB homepage

100 %

Information on definitions and methodology can be found at Central Statistical Bureau of Latvia website - Labour costs, their structure and labour cost index.

Average burden of respondents in hours (filling one questionnaire):

Q1 2022 - 1,30

Q2 2022 - 1,16

Q3 2022 - 1,16

Q4 2022 - 1,09

Confidentiality of the information provided by respondents is protected by Section 17 of the Statistics Law stipulating rights and obligations of the Central Statistical Bureau and other state authorities producing official statistics. Section 18 of the Statistics Law determines confidentiality exceptions. The policy of data protection and dissemination has been described in Quality Policy of the National Statistical System of Latvia. 

Data are published at the aggregate level at which they are not confidential. Statistical data shall be considered confidential if they directly or indirectly allow for identification of the private individuals or State authorities regarding which personal statistical data have been provided. Confidential data are treated by suppression. Data are confidential if there are 3 or less enterprises or one enterprise accounts for more than 80% or two of them more than 90%. Also the data of individual enterprises are confidential.

None