National Statistics Office

Labour Market and Information Society Statistics

Lascaris, Valletta VLT 2000, Malta

The labour cost index (LCI) is defined as the Laspeyres index of labour cost per hour worked, chain linked annually and based upon a fixed structure of economic activity at NACE section level. The labour costs are the total quarterly costs incurred by the employer in the employment of personnel. Labour cost indices are produced individually for the following categories;.

i. total labour cost, (LCI_TOT);
ii. wages and salaries, (LCI_WAG);
iii. employers social contributions plus taxes paid by employer less subsidies received by the employer, (LCI_OTH).  

The Labour Cost Index is calculated every calendar quarter. In order to lessen the response burden on potential responding units, specific surveys were not implemented for the collection of the LCI data. Instead, the indices are computed through the utilization of internal data available from National Accounts Unit and the Labour Force Survey (LFS).

The figures for total labour cost, wages and salaries, social security contributions and employment are compiled from national accounts data. Figures for actual hours worked by employees are estimated using employment figures available from the National Accounts Unit and weekly average actual hours worked from LFS. Mean weekly actual hours worked by employees for each NACE division are retrieved from the LFS and these figures are multiplied by the respective figures available from the National Accounts Unit.

NACE Rev. 2

NACE Rev. 2 Sections B to S.

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, excluding vocational training costs or other expenditure such as recruitment costs and spending on working clothes. 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. 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 are weighted by the total labour costs associated with that activity, which are fixed for one year in order to obtain activity aggregates.

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

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)".

Enterprises.

All activities in sections B to S of NACE Rev. 2 and all statistical units.

Data is available at NUTS 1 level.

Data is available since 1^st quarter of 2000.

2016

National Accounts is the source of information for labour costs and employment whereas the Labour Force Survey is used for the estimate of hours worked.  Information on COVID-related subsidies is sourced by the entity in charge of this scheme.

Data from National accounts is collected at quarterly intervals.

Information related to the actual hours worked by employees is available on a quarterly basis from 2001 onwards. However, figures for the year 2000 are only available for the second and fourth quarter since the Labour Force Survey for that year was only conducted twice.

Quarters one and three for the year 2000 were estimated directly from quarter two and four respectively. For more details kindly refer to Annex.

Not applicable.

Validation is carried out by analyzing trends of the variables obtained from National Accounts.  

Estimation

The labour cost index (LCI) is defined as the Laspeyres index of labour cost per hour worked, chain linked annually and based upon a fixed structure of economic activity at NACE section level. 

The main components used for working out the LCI are actual hours worked by employees, compensation of employees and social security contributions. National Accounts provide estimates on wages and salaries, social security contributions and employment. The Labour Force Survey provides the estimates for mean actual hours worked per week by employees.  These figures are used in combination with employment data given by National Accounts to provide a figure of total actual hours worked by employees per quarter within each NACE category.

1. National Accounts Estimates

A description on how data related to wages and salaries and social security contributions for each NACE Rev. 2 category are derived, are shown in the annex.   Information related to COVID-related labour cost subsidies is provided by the authority in charge of this scheme.

2.  Estimates for hours worked

Figures on actual hours worked by employees are not compiled by the National Accounts Unit. As a result, this information is estimated using the following procedure:

Average actual weekly hours worked by employees for each NACE section are obtained from LFS for each year as well as for each quarter. The average hours worked per week by employees is used for the computation of hourly estimates since variations between quarters for the different NACE categories may be the result of sampling errors. These weekly averages are then multiplied by 13 to obtain the average quarterly hours worked by an employee for each section. The average quarterly hours are then multiplied by the number of employees as obtained from National Accounts Unit. The final output produces the total actual hours worked by employees for each NACE section and for each quarter.

Work day and seasonal adjustments are provided on a quarterly basis.

As soon as updates are carried out by the main source (National Accounts), these are all taken into account in the production of the index.

The data from the National Accounts unit is retreived two weeks prior to the transmission of the index so as to ensure that revisions are made accordingly in a timely manner. This is done by analyzing the trends of the components simultaneously, particularly checking that the trends of Wages and Social contributions are in line.  Any sudden changes between one time period and another are queried with the National Accounts unit.

As from the second quarter of 2014, the indirect approach has been adopted on the labour cost index since when using the direct approach, the adjusted index of the total cost component in some instances proved to be either higher or lower than the adjusted index of its two sub-components.

Main users of this data include: (1) International organisations (such as Eurostat, UNESCO, OECD, EU's Directorate General for Employment), (2) Public Entities (such as Ministries, Authorities) (3) Private entities (research organisations, unions, businesses), and (4) Research Institutes (5) Universities (6) Other policy makers

The NSO carried out a user satisfaction survey covering all domains.   

Main results from this survey can be accessed through this link:

https://nso.gov.mt/user-satisfaction-survey/

The National Statistics Office has still not reached full implementation of regulation (EC) No.450/2003. Pending issues relate to the provision of a labour cost index which excludes bonuses based on NACE classification and broken down by economic activity.

refer to 5.3.

LCI data is revised on a quarterly basis. Such revisions are necessary in order to reflect changes in data which are forwarded by the primary sources.  In line with National Accounts’ revision policy, data from 2016 onwards need to be left ‘open’ to revisions due to the fact that newer information from various surveys may provide additional updates to data relating to wages and salaries and social contributions.  The remaining years of the time series are considered ‘closed’. ‘Closed’ years are usually not subject to any revisions. 

During 2020 National Accounts carried out a benchmark revision of its data and this impacted on part of the LCI components resulting in a revision of all the time series for this domain.

The tables attached in the annex display the revision history for the various NACE Rev 2 sections.  Annual growth rates are being displayed for Q1 2021 onwards. The shifts described above can be observed when referring to the data which was transmitted in Q1 2022. 

Not applicable.

Not applicable.

See below

National LCI covers NACE sections B to S (NACE Rev 2) and figures relating to compensation of employees are representative of the whole economy operating under these economic activities.  One is to note that the sources of this information are usually business surveys and in case of large companies records are directly derived from financial accounts.

In terms of information relating to actual hours worked by employees, since data is derived from quarterly Labour Force Survey statistics, it may have a high relative standard error by economic activity.  This is mainly due to the fact that the sample size for a number of economic activities such as mining and quarrying and real estate activities is rather small.  In this respect in such cases the mean actual hours worked by employees (excluding self employed) for B to S is used.

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All three indices are made available in working-day adjusted form. This means that differences in hourly labour cost which arise due to a varying number of working days are corrected for. In addition, all the series are made available on a seasonally adjusted basis. Seasonal adjustment corrects for infra-annual variations in the labour cost index which can arise due to recurring events, such as new school and university graduates entering the labour market in the autumn season.

Seasonally adjusted series is achieved by taking the working day adjusted series for each index and running this series using JDemetra+.

Refer to Annex for information on seasonal adjustment procedures and models.

NSO has an internal data revision policy which we adhere to.

Revisions are made on the index on a quarterly basis, depending on revisons in the main data sources (i.e. employment, labour costs and national insurance payments) made by the National Accounts Unit.  

The whole series is revised quarterly on every transmission in order to be in line with updates provided by the National Accounts. Refer to Annex.

Revisions to LCI data are carried out four times a year. 

Refer to section 7.1 and 7.2.

Refer to transmission dates in 7.2.

The whole time series is flagged as provisional pending any updates that may be given by National Accounts.

The National Statistics Office has transmitted the different labour cost indices within the 70 days deadline.

Refer to Annex.

Not applicable; index is only compiled at NUTS 2 level.

Not applicable.

Differences in the definition used for calculating a sub-component of the LCI, namely, actual hours worked by employees are to be noted. As explained in section 7., actual hours worked are calculated using National Accounts employment estimates along with the LFS averages. Between 2000 and 2003, a specific reference week within a quarter was used to represent the whole quarter. Hence, averages derived from LFSs carried out during this period, are in actual fact based on a specific week within a quarter. From 2004 onwards, the LFS started to be carried out on a continuous basis. In this regard estimates on actual hours worked for 2004 onwards truly refer to the average within the whole quarter. 

All the time series is comparable.

The index is mainly compiled basing on data provided by National Accounts, making it comparable to other statistical domains.

Not applicable.

The attached table provides the annual growth rates for different NACE categories along with the absolute year on year difference. 

Optional

The labour cost index is not published at a national level.  

Not applicable.

There is no national online database with LCI results.

There is no national online database with LCI results.

Not applicable.

No other format of dissemination is available.

A document explaining the processes involved in working out the LCI is available internally.

Procedures used for the data analysis are documented, but are currently not available to the public.

Optional

Optional

Not available.

All statistics collected by the NSO are considered as confidential according to the Malta Statistics Authority Act (2000).

The national Labour Cost Index is a set secondary statistics based on information produced from National Accounts and from the Labour Force Survey (LFS).

All data provided to work out the LCI is given in aggregate format and in such a way that no individual or enterprise is identifiable.

Not applicable.

None