Statistics Norway

Division for structural business statistics

Statistics Norway

2225 Kongsvinger

The background of the labour cost index is the need for more timeliness in the measurement of changes in labour costs. The purpose is therefore to show changes in labour costs through the year.

The index was published for the first time for the third quarter of 2004, with back indices to the first quarter of 1996.

The statistics is based on data from a-meldingen. More about a-meldingen: https://www.skatteetaten.no/en/business-and-organisation/employer/the-a-melding/

The Labour Cost Index is defined by economic activities according to https://www.ssb.no/en/klass/klassifikasjoner/6, which is in accordance to NACE Rev. 2.

Private sector (all sectors except general government (but included in section O))

The labour cost index measures changes in total labour costs, direct labour costs ad indirect labour costs per hour. Total labour costs are the sum of direct labour costs and indirect labor costs.

Direct labour costs include wages and salaries, remuneration and other cash payments like paid annual leave, sickness pay, representation allowances. In other words, payment for hours not worked are also included in direct labour costs. The main sources for direct labour costs are wage totals and wage index.

Wages and other remuneration contains basic paid salaries and other cash payments, among others, sitting-allowances paid to committee members, paid annual leave, sickness pay, representation allowances, and benefits from cashing in or selling options in employment relations.

Payment for hours not worked includes, among other things, paid annual leave, sickness pay, pay for various leave of absence and expenses on extra holidays.

Indirect labour costs include salaries in kind, costs for health and safety, social contributions, training costs and taxes on labour. The main sources for indirect labour costs are the labour cost survey for training costs, costs for health and safety, most social contributions and some of the salaries in kind, and the wage totals for some social contributions and most salaries in kind.

Salaries in kind is a common term for benefits besides the usual salaries. It includes, among other things, costs in connection with free cars, car allowances, free telephones, free newspapers, various welfare initiatives and taxable salaries in kind. Taxable salaries in kind are got from The Register of End of the Year Certificate, which includes, among other things, collective insurance contributions, free food and lodging, toll or monthly travel cards paid by the employer, free electricity, free housing, holiday trips paid by the employer and benefits from contributions to kindergartens for employees' children.

Costs of health and safety include costs of health services provided by the company, and costs of various workplace safety initiatives to the benefit of employees.

Social contributions are expenditures on pension schemes and insurance such as insurance against occupational injury and insurance against accidents.

Training costs include, among other things, the costs of participation in external courses and further education paid for by the employer, the costs of running schools and courses run by the company, the costs of recruitment and the costs of training new employees. Hours workedThe index shows changes in labour costs per hour. The data sources have information on contractual working hours and the number of overtime.

Hours worked are the sum of contractual working hours and overtime.

Enterprise and local kind of activity

The population covers all the establishments in private sector in Statistics Norway's Central Register of Establishments and Enterprises, industrial groups B to S. Industrial group O includes public administration.

National level

The labour cost index was produced for the first time with figures for the third quarter of 2004 and is comparable back to 1996 for all the economic activities covered.

2016=100

The population covers all the establishments in private sector in Statistics Norway's Central Register of Establishments and Enterprises, industrial groups B to S. Industrial group O includes public administration.

Quarterly

The statistics is based on data from a-meldingen. More about a-meldingen: https://www.skatteetaten.no/en/business-and-organisation/employer/the-a-melding/, annual accounts and legislation 

The labour cost index has no data servey of its own.

The indices are checked against historical series and are compared with the published statistics from other data sources.

The labour cost index is carried out within the frame work set by the data sources.

The labour cost index is adjusted when new significant information becomes available

The labour cost index is a Laspeyres index with fixed weights. The labour cost index is constructed as a sum of sub-indices for cost components constituting total labour costs. Changes in labour costs are estimated and then weighted together to obtain a labour cost index, where weights are based on information from the labour cost survey.

Quality control and editing of the statistics takes place in several stages, with most of the operations automatic both with respect to the actual control and consequent correction. When the reported data are received essential variables are controlled. Quality control of the data continues before and after registration.

The quarterly Labour Cost Index (LCI) is primarily used by the Technical Reporting Committee on Income Settlement, research institutes, employees and employer organizations, Eurostat, the media, business and industry.

The labour cost index is compiled every quarter, and is published no later than 60 days after the end of each quarter.

The feedback from main users indicates satisfaction. The labour cost index is in use by many enterprises, mainly for contract price adjustments

Statistics Norway has delivered the LCI for all relevant NACE sections, for the years 1996-2022.

The index is a working day adjusted index. It is not seasonally adjusted. This means that the index shows changes in labour costs per hour and that variations in the number of working hours or days between the quarters do not affect the index in the present quarter.

The sources the data, A-ordningen, is classified according to the former standard for industrial classification. For some sections the changes in the classification have been insignificant and the variables have been calculated directly according to NACE 2007. Norway also delivers a Labour Cost Index excluding bonuses. The LCI without bonuses is estimated for all NACE sections from the first quarter of 2000.

The series are not seasonally adjusted.

Hours paid are not given in the data source. There is some uncertainty in these calculations.

Optional

Optional

See below

The data source, a-ordningen, is a full cencus registry

Optional

The statistics is not based on survey but monthly data from the administrative register, A-ordningen

Measurement errors in the labour cost index relate to the possibility of inconsistencies between the data source with respect to the definitions of variables.

The statistics is not based on survey but monthly data from all enterprices (the administrative register "A-ordningen" ). Enterprises which report late are not included in the statistics.

Optional

Information abourt hours worked may be deficient.

Optional

Hours worked

There are two sources of data, with respect to hours worked. The first is the Labour Cost Survey, which covers the number of hours paid in a year. The second is data from a-ordningen, which covers contractual workinghours per week and overtime hours paid per month.

Contractual hours including paid overtime hours should in this case be viewed as gross hours or rather just hours paid. For all practical purposes we then still need to include, or subtract in this case, hours that are paid and not worked. The result of this exercise will then be hours worked. The costs are of course unaffected since we exclusively are concerned with working time in this chapter. The last factor to address is hours worked and not paid, but it seems that it will be too much of a stretch to cover this concept in this stage.

Paid hours in general cover all contractual hours that are paid, such as paid overtime hours, paid holidays and paid leave of absence for sickness, education and maternity leave. For a Labour Cost Survey it would be of relevance to be able to identify all facets of working hours. However the Norwegian LCI will initially be restricted to estimate actually worked hours as a function of paid hours and overtime hours, and thereafter subtracting hours paid but not worked.

The series of the Norwegian LCI would therefore only cover hours actually worked, except for hours that are worked but not paid. A series adjusted for actual working days would take into account effects such as:

• Differences in amount of possible working days between quarters (all days in a quarter excluding weekends. Actual amount of agreed hours covers problems in differentiating between ordinary working-hours and shift-work.)
• Differences in paid holidays between the quarters
• Differences in other paid public holidays between the quarters

This working day adjusted series would exclude the effect of differences between quarters due to calendar-effects, and only cover seasonal effects that are directly explained through the differences in the number of working days that regularly occur between years.

Variables and possible sources of error:

• Some non-regular payments of indirect costs are estimated from LCS, CVTS, LFS and legislation
• Contratual hours are calculated from full-time hours and The percentage of the position. The percentage of the position are imputated when this informatioan is not reported

The labour cost index is constructed by putting several variables together, where the variables are paid at different months during the years.

The series are not yet presented seasonally adjusted, but the basis for SA series is presented in the annex to this item 6.4.

The most significant revisions of the LCI was made after the publication of the Labour Cost Survey (LCS) for 2012 and 2016. This survey gives an overview over the costs of having an employee. The LCI is supposed to measure the quarterly growth in the same costs. If the four year growth in the LCI does not match the growth between the former and the current LCS, it has to be revised. By adjusting the growth for each quarter in the LCI by the same factor we can keep the quarterly variations and at the same time have the LCI reflect the development between the Labour Cost Surveys.

In addition to the adjustment caused by the LCS, there have been some revisions in connection with the new standard of industrial classification and some minor corrections caused by delayed updating of our regular source data. Reports on overtime and overtime hours have been of fluctuating quality, and data for part-time workers have also shown variation that often seems unreasonable.

The publication of the results from LCS 2016 was 26th of October 2018. The growth measured between 2012 and 2016 did not match the growth in the LCI for the same period. Because of this, there were revisions for all sections in the publication for 3rd quarter 2018.

See 6.5

See 6.5

2022Q1: < t+ 60 days

2022Q2: < t+ 60 days

2022Q3: < t+ 60 days

2022Q4: < t+ 60 days

See 7.1

See 7.1

LCI was delivered on time for the year 2022.

<=60 days

Internal coherence

National level

Optional

The LCI has been estimated according to the same methodology as before, and the index should be comparable. The LCS and SES have been published with industries classified according to NACE 2007 and there have been some revisions of data for the years 2004-2008. This has resolved some of the uncertainty in connection with the transition from NACE 2002.

The labour cost index is comparable back to 1996 for all the economic activities covered.

Other statistics that could be used to measure direct labour costs include the wage index and the wage-cost statistics from the National Accounts. There are some significant differences between the direct LCI and these statistics. The wage index does not include hours and overtime pay and it measures the development of wages per month per full-time equivalent employee. The LCI measures cost per hour, and it includes payments for overtime. The statistics from the National Accounts covers aggregate wage costs and annual changes in average yearly salaries.

Comparability over NACE sections

See 8.3

See 8.3

Optional

The statistics are published electronically at Statistics Norway's website at http://www.ssb.no/en/aki, and in StatBank (http://www.ssb.no/en/statistikkbanken - “Labour market and earnings” – “Labour costs” – “Index of labour costs”). 

Metadata is found at “About the statistics” at http://www.ssb.no/en/aki. The Statistics on Labour Cost Index are released at 08.00am on the day given in the statistics calendar: http://www.ssb.no/en/kalender. 

The indices are sent to Eurostat no later than t+60 days.

See 9.

See 9.

See 9.

https://www.ssb.no/en/statbank/table/07251/

See 9.

See 9.

https://www.ssb.no/en/aki#om-statistikken-definisjoner

See 9.

https://www.ssb.no/en/aki#om-statistikken-definisjoner

See 9.

The labour cost statistics make use of data from «A-ordningen». A-ordningen is a collaborative between The Norwegian Labour and Welfare Administration (NAV), Statistics Norway and the Norwegian Tax Administration.

The aim of a-ordningen is to coordinate the authorities' requirements concerning the reporting of information on employees' income and employment etc. in order for the enforcement of a-ordningen to be as smooth as possible.

From 1st January 2015, the way in which employers and others with a reporting obligation declare employment- and income information to the Norwegian authorities will change. The same information will no longer need to be submitted several times to several national agencies.

The new way of reporting mandatory information is useful to the Norwegian society in general, as the monthly a-melding report provides a more correct foundation for NAV benefits, tax returns and social statistics. A-ordningen is one step on the road to modernisation and reforms.

Hence, there are no estimates on cost and burden for the enterprises concerning the labour cost statistics on its own.

The Statistics Act 21st of June 2019 number 32, §10 and §20.

The Statistics Act 21st of June 2019 number 32, §10 and §20. 

Employees of Statistics Norway have a duty of confidentiality.

Statistics Norway does not publish figures if there is a risk of the respondent’s contribution being identified. This means that, as a general rule, figures are not published if fewer than three units form the basis of a cell in a table or if the contribution of one or two respondents constitutes a very large part of the cell total.

Statistics Norway can make exceptions to the general rule if deemed necessary to meet the requirements of the EEA agreement, if the respondent is a public authority, if the respondent has consented to this, or when the information disclosed is openly accessible to the public.

More information can be found on Statistics Norway’s website under Methods in official statistics, in the ‘Confidentiality’ section.

Seasonally adjusted series will be available from 2023.