Archive:ESA 2010 - Distributive transactions

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4.01
Definition: distributive transactions are transactions whereby the value added generated by production is distributed to labour, capital and government, and transactions redistributing income and wealth.
A distinction is drawn between current and capital transfers, with capital transfers redistributing saving or wealth, rather than income.

Full article

Compensation of employees (D.1)

4.02
Definition: : compensation of employees (D.1) is defined as the total remuneration, in cash or in kind, payable by an employer to an employee in return for work done by the latter during an accounting period. Compensation of employees is made up of the following components:
(a) wages and salaries (D.11):

wages and salaries in cash,
wages and salaries in kind;

(b) employers’ social contributions (D.12):

employers’ actual social contributions (D.121):
- eemployers’ actual pension contributions (D.1211),
- employers’ actual non-pension contributions (D.1212),
employers’ imputed social contributions (D.122):
- employers’ imputed pension contributions (D.1221),
- employers’ imputed non-pension contributions (D.1222).

Wages and salaries (D.11)

Wages and salaries in cash

4.03
Wages and salaries in cash include social contributions, income taxes, and other payments payable by the employee, including those withheld by the employer and paid directly to social insurance schemes, tax authorities, etc. on behalf of the employee: Wages and salaries in cash include the following kinds of remuneration:
(a) basic wages and salaries payable at regular intervals;
(b) enhanced payments, such as payments for overtime, night work, weekend work, disagreeable or hazardous circumstances;
(c) cost of living allowances, local allowances and expatriation allowances;
(d) bonuses or other exceptional payments linked to the overall performance of the enterprise made under incentive schemes; bonuses based on productivity or profits, Christmas and New Year bonuses excluding employee social benefits (see point (c) of paragraph 4.07); '13th to 14th month' pay also known as annual supplementary pay;
(e) allowances for transport to and from work, excluding allowances or reimbursement of employees for travelling, separation, removal and entertainment expenses incurred in the course of their duties (see point (a) of paragraph 4.07);
(f) holiday pay for official holidays or annual holidays;
(g) commissions, tips, attendance and directors' fees paid to employees;
(h) payments made by employers to their employees under saving schemes;
(i) exceptional payments to employees who leave the enterprise, where those payments are not linked to a collective agreement;
(j) housing allowances paid in cash by employers to their employees.

Wages and salaries in kind

4.04
Definition: wages and salaries in kind consist of goods and services, or other non-cash benefits, provided free of charge or at reduced prices by employers, that can be used by employees in their own time and at their own discretion, for the satisfaction of their own needs or wants or those of other members of their households.
4.05
Examples of wages and salaries in kind are:
(a) meals and drinks, including those consumed when travelling on business but excluding special meals or drinks necessitated by exceptional working conditions. Price reductions obtained in free or subsidised canteens, or obtained by luncheon vouchers, are included in wages and salaries in kind;
(b) own account and purchased housing or accommodation services of a type that can be used by all members of the household to which the employee belongs;
(c) uniforms or other forms of special clothing which employees choose to wear frequently outside of the workplace as well as at work;
(d) the services of vehicles or other durables provided for the personal use of employees;
(e) goods and services produced as outputs from the employer's own processes of production, such as free travel for the employees of railways or airlines, free coal for miners, or free food for employees in agriculture;
(f) the provision of sports, recreation or holiday facilities for employees and their families;
(g) transportation to and from work, except when organised in the employer's time; car parking when it would otherwise have to be paid for;
(h) child care for the children of employees;
(i) payments for the benefit of employees, made by employers to works councils or similar bodies;
(j) bonus shares distributed to employees;
(k) loans to employees at reduced rates of interest. The value of this benefit is estimated as the amount the employee would have to pay if interest at market conditions were charged, less the amount of interest actually paid. The benefit is recorded in wages and salaries in the generation of income account, and the corresponding imputed payment of interest from the employee to employer is recorded in the primary distribution of income account;

(l)	stock options, when an employer gives an employee the option to buy stocks or shares at a specified price at a future date (see paragraphs 4.168 to 4.178);

(m) incomes generated by non-observed activities in corporate sectors and transferred to the employees participating in such activities for their private use.
4.06
Goods and services given to employees as wages and salaries in kind are valued at basic prices when produced by the employer, and at purchasers' prices when purchased by the employer. When provided free, the whole value of the wages and salaries in kind is calculated according to the basic prices (or purchasers' prices of the employer when purchased by the employer) of the goods and services in question. This value is reduced by the amount paid by the employee when the goods and services are given at reduced prices rather than free of charge.
4.07
Wages and salaries do not include the following:
(a) expenditure by employers necessary for the employers' production process. Examples are the following:
(1) allowances or reimbursement of employees for travelling, separation, removal and entertainment expenses incurred in the course of their duties;
(2) expenditure on providing amenities at the place of work, medical examinations required because of the nature of the work and supplying working clothes which are worn for work;
(3) accommodation services at the place of work of a kind which cannot be used by the households to which the employees belong, for example cabins, dormitories, workers' hostels, and huts;
(4) special meals or drinks necessitated by exceptional working conditions;
(5) allowances paid to employees for the purchase of tools, equipment or special clothing needed for their work, or that part of their wages or salaries which, under their contracts of employment, employees are required to devote to such purchases. To the extent that employees who are required by their contract of employment to purchase tools, equipment, special clothing, etc., are not fully reimbursed, the remaining expenses they incur are deducted from the amounts they receive in wages and salaries and the employers' intermediate consumption increased accordingly.
Expenditure on goods and services that employers are obliged to provide to their employees in order for them to be able to carry out their work is treated as intermediate consumption by employers;
(b) The amounts of wages and salaries which employers pay to their employees temporarily in the case of sickness, maternity, industrial injury, disability, etc. Such payments are treated as other social insurance non-pension benefits (D.6222), with the same amounts recorded under employers' imputed non-pension social contributions (D.1222);
(c) other employment-related social insurance benefits, in the form of children's, spouses', family, education or other allowances in respect of dependants, and in the form of the provision of free medical services (other than those necessitated by the nature of the work) to employees or their families;
(d) taxes payable by the employer on the wage and salary bill — for example, a payroll tax. Such taxes payable by enterprises are assessed either as a proportion of the wages and salaries paid or as a fixed amount per person employed. They are treated as other taxes on production;
(e) payments to outworkers on piecework rates. When the income received by the outworker is a function of the value of the outputs from some process of production for which that person is responsible, however much or little work was put in, this kind of remuneration implies that the worker is self-employed.

Employers' social contributions (D.12)

4.08
Definition: employers' social contributions are social contributions payable by employers to social security schemes or other employment-related social insurance schemes to secure social benefits for their employees.
An amount equal to the value of the social contributions incurred by employers in order to secure for their employees the entitlement to social benefits is recorded under compensation of employees. Employers' social contributions may be either actual or imputed.

Employers' actual social contributions (D.121)

4.09
Definition: employers' actual social contributions (D.121) consist of the payments made by employers for the benefit of their employees to insurers (social security and other employment-related social insurance schemes). Such payments cover statutory, conventional, contractual and voluntary contributions in respect of insurance against social risks or needs.
Although paid directly by employers to the insurers, such employers' contributions are treated as a component of the compensation of employees. The employees are then recorded as paying the contributions to the insurers.
Employers' actual social contributions are comprised of two categories, the contributions related to pensions and the contributions for other benefits, which are recorded separately under the following headings:
(a) Employers' actual pension contributions (D.1211);
(b) Employers' actual non-pension contributions (D.1212).
Employers' actual non-pension contributions correspond to contributions related to social risks and needs other than pensions, such as sickness, maternity, industrial injury, disability, redundancy, etc. of their employees.

Employers' imputed social contributions (D.122)

4.10
Definition: employers' imputed social contributions (D.122) represents the counterpart to other social insurance benefits (D.622) (less eventual employees' social contributions) paid directly by employers to their employees or former employees and other eligible persons without involving an insurance enterprise or autonomous pension fund, and without creating a special fund or segregated reserve for the purpose. Employers' imputed social contributions are divided into two categories:
(a) Employers' imputed pension contributions (D.1221)
Social insurance schemes in respect of pensions are classified as defined contribution schemes or defined benefit schemes.
A defined contribution scheme is one where the benefits are determined by the contributions made to the scheme and the return from the investment of the funds. At the time of retirement, it is the employee that takes on all risks regarding benefits payable. For such schemes there are no imputed contributions unless the employer operates the scheme himself. In that case, the costs of operating the scheme are treated as an imputed contribution payable to the employee as part of compensation of employees. This amount is also recorded as final consumption expenditure by households on financial services.
A defined benefit scheme is one where benefits payable to the members are determined by the rules of the scheme, i.e. by the use of a formula to determine the payment or a minimum payment. In a typical defined benefit scheme, both employer and employee make contributions, with the employee contribution compulsory, being a percentage of current salary. The costs of meeting the quoted benefits are the responsibility of the employer. It is the employer who takes the risk for providing the benefits.
Under a defined benefit scheme, there is an imputed contribution by the employer calculated according to the following calculation: The imputed contribution by the employer is equal to the increase in benefit due to current period of employment less the sum of the employer's actual contribution, less the sum of any contribution by the employee, plus the costs of operating the scheme. Some schemes may be expressed as non-contributory because no actual contributions are made by either the employer or employee. Nevertheless, an imputed contribution by the employer is calculated and imputed as just described. Where pension entitlements of schemes for government employees are not recorded in the core accounts, the government employers' imputed pension contributions are to be estimated on the basis of actuarial calculations. Where the actuarial calculations cannot obtain a sufficient level of reliability, and in such cases only, two other approaches are possible to estimate government employers' imputed pension contributions as follows: (1) on the basis of a reasonable percentage of wages and salaries paid to current employees; or (2) as equal to the difference between current benefits payable and actual contributions payable (by both employees and government as employer).

(b) Employers' imputed non-pension contributions (D.1222) The fact that certain social benefits are paid directly by employers, and not through the medium of social security funds or other insurers, does not prevent them from being recorded as social welfare benefits. Since the costs of such benefits form part of employers' labour costs, they are also included in the compensation of employees. Remuneration is therefore imputed for such employees equal in value to the amount of social contributions that is needed to secure the entitlements to the social benefits that they accumulate. Such amounts take into account any actual contributions made by the employer or employee and depend not only on the levels of the benefits currently payable but also on the ways in which employers' liabilities under such schemes are likely to evolve in the future as a result of factors such as expected changes in the numbers, age distribution and life expectancies of their present and previous employees. The values imputed for the contributions are based on the same kind of actuarial calculations that determine the levels of premiums charged by insurance enterprises.

In practice, however, it may be difficult to calculate precisely the amounts of such imputed contributions. The employer may make estimates itself, perhaps on the basis of the contributions paid into similar funded schemes, in order to calculate its likely liabilities in the future, and such estimates may be used when available. Another acceptable method is to use a reasonable percentage of wages and salaries paid to current employees. Otherwise, the only practical alternative is to use the unfunded non-pension benefits payable by the employer during the same accounting period as an estimate of the imputed remuneration that would be needed to cover the imputed contributions. The benefits actually paid in the current period provide an acceptable estimate of the contributions and associated imputed remuneration. 4.11
In the accounts of the sectors, the costs of direct social benefits appear firstly among uses in the generation of income account, as a component of the compensation of employees, and secondly among uses in the secondary distribution of income account, as social benefits. In order to balance the latter account, it is assumed that the households of employees pay back to the employers' sectors the employers' imputed social contributions, which finance, together with eventual employees' social contributions, the direct social welfare benefits provided to them by those same employers. This notional circuit is similar to that for employers' actual social contributions, which pass through the accounts of households and are then deemed to be paid by them to the insurers.

4.12
Time of recording of compensation of employees:
(a) wages and salaries (D.11) are recorded in the period during which the work is done. However, ad hoc bonuses or other exceptional payments such as 13th month payments are recorded when they are due to be paid. The time of recording of stock options is spread over the period between the grant date and vesting date. If the data are inadequate, the value of the option is recorded at vesting date;
(b) employers' actual social contributions (D.121) are recorded in the period during which the work is done;
(c) employers' imputed social contributions (D.122) are recorded according to following categories:
(1) Those representing the counterpart of compulsory direct social benefits are recorded in the period during which the work is done;
(2) Those representing the counterpart of voluntary direct social benefits are recorded at the time these benefits are provided.
4.13
The compensation of employees consists of the following components:
(a) the compensation of resident employees by resident employers;
(b) the compensation of resident employees by non-resident employers;
(c) the compensation of non-resident employees by resident employers.
The items listed in points (a) to (c) are recorded as follows:
(1) the compensation of resident and non-resident employees by resident employers groups together the items listed in points (a) and (c) and is recorded as uses in the generation of income account of the sectors and industries to which the employers belong;
(2) the compensation of resident employees by resident and non-resident employers groups together the items listed in points (a) and (b) and is recorded as resources in the allocation of primary income account of households;
(3) for the item referred to in point (b), compensation of resident employees by non-resident employers is recorded as uses in the external account of primary incomes and current transfers;
(4) for the item referred to in point (c), compensation of non-resident employees by resident employers, is recorded as resources in the external account of primary incomes and current transfers.

Taxes on production and imports (D.2)

Subsidies (D.3)

Property income (D.4)

Current taxes on income, wealth, etc. (D.5)

Social contributions and benefits (D.6)

Other current transfers (D.7)

Adjustment for the change in pension entitlements (D.8)

Capital transfers (D.9)

Employee stock options (ESOs)

Source data for tables and graphs

Population: tables and figures

Data sources

The statistical data in this article were extracted during March 2018.

The indicators are often compiled according to international — sometimes worldwide — standards. Although most data are based on international concepts and definitions there may be certain discrepancies in the methods used to compile the data.

EU data

Most of the indicators presented for the EU have been drawn from Eurobase, Eurostat’s online database. Eurobase is updated regularly, so there may be differences between data appearing in this article and data that is subsequently downloaded. In exceptional cases some indicators for the EU have been extracted from international sources.

G20 members from the rest of the world

For the 15 non-EU G20 members, the data presented have been compiled by a number of international organisations, namely the Food and Agriculture Organisation, the United Nations Department of Economic and Social Affairs, the United Nations High Commissioner for Refugees, and the World Bank. For some of the indicators shown a range of international statistical sources are available, each with their own policies and practices concerning data management (for example, concerning data validation, correction of errors, estimation of missing data, and frequency of updating). In general, attempts have been made to use only one source for each indicator in order to provide a comparable dataset for the members.

Context

As a population grows or contracts, its structure changes. In many developed economies the population’s age structure has become older as post-war baby-boom generations reach retirement age. Furthermore, many countries have experienced a general increase in life expectancy combined with a fall in fertility, in some cases to a level below that necessary to keep the size of the population constant in the absence of migration. If sustained over a lengthy period, these changes can pose considerable challenges associated with an ageing society which impact on a range of policy areas, including labour markets, pensions and the provision of healthcare, long-term care, housing and social services.