Labour input indices overview

Data extracted in September 2020.

Planned article update: September 2021.

Highlights


EU-27, Index of employment in industry, construction, trade, and services (2015 = 100)
Source: Eurostat (sts_inlb_q), (sts_colb_q), (sts_trlb_q) and (sts_selb_q)

This article presents the labour input indicators, which are business cycle indicators measuring for each quarter how the labour input used by industry, construction, trade and services changes and provides important information for the analysis and forecast of economic developments in the European Union (EU).


Full article

General overview

Short-term business statistics (STS) provide three different indicators for the input of labour used by European businesses:

  • the number of persons employed (sometimes simply referred to as "employment"),
  • hours worked ("volume of work done"),
  • gross wages and salaries.

As of 2010, these three indicators are generally available for all economic areas covered by European short-term statistics, i.e. for industry, for construction, trade (wholesale and retail trade) and for services (encompassing market business services excluding finance, i.e. basically NACE Rev. 2, H-N) .

During the last decade the number of employed persons has developed very differently in the main economic sectors – industry, construction, trade and services (Figure 1). In industry, the number of persons employed had already begun to decline before the financial crisis and then dropped significantly between 2008 and 2010. Between 2010 and 2016 the level of employment in industry has remained nearly constant. Afterwards a moderate increase could be observed. In the second quarter of 2020 the employment level in industry is dropped again, mainly as a result of the Covid-19 crisis.

Figure 1: EU-27, Index of employment in industry, construction, trade, and services (2015 = 100)
Source: Eurostat (sts_inlb_q), (sts_colb_q), (sts_trlb_q) and (sts_selb_q)

After several years of stagnation between 2000 and 2004, employment in construction rose rapidly between 2005 and the first quarter of 2008. Afterwards an equally rapid decline set in which lasted until the end of 2014. In 2015, a relatively dynamic increase set in which lasted until the first quarter of 2020, then, as a result of the Covid-19 crisis, the employment level in construction dropped again. For a long time the development in trade and in services was steadier. Employment in trade (wholesale trade, retail trade and trade and repair of motor vehicles) displayed a slow but steady increase until early 2008 and then decreased for two years to stabilise again at the level which it had had around 2005. Just as in industry and construction, the employment level in trade dropped in the second quarter of 2020. In services, the financial economic crisis became visible in the employment data towards the end of 2008 but the decline lasted only about one year and a month and afterwards a still continuing steady increase set in which lasted until the first quarter of 2020. In the second quarter of 2020, the employment level in services dropped by more than 6 points and thus to a larger degree than during the whole financial crisis in 2008 and 2009.

Industry and construction

Figure 2 presents the development of the three labour input indicators for industry, Figure 3 for construction activities. In both cases the indicators for employment and for hours worked develop in a similar fashion, although during the financial crisis the indicator for hours worked dropped a bit faster than the indicators for the number of persons employed, suggesting that measures like the reduction of overtime were taken before dismissals or postponed recruitment. There is, however, a marked difference between these two quantity indicators and the development of the total gross wages and salaries. (Note that all labour input indicators are based on total numbers and not on average earnings or average working times.)

Figure 2: EU-27, Number of persons employed (employment), hours worked, gross wages and salaries in industry (2015 = 100)
Source: Eurostat (sts_inlb_q)


Figure 3: EU-27, Number of persons employed (employment), hours worked, gross wages and salaries in construction (2015 = 100)
Source: Eurostat (sts_colb_q)

In industry, before the financial crisis, there was a relatively steady increase in total gross wages and salaries despite an ongoing reduction of employment and hours worked. Following the crisis, the remuneration indicator recovered relatively quickly and increased again despite a constant use of total labour input. During the Covid-19 crisis, employment figures dropped, however the declines were moderate in comparison with the declines in the hours worked (no data available for the second quarter for industry) and the gross wages and salaries.

In construction, the indicators for gross wages and salaries steadily increased between 2000 and 2008. With the onset of the economic crisis, however, wages and salaries declined rapidly, as with hours worked and employment. Between 2010 and 2014, the indicator stagnated, since then it again displays a continuous increase which is, however, not as strong as during the pre-crisis years. As in industry, during the Covid-19 crisis employment figures dropped, however the declines were moderate in comparison with the declines in the hours worked and wages and salaries.

Trade and services

Figure 4 presents the development of employment, hours worked and gross wages and salaries for trade, Figure 5 presents data for services. The obligation to provide data on hours worked and gross wages and salaries for these two areas entered into force only in 2013. Backdata for these indicators only reach back for a few years. For both areas, trade and services, the trend for employment is rather steady, especially when compared with industry and construction. Moreover, gross wages and salaries in trade and services have rather dynamically increased since 2010.

Figure 4: EU-27, Number of persons employed (employment), hours worked, gross wages and salaries in trade (2015 = 100)
Source: Eurostat (sts_trlb_q)


Figure 5: EU-27, Number of persons employed (employment), gross wages and salaries in services (2015 = 100)
Source: Eurostat (sts_selb_q)

It is noteworthy that the declines in the labour indicators were not as marked in trade in services during the financial crisis 2008/2009 as for industry and construction. This was different, however, during the first half of 2020. The reduction in employment levels, especially in services, was quite pronounced as large parts of these industries (e.g. hotels, restaurants, air traffic) were completely, or almost completely, shut down for a considerable amount of time.


Annual development by country, 2017 - 2019

Table 1 provides an overview of annual rates of change for the years 2017, 2018, and 2019. In 2017 and 2018, the level of employment in general developed quite dynamically. In 2019, while generally still positive, the development was not so pronounced. In industry there were increases in employment in more than 20 Member States in 2017 and 2018 and 19 Member States in 2019. The development was particularly strong in Spain and Cyprus. Countries with a predominantly negative development were Bulgaria, Croatia, and Finland.

For construction, employment levels increased in the large majority of countries during the period 2017 – 2019. In particular, in Ireland, Cyprus, and Hungary the increases in employment were quite strong, sometimes even with double-digit growth rates. Malta and Greece experienced negative rates of change during this time.

For employment in trade, the development was in general less dynamic than for industry and construction. Almost all countries experienced positive growth rates but on the other hand the rates were much smaller.

In services, declining rates of employment were the exception in 2017 and 2018. In 2019, there was still a large majority of countries with a positive growth rate.

Table 1: Employment, annual rates of change, unadjusted data
(Percentage change compared with same period in previous year)
Source: Eurostat (sts_inlb_a), (sts_colb_a), (sts_trlb_a) and (sts_selb_a)

Development during the first quarters of 2020

Table 2 shows the development of employment, hours worked and gross wages and salaries during the first two quarters of 2020 which were clearly affected by the Covid-19 crisis.

Most of the measures to combat the epidemic were put in place in March 2020. The first quarter, therefore, is influenced by these measures but only to a moderate extent. In the EU-27, employment in industry dropped by 0.4 % compared with the last quarter of 2019. In construction there was still a moderate increase (0.2 %). The employment in trade went down by 0.3 % and in services, which were most strongly hit by the crisis (hotels, restaurants, air traffic etc.), employment was reduced by 1.0 %. In the second quarter, effects on employment were already much stronger, in industry it decreased by 1.4 %, in construction and trade by 1.5 %. The employment level in services went down by 5.6 % which is a quite unprecedented drop from one quarter to the next. The amount of hours worked went down by a much larger extent in the first and second quarters of 2020 than employment in general, indicating the effects of short term working measures and similar policies to mitigate the effects of the crisis on the labour market. In many countries the reduction of working hours reached double-digit rates of change. Gross wages and salaries also went down to a larger extent than employment, especially in the second quarter.


Table 2: Employment, hours worked, gross wages and salaries during the first quarters of 2020
(Percentage change on previous period)
Source: Eurostat (sts_inlb_q), (sts_colb_q), (sts_trlb_q) and (sts_selb_q)

Source data for tables and graphs

Data sources

Data sources, aggregation and availability

Short-term statistics present data on the number of persons employed. This statistical concepts differs from other statistical employment concepts which are for example used by the labour force survey or national accounts. In short-term statistics the number of persons employed is collected by aggregating the number of persons employed in the statistical units, i.e. the businesses. The number of persons employed is thus in effect a number of jobs. If a person holds two jobs (e.g. regular daytime job and occasional week-end job) both jobs will be considered in the statistics. Persons employed are not identical with employees (i.e. persons who have a work contract with an employer and receive a remuneration in return for their work) but include for example unpaid family workers. Persons employed also include home workers, apprentices, persons on leave, part time workers, temporary workers and seasonal workers. Not included are persons supplied to the business by other enterprises or persons carrying out repair and maintanance work in the observation unit on behalf of other businesses.

The measure of hours worked is rather comprehensive, it not only includes the normal hours but also overtime, hours worked on holidays and time which is spent on the preparation of actual work, hours spent at the working place during which no actual work is done and even short periods of rest at the work place. Thus, in broad terms, hours worked represent hours paid. However, they do not include however hours paid but not worked (e.g. paid holidays or sick leave). They do also not include time spent for meal breaks or time for commuting between home and work place.

The indicators of wages and salaries include all remuneration in cash or in kind in exchange for work including bonuses, allowances and similar payments. Social contributions payable by the employee are also included even if they are withheld and transferred to the authorities by the employer. Not included are social contributions payable by the employer and payroll taxes. The statistical sources used to establish STS labour input data vary. In some cases special surveys are used, in others data are collected from administrative sources.

The STS regulation requires that Member States collect labour input data and transmit them to Eurostat at least quarterly. However for several Member States data are also available on a monthly basis ( (sts_inlb_m), (sts_colb_m), (sts_trlb_m), (sts_selb_m) ).

Context

Employment is a variable that is important in both economic and social statistics. Labour input is one of the main costs of production. Employment, in its own right, is an important short-term indicator in monitoring the economy. The proportion of the working population in employment, the type of job they do and their working patterns are social variables of interest. The collection of short-term information on employment has a number of important uses:

  • to evaluate the economic situation to help monitor the economic cycle;
  • to calculate measures of productivity;
  • to help calculate income from employment in national accounts.

The collection of information in all the Annexes of the STS-regulations give a broad economic picture and shows the balance between services and industry. Note however that to a large extent, services in STS are business services, i.e. services consumed by business like market research, business consultancy, employment activities and also transport and communication but not public services or financial services.

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Industry (NACE Rev.2) (t_sts_ind)
Industry labour input index (NACE Rev.2) (t_sts_ind_labo)
Construction, building and civil engineering (NACE F) (t_sts_cons)
Construction labour input (teiis520)
Trade and services (t_sts_ts)
Wholesale and retail trade (NACE G, NACE Rev.2) (t_sts_wrt)
Labour input index (NACE Rev.2) (t_sts_wrt_li)
Industry (NACE Rev.2) (sts_ind)
Industry labour input index (NACE Rev.2) (sts_ind_labo)
Construction, building and civil engineering (NACE F) (sts_cons)
Construction labour input index (sts_cons_lab)
Trade and services (t_sts_ts)
Wholesale and retail trade (NACE G, NACE Rev.2) (sts_wrt)
Labour input index (NACE Rev.2) (sts_wrt_li)