Transcript Labour Cost Index (LCI)

Labour Cost Index (LCI)
Calculation of the LCI in Denmark
Labour Cost index calculation in
Denmark
• Calculate working day adjusted
index on NACE B, C,…,S for total
labour costs, wages and salary,
other labour costs and total labour
costs excluding bonus
• Seasonal adjustment
• Send the data to Eurostat
• Eurostat calculates the aggregates
LCI calculation in Denmark
Example Q2 2012 for NACE C:
• Identifying enterprises that have
reported for both Q1 and Q2
LCI calculation in Denmark
• Calculate labour costs per hour for
each quarter:
– Use the quarterly survey for wages
and salaries
– Estimates for other costs until survey
is completed
– Q1: 255
– Q2: 266
LCI calculation in Denmark
• Calculate the quarterly change
between Q1 and Q2.
– Q2/Q1 = 266/255 = 1.043
• Chain to index from Q1 (149.5):
– 149.5 * 1.043 = 156.0
LCI calculation in Denmark
• In Denmark the base period is Q1
2000
• Eurostat request base year 2008.
• The base period is changed to
2008.
– The index is divided by the average
index of 2012.
– Result: 114,0 (109,2 for Q1)
– This result is delivered to Eurostat
LCI calculation in Denmark
• The index is seasonal adjusted
– We use Demetra
– Delivered to Eurostat
LCI calculation in Eurostat
• Example for Denmark Q2 2011
calculating an aggregate:
– NACE C: LCI_TOT = 112,44
– NACE D: LCI_TOT = 119,27
LCI calculation in Eurostat
• Calculate the increase compared
with the last full year multiplied with
100:
– NACE C:
• LCI_TOT = 112,4
• Average 2010 = 105,1
• Result = 107,0
– NACE D:
• Result = 110,5
LCI calculation in Eurostat
• Calculating the unchained index:
– NACE C:
• index 107.0
• weight (based on 2010) 135,612.89
– NACE D:
• index 110.5
• weight 5.096,91
– Unchained Index 107.08
LCI calculation in Eurostat
• Calculating the annual link
– Average of the unchained index the
previous full year
• 102.43
– Annual link same quarter previous
year (Q2 2010)
• 136.29
– Annual link
• 102.43*136.29/100 = 139.60
LCI calculation in Eurostat
• Calculating the aggregated
changes series:
– The unchained index multiplied with
the annual link
– 107.08*139.60/100 = 149.49
LCI calculation in Eurostat
• Calculating the aggregated index
with base year 2008 for NACE C
and D:
– Take the aggregated chained series
and divide it with the average for 2008
– 149.49*100/132.66 = 112.68
LCI calculation in Eurostat
• Issues:
• Eurostat and the member states obtain
different aggregates
• LCI_TOT must be not an independent
derived index but a combination, using
the appropriate weights and linking
technique, of LCI_WAG and LCI_OTH
LCI calculation in Eurostat
• Reasons:
– Different Indexes for aggregation: Eurostat
aggregates at NACE section level while
member states might use lower level
indices
– Different weights: Eurostat uses the
weights transmitted by Member States
(dataset LCI_WEIGHT_A). If the country
uses other weights the aggregation results
will be different.
LCI calculation in Eurostat
• Reasons:
– Use of different linking techniques
– Working day adjustment: Eurostat
uses the indirect approach while
Member States might use a direct
approach for aggregates
Issues with Denmark
• We do not deliver NACE
aggregates
• LCI_TOT is not calculated using
Eurostat weights, but national
weights