Labour costs, their structure and labour cost index
Labour costs and their structure data aim at acquiring information on total labour costs and their structure in breakdown by economic activity and sector (public and private), as well as obtaining source data for the calculations of quarterly labour cost indices.
Data on Labour cost index are used to ensure with regular (short-term) and timely labour cost indicators, to control changes in labour costs and to understand dynamics of inflation process and labour market.
- Table of contents
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Terms and definitions
- Data collection and statistical processing
Terms and definitions
Labour costs
The total labour costs are formed by the employer’s expenditure necessary to employ the staff.
The labour costs include remuneration for the work done both in money (direct remuneration) and in goods and services (wages and salaries in kind); employers’ compulsory and voluntary social contributions paid for the employees; employers’ direct social contributions to employees, as well as other costs arising when employing the workforce.
In calculations the wage and salary subsidies are subtracted from the labour costs.
Monthly labour costs per employee
Hourly labour costs
Total quarterly (annual) labour costs divided by number of actually worked hours of all employees within a quarter (year).
If compared to annual data quarterly data do not include vocational training costs and recruitment costs; expenditures for work clothes and uniforms as well as other costs not specified yet.
Labour cost index
Index measuring changes in the hourly compensation paid by the employer to employ personnel having working time registration. Quarterly Labour cost index is calculated basing on average hourly labour costs of 2016, excluding professional training costs covered by the employer and recruitment costs.
Labour cost index (seasonally adjusted)
Index measuring changes in the hourly compensation paid by the employer to employ personnel having working time registration. Quarterly Labour cost index is calculated basing on average hourly labour costs of 2016, excluding professional training costs covered by the employer and recruitment costs.
Influence of seasonality and varying number of working days has been averted.
Gross wages and salaries (direct and in kind)
Gross wage or salary covers regular and irregular direct remuneration – basic wage (monthly wage, salary); payments on the time worked or amount of work done; regular and irregular bonuses and premiums, additional payments for overtime work and work on holidays, additional payment before vocation; leave benefit; compensation for unused leave; payments on days not worked – annual and additional leave, payments on other days not worked; statutory social security contributions payable by employees; and sums of income tax. In compliance with the EU Regulations, when compiling data on labour costs, gross wages and salaries include also wage or salary in kind.
Starting from 2009, gross wages and salaries include payment on idle time: till 2008, payment on idle time was included in other labour costs.
Direct remuneration
Remuneration for the work accomplished, as well as, payments for the hours not worked, but paid by employer. Direct remuneration includes basic wages and salaries, payments for time worked or for the amount of work done, regular or non-regular allowances and bonuses (including additional payments to annual leave, leave allowance; compensation for leave not used), additional payments for overtime work and work on holidays, payments for annual and additional leave; payments for other days not worked, but paid by employer (idle time, personal holidays, donor days etc.), payment of sick-leave certificate A.
Regular gross wages and salaries
Irregular wages and salaries
Wages and salaries in kind
Remuneration subsidies
Remuneration subsidies (employers’ contributions compensated from the state budget) – financing from the state budget or State Employment Agency to the employer for the wages and salaries of unemployed engaged in salaried temporary jobs, disabled persons and other resident groups engaged in activities of employment support.
In calculations the remuneration subsidies are subtracted from the sum of labour costs.
Employers’ social contributions
Other labour costs
Private sector
Private sector includes commercial companies with central or local government capital participation up to 50%, commercial companies of all types without central or local government capital participation, individual merchants, and peasant and fishermen farms with 50 and more employees.
Public sector
Data collection and statistical processing
Survey method and data source
Data on monthly average and real wages and salaries are obtained by surveying enterprises, central government institutions, local governments and institutions thereof and institutional units.
Information is acquired by compiling questionnaires developed by the CSB – quarterly statistical reports on activities of merchants, institutions, foundations, associations and funds (2-Labour, 2-Labour-municipalities, 2-Labour (short)), and administrative data.
Statistical report form 2-Labour (short) is submitted by individual merchants, foundations, associations and funds employing 7–49 persons. Form 2-Labour-municipalities submitted by local governments and municipal institutions. All other statistical units included in the sample submit statistical report form 2-Labour.
Administrative data are acquired from reports on employees submitted by employers to the State Revenue Service information from the Report on state social security compulsory payments from employee income, Income Tax and Business Risk State Duty during the reference month, from the Report regarding the employment income, personal income tax and state mandatory social insurance contributions of the payers of the income tax for seasonal farm workers and from Micro-enterprise Tax Declaration.
All latest forms are published in the CSB website section Forms.
Information is compiled on all fields. Data by kinds of economic activity are compiled by the main kind of activity which includes also all the other activities of the respondent, except centralized accountancies of the local governments, which submit data separately on following sectors:
- Electricity, gas, steam and air conditioning supply;
- Public administration and defence; compulsory social security;
- Education;
- Residential care activities;
- Social work activities without accommodation;
- Creative, arts and entertainment activities;
- Libraries, archives, museums and other cultural activities;
- Cleaning activities.
Target population
Target population are all statistical units (state and local government budgetary institutions, state and local government merchants, private commercial companies, individual merchants, peasant and fishermen farms employing 50 persons and more, foundations, associations and funds employing 1 and more persons) economically active in 2019.Target population of the survey does not include:
- religious organisations;
- rural handicraft enterprises;
- family businesses;
- individuals performing economic activity.
Target population does not include also statistical units having NACE Rev. 2 classification economic activity code starting with 97 or 98.
Sample size
Each quarter of 2019 more than 7 thsd respondents are surveyed.
Budgetary institutions, businesses with government or local government participation 50 % and more, and all businesses of the private sector with 50 employees and more are surveyed completely. Other statistical units are surveyed with the help of simple stratified random sample conduced in pre-built strata based on the main kind of economic activity and size of enterprise (number of employees). Sample, regardless of all other pre-conditions, includes general government sector enterprises (institutional sector classification code starts with S13).
When the population was built, the population frame included all statistical units meeting target population description. Population frame was built based on the information in Statistical Business and Organisation Register. Upon the sample formation, population frame consisted in total of 107 686 units, 2 988 units of which belonged to the first population part surveyed with a full-scope survey, 13 579 units to the second population part surveyed with a sample survey, and 91 119 units to the third population part not surveyed directly. Before forming the sample, the population frame was broken down into six target population groups. The surveyed sample size constituted 7 502 units (45.3 % of the 16 567 units in the frame).
| Target population | full-scope survey | Sample survey | imputed | total |
| State and local government budgetary institutions | 753 | 0 | 0 | 753 |
| State and local government merchants – *SVTK code starts with 1 or 2, or 82, or 83 | 442 | 0 | 0 | 442 |
| Private commercial companies – SVKT code does not start with 1 or 2, or 82, or 83 or third or fourth digit is not 71 or 77 | 1 752 | 13 103 | 74 852 | 89 707 |
| Individual merchants – third or fourth digit of SVKT code is 71 or 77 | 2 | 96 | 6 084 | 6 182 |
| Peasant and fishermen farms | 6 | 0 | 0 | 6 |
| Foundations, associations, funds | 33 | 380 | 10 183 | 10 596 |
| Total | 2 988 | 13 579 | 91 119 | 107 686 |
*SVTK – CSB Typological Classifier of Statistical Units.
Calculation methods
Information is obtained from the statistical surveys every quarter. The information acquired form the respondents of the sample is summarized with the help of weights given for the each sample unit. Report indicators multiplied with weights first of all are added together at class (four-digit), group (three-digit), division (two-digit) and section (letter) level according to NACE Rev. 2. Information is compiled in breakdown by main kind of activity.
Labour cost indicators are given on employees having working time registration and wages and salaries whereof have been calculated.
With an aim to estimate imputations of non-responding and directly not surveyed statistical units and credibility of data acquired by using weights, data are analysed each quarter. Summary indicators are compared with previous periods and administrative data sources.
If compared to annual data quarterly data do not include vocational training costs and recruitment costs; expenditures for work clothes and uniforms as well as other costs not specified yet.
The labour costs index LCI (in percent) in the period t is calculated as follows, with the average hourly labour costs in 2016 = 100 taken as the basis:
LCIt = LCt : LC average in 2016 x 100, where
LCt – hourly labour costs in the period t;
LC average in 2016 – hourly labour costs on average in 2016.
Hourly labour costs LC in the period t are calculated in the following way:
LCt = TLCt : THt, where
TLCt – total labour costs in the period t;
THt – total hours actually worked in the period t.
Hourly labour costs are calculated separately on each of the following three labour cost categories: total labour costs, gross wages and salaries and other labour costs.
Labour cost indices are calculated and published in two ways – seasonally adjusted and non-adjusted. Seasonally adjusted data are indicators that allow estimating changes in economic processes in time series analysis more objectively, eliminating influence of seasonality, varying number of work days, various holidays (e.g., Easter, Ligo, or Christmas) on labour costs. Seasonally adjusted data are obtained with the help of specific data processing programme DEMETRA. When, after the seasonal adjustment, data of the new period are added, also data on previous periods are re-calculated.
The aggregate labour cost index for NACE Rev. 2 B–S is calculating using Laspeyres chain index method, where the total labour costs of previous year by NACE sections are used as weights. The weights are changed annually.
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Software |
JDemetra+ |
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Seasonal adjustment method |
TRAMO/SEATS |
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Last model revision |
For data of the 3rd quarter of 2018 |
Base period
Base year of the Labour cost index is 2016.
Clasifications
Data on monthly average and real wages and salaries are compiled, calculated and published by using:
- Statistical Classification of Economic Activities in the European Community, Rev. 2 (NACE Rev. 2);
- Classification of Administrative Territories and Territorial Units of the Republic of Latvia (CATTU) (only for data on labour costs and structure);
- Classification of Institutional Sectors (only for data on labour costs and structure).