Background Notes

Introduction

The Earnings, Hours and Employment Costs Survey (EHECS) replaced the four-yearly Labour Cost Survey, and also replaced all other CSO short-term earnings inquiries. The EHECS results are comparable across sectors and include more detail on components of earnings and labour costs than was previously available.

Legislation

The survey information was collected by the Central Statistics Office (CSO) under the S.I. No 140 of 2013 Statistics (Labour Costs Surveys) Order 2013. The information collected is treated as strictly confidential in accordance with the Statistics Act 1993. The survey results meet the requirements for Labour Costs statistics set out in Council Regulation (EC) 530/1999.

Business Register

The CSO’s Business Register provides the register of relevant enterprises for the survey. An enterprise is defined as the smallest legally independent unit.

Business Classification

The business classification used for the EHECS is based on the Statistical Classification of Economic Activities in the European Community (NACE Rev.2). The NACE code of each enterprise included in the survey was determined from the predominant activity of the enterprise, based on information provided in this or other CSO inquiries.

Nace Classification

NACE Rev.2 is the latest classification system for economic activities, updated from NACE Rev 1.1. A major revision of NACE was conducted between 2000 and 2007, in order to ensure that the NACE classification system remained relevant for the economy. The main changes that affected the release was the reclassification of some industrial enterprises from industry to services (principally in the software and publishing sectors) and the inclusion of air conditioning supply, sewerage, water management and remediation activities in industry. See web link to NACE coder :-

http://www.cso.ie/px/u/NACECoder/NACEItems/searchnace.asp

Coverage

The survey results relate to enterprises in the Nace Rev 2 Sections B – E (Industry), F (Construction), G (Wholesale & retail trade: repair of motor vehicles & motorcycles), H (Transportation & storage), I (Accommodation & food services activities), J (Information & communication), K-L (Financial, insurance & real estate activities), M (Professional, scientific & technical activities), N (Administrative & support services activities), O (Public administration & defence), P (Education), Q (Human health & social work activities) and R-S (Arts, entertainment, recreation & other service activities) with 3 or more employees. The data was collected at the enterprise level.

All enterprises with 50 or more employees and a sample of those with 3 to 49 employees are surveyed each quarter. The sample is based on the proportion of companies in each NACE 2 digit economic sectors in the 3 to 49 size classes (3 to 9, 10 to 19 and 20 to 49).

Earnings in the public sector are calculated before the deduction of the pension levy that was introduced in March 2009.

For Q1 and Q2 2011 temporary census field staff are included in all tables due to the large numbers involved.

Data Collection

The survey is conducted by post and questionnaires are issued in the last week of the relevant quarter. Some returns are received electronically. All returns are scrutinised for accuracy. Where appropriate, firms are queried by post or telephone regarding incompleteness, apparent inconsistencies, etc. Information about the survey is on the CSO website and all questionnaires and instructions are available electronically there.

Differences with discontinued sources

The EHECS is not directly comparable with other discontinued short-term earnings surveys such as the Quarterly Industrial Inquiry (QII), the Quarterly Services Inquiry (QSI) and the Quarterly Earnings and Hours worked in Construction (QEC). The main differences are:

The EHECS collects data on the entire reference quarter while the QII, QSI and QEC only collected data for a reference week in the quarter.

Data on earnings and labour costs per hour is generally presented on the basis of hours paid and worked in the EHECS. Data on earnings per hour was presented on the basis of hours paid (including paid leave) in the QII.

The EHECS uses a standardised form for all NACE sectors with a standard occupational classification for all enterprises while the QII, QSI and QEC surveys had their own occupational classifications. However the EHECS category “Production, Craft and other Manual workers” corresponds broadly to the “Industrial” category in the QII; the EHECS category “Clerical, Sales and Service Workers” also corresponds broadly to the QII category “Clerical and other office staff”; the QII category “Managerial and technical staff” is largely equivalent to the EHECS category “Managers, Professional and Associated Professionals”.

The EHECS collects data for enterprises while the QII collected data for local units.

Data on hours is collected for all categories of employees in the EHECS, while such data was limited to the industrial workers in the QII, non-managerial employees in the QEC and not collected at all in the QSI.

The earnings data collected for the EHECS includes irregular earnings, irregular bonuses etc while these items were excluded from the QII, QSI and QEC which only collected data on regular earnings (including regular bonuses) and overtime.

Non-labour costs such as employers PRSI, other social costs, benefit in kind etc., are collected for the EHECS but were not collected for the QII, QSI and QEC surveys.

Data on employees in the QII, QSI and QEC was collected with regard to the reference week. In the EHECS employment data is collected with regard to the first and last day of the quarter.

Definitions

Employees

All full-time or part-time workers paid a specific wage or salary or who had a contract of employment are defined as employees. Persons not working for salary e.g. family members, directors, partners, outside pieceworker’s etc., are not considered employees but other persons engaged. These workers are included separately but not used in the calculation of derived variables. All employment figures are rounded to the nearest hundred.

Part-time Employees

Part-time employees are defined as those who normally worked less than around 30 hours per week. These included persons who worked for some whole days per week as well as those who worked for part of the day each day.

Apprentices

Apprentices are defined as those whose wages/salaries are governed by the fact that they work either under an apprenticeship contract or as part of a training program. They are included in the calculation of earnings and hours data. They were also combined with full-time and part-time employees in determining the size group to which enterprises were classified.

Category of employees by occupation

For some enterprises information was collected separately for three occupational groups. The three groups are:

1. Managers, Administrators, Professionals and Associate Professionals.

2. Clerical, Sales and Service workers.

3. Production, Transport workers, Craft & Tradespersons and other Manual workers.

Wages and Salaries

All wages and salaries payments are gross (i.e. before deduction of income tax and employees’ PRSI contributions and levies such as the public sector pension levy). In the analysis, the total wages and salaries are divided into:

Regular earnings i.e. pay and allowances paid at each pay period, even if the amount may vary.

Overtime, i.e. payments for working in excess of normal hours, usually paid at a premium.

Irregular bonuses and premiums, pay and allowances not paid at each pay period, i.e. annual or quarterly bonuses etc.

Hours

Weekly paid hours include total contracted hours plus overtime hours.

Other Costs

The following are the other categories of labour costs:

Statutory employers’ PRSI including the social security contributions for apprentices.

Other social costs; which encompass pension fund contributions, life assurance premiums, income continuance insurance as well as other employee-related payments paid by the employer.

Benefits in kind; which include private use of company cars, stock options & share purchase schemes, voluntary sickness insurance, staff housing and other free or subsidised benefits (e.g. canteen facilities, childcare provision, health costs).

Other labour costs.

Redundancy payments.

Benefits in Kind

Benefits in Kind (BIK) are considered to be an “Other Labour Cost” in the Earnings and Labour Costs release and is included in the Other Labour Costs data reported in Table 6a of the release. Eurostat consider Benefits in Kind to be a part of Earnings rather than Other Labour Costs; this is reflected in Eurostat’s Labour Costs Index, Labour Costs Survey and Structure of Earnings Survey. Average hourly benefits in kind are detailed in Table 6b of the Earnings and Labour Costs release to ensure users can make the most informed comparisons between data sources.

Subsidies and Refunds

These are amounts received by firms under the various state schemes (IDA employment incentive scheme, grants etc.) as well as refunds from the Department of Social Protection (DSP) for sick and maternity leave. These are deducted from the firms’ labour costs in the analysis.

Job Vacancies

Respondents are asked to provide the number of job vacancies in their firm as at the last working day of the quarter. A job vacancy is defined as a newly created post, an unoccupied post or post about to become vacant in the near future, where the employer is actively looking for (i.e. advertising, contacting employment agencies, etc.) and willing to recruit a suitable candidate immediately or very soon. The posts must be open to external candidates, although it may be filled by an internal candidate. Due to one off recruitments by individual firms and a low number of firms reporting vacancies, the job vacancies series can be volatile and should be interpreted with caution. Job vacancy information is collected by the Central Statistics Office under EU regulation (EC) No. 453/2008. For more information on job vacancies please see the link below.

http://ec.europa.eu/eurostat/web/labour-market/job-vacancies

Job Vacancy Rate

The job vacancy rate (JVR) measures the proportion of total posts that are vacant, according to the definition of job vacancy above, expressed as a percentage as follows

Job Vacancy Rate = ( Number of job vacancies / Number òf occupied jobs + Number of job vacancies ) * 100

National Minimum Wage (NMW)

The National Minimum Wage Act 2000 became law on the 1st April 2000. Enterprises are asked to indicate the number of employees in receipt of the NMW at the end of each quarter. A detailed guide to the Act is available from the Department of Jobs, Enterprise and Innovation at www.djei.ie. Employees earning less than the minimum wage due to age or training status are also included. These rates do not apply to close relatives of the employer or apprentices other than apprentice hairdressers.

Derived Variables

Employment

The sum of full-time employees and part-time employees on the last day of the quarter plus the average number of apprentices engaged during the quarter.

Average Weekly Earnings

Total earnings for the quarter divided by the average number of persons employed during the quarter divided by 13 (number of weeks in a quarter).

Average Hourly Earnings

The sum of regular earnings, irregular earnings, and overtime earnings for the quarter divided by total paid hours for the quarter.

Average Hourly Irregular Earnings

Total irregular earnings in the quarter divided by total paid hours for the quarter.

Average Weekly Paid Hours

Total paid hours for the quarter divided by the average number of persons employed during the quarter divided by 13 (number of weeks in a quarter). Unpaid hours worked (including unpaid overtime) and unpaid leave are excluded.

Average Houly Other Labour Costs

The sum of other labour costs divided by total paid hours for the quarter. Other labour costs include redundancy payments, employers’ contributions to social security, other social costs, benefit in kind and other labour costs. Subsidies and refunds received were deducted.

Average Hourly Total Labour Costs

Hourly labour costs are total labour costs divided by the total number of hours paid during the quarter.

Annual Data

Annualised results are available as a separate release, details of which are available on the CSO website.

Methodology for production results

All enterprises with 50 or more employees are surveyed as well as a sample of enterprises which have between 3 and 49 employees inclusive. The classifications by size of enterprise are based on total persons engaged on the first day of the quarter.

Weighting

For enterprises with 3 to 49 employees inclusive, a weighting factor (the reciprocal of the sampling fraction) is used to weight the estimates to the total population for both employees and enterprises. The CSO Business Register forms the basis of the sampling frame used for weighting the sample data to the population. Decay factors are calculated for each size class and sector to adjust the non-sampled element of the register for the respondent non-relevant enterprises.

Imputation

Imputation is carried out for non-respondents in the greater than 50 employees’ categories. Where an enterprise responded in the previous quarter ratio-imputation is used to estimate figures for the current quarter while for enterprises that did not respond in the previous quarter a stratum average imputation method is used to estimate the missing variables. These estimates are based on respondent enterprises of a similar size and activity.

Final Estimates

After imputation, all enterprises with 50 or more employees are accounted for and included in the final dataset. For those cells where a sample survey of enterprises is used (enterprises employing between 3 and 49 employees), the results are expanded using the grossing factors to cover the entire population for the relevant industries in the quarter. Macro edits are carried out at this stage and any outliers are investigated and corrected. Coherence of the data is ensured by scrutinising quarter on quarter changes.

Interpretation of results

The series presented in this release and all estimates deriving from the EHECS survey are primarily of use as an indicator of trends in average earnings and paid hours of employees across different classifications. However, in interpreting the trends and in undertaking direct comparison of the average level of earnings of different groups of employees or sectors some caution in interpretation is warranted.

In the case of trends, changes in the composition of employees in a given sector or group has an effect on the average levels of earnings and paid hours over time. For example if the proportion of part time employees increases within a sector then it would be expected that the average weekly earnings and paid hours would fall in that sector even if hourly pay rates were unchanged.

In the case of direct comparison of earnings levels estimates are based on raw earnings levels. To get a true picture of differences in earnings levels of different employees comparisons should take account of differences in the characteristics of employees such as length of service, educational attainment level, nature of work etc., none of which are available via EHECS. The additional information available from the annual National Employment Survey (NES) allows for a more detailed analysis of differences in earnings levels and should be referred to by users seeking more detailed information on earnings determinants than is available from EHECS.

Seasonal Adjustment

To correct for typical seasonal patterns, the series presented in Table 4 have been seasonally adjusted. Since Quarter 1 2015 seasonal adjustment of earnings and labour costs data is completed by applying the X-13-ARIMA model, developed by the U.S. Census Bureau.

Seasonal adjustment is conducted using the direct approach, where each individual series (average weekly earnings, average weekly hours worked, average hourly earnings, average hourly irregular earnings, average hourly other labour costs and average hourly total labour costs) is independently adjusted for each sector.

As a result of the direct seasonal adjustment approach employed, it should be noted that the sum of any component series may not be equal to seasonally adjusted series to which these components belong. For example, the seasonally adjusted average hourly earnings and seasonally adjusted other labour costs will not necessarily add up to the seasonally adjusted average total labour costs.

The X-13 ARIMA method has the X-11 moving averages process at its core, but builds on this by providing options for pre-treating the series using a regARIMA approach for prior adjustment and series extension. In essence this methodology will estimate seasonal factors while taking account of calendar effects (e.g timing of Easter), outliers, temporary changes and level shifts.

All earnings series are updated quarterly with the entire seasonally adjusted series from Q1 2008 as part of the concurrent approach. A comprehensive review of the seasonal adjustment specification is carried annually where revisions to the entire series are made. Revisions to the series are typically very minor in scale.

Occupational category estimates

From Q2 2010 a sub-sample of EHECS respondents has been used to generate earnings and hours estimates by three broad occupational categories.

Results are derived by utilising a matched sample of enterprises between consecutive quarters to generate quarterly updates to the previous quarters earnings. An estimated series is included in table A1. Given the number of enterprises involved it is only possible to produce reliable estimates when the sectors are grouped. Earnings for the broad occupational groups are therefore presented by the following amalgamations:

B-E Industry

B-N/R-S All NACE sectors from Industry to Administrative and support service activities inclusive, plus Arts, entertainment, recreation and other service activities

O-Q All NACE sectors from Public administration and defence to Human health and social work activities, inclusive

B-S All NACE sectors

Review of preliminary versus final data

A detailed review of preliminary estimates and final data was undertaken to ascertain the extent of change between both sets of results. The review focused on response rates, scale of revision at NACE sectoral level and significant changes in trends. The findings of the review indicate that the preliminary figures can be accepted as a suitable indicator for quarterly trends. Analysis of the results for individual NACE sectors highlighted that the change from preliminary to final data was broadly in the range of plus or minus 5%. However, as response rates can impact on the quality of data at the sectoral level, it is advisable to be aware of this when interpreting preliminary results. In the quarterly release table A3 contains the differences between preliminary and final data for the most recent reported quarter, while table A2 highlights response rates.

Labour Cost Index (LCI)

Results of EHECS are compiled and transmitted to Eurostat for inclusion in the Labour Cost Index. The quarterly Labour Cost Index (LCI) shows the short-term development of the total hourly costs incurred by the employers of maintaining their employees. In other words, the LCI measures the costs arising from the production factor 'labour'. The LCI covers the economic activities of industry and services (including public administration). The reference year of the index is 2008. The labour cost index data is collected by EU Member States and is transmitted to Eurostat. In addition to the index numbers, Eurostat provides annual and quarterly growth rates of labour cost. Further labour cost index information and data is available through the Eurostat website:

http://ec.europa.eu/eurostat/web/labour-market/labour-costs/database

Public Sector Employment

There are two CSO surveys which can potentially provide information on public sector employment. The Quarterly National Household Survey (QNHS) can provide estimates based on all respondents who are in employment being asked whether they work in the public sector or not. The EHECS, which is the source of the quarterly Earnings and Labour Costs data, provides estimates based on responses from the employer. Specifically in the case of EHECS there is a response level of close to 80% for public sector employers over time.

Based on the higher response levels and lower levels of subjectivity associated with EHECS the CSO believes it offers a more reliable source for public sector number estimates over time and the CSO publishes data from EHECS as the primary series on public sector numbers. Table 8e contains the estimates of public sector numbers broken down by the different high level areas within the public sector.

Public Sector Organisations

Public sector organisations consists of the following:

Civil Service

Defence

Garda Síochána

Education

Regional bodies

Health

Semi State, both commercial and non-commercial

Financial Crisis Related Bodies

Nationalised banks are in temporary public ownership resulting from the financial crisis, their employment and earnings data are excluded from Public Sector earnings and employment figures, this is in order to maintain the stability of the series. Their data is reflected in the appropriate NACE sector.