The COVID-19 pandemic in Ireland has had a significant impact on the Earnings and Labour Costs (ELC) release. Preliminary estimates for the fourth Quarter (Q4) of 2020 and Final estimates for Quarter 3 (Q3) 2020 are being published tomorrow, 02 March 2021. The aim of this Technical Note is to outline to ELC users the impact of COVID-19 on the ELC release being published tomorrow.
The ELC release is published based on data collected by the Earnings, Hours and Employment Costs Survey (EHECS). The EHECS collects data from enterprises with three or more employees in the NACE Rev 2 Industrial Sectors B–S inclusive.
The following are the groupings of NACE industrial sectors that are used when presenting ELC data:
Sector Group Sector Name
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
R-S Arts, entertainment, recreation & other service activities
All enterprises with 50 or more employees and a sample of those with 3 to 49 employees are surveyed as part of the EHECS each quarter.
The information collected from an enterprise as part of the survey includes:
Imputation is carried out for non-responding enterprises with 50 or more employees. Where an enterprise responded in at least one of the previous four quarters ratio-imputation is used to estimate figures for that enterprise for the current quarter. For enterprises that did not respond in any of the previous four quarters 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.
For enterprises with 3 to 49 employees inclusive, a weighting factor (the reciprocal of the sampling fraction) is used to weight the estimates up to the total population for both employees and enterprises. Enterprises with 50 or more employees are assigned a weight of 1 as the EHECS sample consists of a census of these enterprises.
All enterprises' data are contained in the quarterly dataset which is tabulated to produce the aggregates which are published in the ELC quarterly release. Results for the most recent quarter are published initially as “Preliminary” estimates and are revised and relabeled as “Final” when the next quarterly release is published three months later.
During Q4 2020, two major schemes were being operated by the Government to support those whose income from employment had been affected due to COVID-19.
The COVID-19 Pandemic Unemployment Payment (PUP) scheme, which is administered by the Department of Social Protection (DSP), operated to provide a social welfare payment to those who lost their employment because of the COVID-19 crisis.
The Employment Wage Subsidy Scheme (EWSS), which is administered by the Revenue Commissioners, was also operational during Q4 2020. The EWSS enables employees, whose employers are affected by the pandemic, to receive significant supports directly from their employer through the payroll system. This scheme replaced the Temporary Wage Subsidy Scheme on 01 September 2021. While the EWSS was operational from the start of September, the first refunds to enterprises were paid in October 2020 which resulted in enterprises receiving four months of subsidies during the three months of Q4 2020. This could impact the labour costs estimates for Q4 2020 as September 2020 payments to employees were made in Q3 2020 and the related refunds received by the enterprise in Q4 2020.
The Central Statistics Office (CSO) have engaged extensively with both the Revenue Commissioners and the DSP to understand the mechanics behind the various income supports. The CSO have also engaged with Eurostat, the European statistical agency, to determine the statistical treatment of these income supports for the purposes of the collection of data for EHECS and the reporting of the related outputs.
Any payments related to the PUP scheme are not collected by EHECS or recorded in the ELC release. Such payments are paid by DSP to a person who has lost income from employment and where no attachment in the form of an employment contract is maintained between the employer and employee. Eurostat has confirmed that such payments should not be recorded in labour costs statistics.
EWSS payments are recorded as follows in the ELC release:
Data for Earnings, Hours and Employment Costs Survey (EHECS) is collected quarterly at enterprise level. Questionnaires for Q4 2020 were issued to enterprises at the end of December 2020.
Due to the unprecedented emergency, Government measures were put in place in response to COVID-19, which resulted in the sudden closures of non-essential businesses at the end of Q1 2020. These restrictions have been lifted and re-imposed at various stages throughout 2020 and 2021 and have affected the ability of enterprises to respond during the Q4 2020 EHECS data collection period.
The overall response rate for the Preliminary estimates for ELC Q4 2020 is 46%. This contrasts with the comparable response rate for Preliminary estimates of 46% for ELC for Q3 2020 and of 53% for ELC for Q4 2019. Because of the low response rates, 40% of enterprises required imputation for Q4 2020.
Caution is therefore advised in relation to drawing inferences from the Preliminary estimates for Q4 2020.
We understand the difficulties enterprises faced in both accessing and sending us the required data and acknowledge the efforts made by our survey respondents during this time. The response rate for Final estimates for Q3 2020 increased to 57%, which compares to a Final response rate of 63% for the period Q3 2019. The CSO is hopeful that businesses who have been unable to submit their Q4 2020 return yet will be able to provide this data in the coming weeks for inclusion in the Q4 2020 Final ELC release, scheduled for publication in May 2020.
Data in relation to changes in the composition of employment with respect to the individual characteristics of employees (e.g. age, education or gender), employment types (e.g. permanent or temporary contracts) and sectoral shifts are not collected by EHECS. When considering the change in earnings, it should be noted that there is a compositional effect due to the significant changes in employment in certain sectors. The composition of the labour market in Q4 2020 is very different to the composition of the labour market in previous quarters including Q4 2019 to which the annual changes are measured against. There were significantly fewer employments in certain sectors in Q4 2020 and a significant number of employments being supported by EWSS in Q4 2020.
The Earnings Analysis team within the CSO have engaged with Eurostat and colleagues from the Methodology division within the CSO to determine what changes were required to the usual methodology used for the ELC release due to the impacts of COVID-19.
Definitions of the variables included in the ELC release are available in the background notes of the ELC release which are also available separately here.
Registered employment refers to the employment of respondent enterprises at the end of the reference quarter.
Average employment refers to the average of the quarters’ opening employment and closing employment.
Average weekly earnings are calculated by dividing the total earnings for the quarter by the average number of persons employed during the quarter and then dividing that by 13 (the number of weeks in a quarter).
Average weekly paid hours are calculated by dividing the total paid hours for the quarter by the average number of persons employed during the quarter divided by 13 (number of weeks in a quarter). Total paid hours are the sum of regular paid hours and paid overtime hours, where regular paid hours are the normal working hours of an employee and not the hours that employees actually worked.
Average hourly earnings are calculated by dividing the total earnings for the quarter by the total paid hours for the quarter.
EWSS scheme
The ELC release presents aggregate results which are based on enterprises’ survey returns. Many enterprises and payroll providers have engaged with the CSO to advise that they have issues recording EWSS payments as refunds for their EHECS return. As a result, EHECS data was linked with an administrative data source from the Revenue Commissioners that contains information about the EWSS scheme to allow for the correction of reporting errors. The linkage and analysis were undertaken by the CSO for statistical purposes in line with the Statistics Act, 1993 and the CSO Data Matching Protocol.
Employment
Registered employment refers to the employment of respondent enterprises at the end of the reference quarter. For non-respondent enterprises and enterprises not in the sample, registered employment refers to the employment from the Business Register. The Business Register bases enterprise employment on data from the latest revenue employee tax data files. Thus, sectoral registered employment is adjusted to reflect the trends of the Labour Force Survey (LFS) sectoral employment. The LFS defines employment in accordance with International Labour Organisation (ILO) definitions and the labour market status assigned to an individual from the LFS in this way may not agree with the labour market status that would be assigned in a subjective manner; please see the Information Note published alongside the LFS for Q2 2020 for more information.
Average employment is the variable used as the denominator in calculating average weekly earnings per person and average paid hours per person.
Government measures put in place in response to COVID-19 related to some or all weeks of Q4 2020 for a number of sectors. For example, level 5 restrictions for the country were imposed on October 21st followed by a return to work of some enterprises in the food and beverage services from December 4th to December 24th, at which point restrictions were re-imposed.
Across and within the sectors, the impact of the COVID-19 crisis was experienced very differently. Within Q4 2020 there was increased volatility in the labour market with an increased churn within certain sectors for the duration of the quarter. The EHECS survey, capturing the quarters’ opening and closing employment, is not designed to account for such churn in employment in the intervening weeks of the quarter.
As a result, in certain sectors EHECS overestimated the average employment for Q4 2020, resulting in deflating weekly earnings and hours and inflating hourly earnings. An average employment factor was created for NACE sectors 55 (Accommodation), 56 (Food and beverage service activities), 95 (Repair of computers and personal and household goods) and 96 (Other personal service activities). This factor was calculated and applied to average employment to account for the increase in the average number of employees availing of PUP during Q4 2020 in these economic sectors compared to Q3 2020.
Because of the difficulties encountered for the EHECS survey and the impact of those on the ELC release for Q4 2020, the CSO have undertaken an analysis of administrative data for Q4 2020 from the Revenue Commissioners. The CSO will be presenting some high-level results of that analysis in the sixth series of the Labour Market Insight Bulletin, which will be published alongside the ELC release tomorrow. This bulletin will include some sectoral analysis to quantify the percentage change in the volume of all employment and earnings by sector between Q1 2020, Q2 2020, Q3 2020 and Q4 2020 as well as an analysis of the earnings for employments that were active in more than one quarter.
The Earnings and Labour Costs Q4 2020 (Final) and Q1 2021 (Preliminary Estimates) release is currently scheduled to be published on 26 May 2020 and, as usual, any amendments to the schedule will be signaled on the CSO release calendar.
Previous reviews of Preliminary and Final estimates indicated that Preliminary figures can be accepted as a suitable indicator for quarterly trends. Analysis of the results for individual NACE industrial sectors highlighted that the change from Preliminary to Final estimates was broadly in the range of plus or minus 5%. However, response rates can significantly impact on the quality of data at the sectoral level.
In relation to Preliminary estimates for Q3 2020, while response rates were lower than in Q3 2019, the change from Preliminary to Final estimates remained in the range of plus or minus 5%.
Given the increased volatility in the labour market in Q4 2020, it is anticipated that, because of the increased employment churn and lower response rates, particularly where responding and non-responding enterprises have been affected differently by the COVID-19 crisis, there may be a more significant change between the results being published as Preliminary tomorrow for Q4 2020 and those published as Final later this year.
We understand the difficulties that enterprises have faced and are continuing to face. The CSO wish to thank all survey respondents who supplied their data and engaged with the CSO in relation to the difficulties they faced both sending data and recording the information required. We appreciate the continuing efforts of survey respondents to get information to us and it is by collecting survey information that we will be able to report on the effects of COVID-19 on our economy.
If users have questions or need clarification in relation to anything outlined in this Technical Note, the Earnings and Labour Costs release or the Labour Market Insight Series 6, please contact us at earnings@cso.ie
For information, this technical note was issued on 01 March 2021.