Background Notes

Introduction

The Earnings, Hours and Employment Costs Survey (EHECS) is a survey that collects earnings, labour cost, hours and employment data from enterprises each quarter. The EHECS survey provides the basis for the production of earnings and labour costs statistics, which measures the cost pressure arising from the production factor "labour" and provide a detailed picture of the level, structure and short-term development of labour costs in the different sectors of economic activity in Ireland.

The EHECS survey replaced the four-yearly Labour Costs 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 is collected by the Central Statistics Office (CSO) under the S.I. No 115 of 2018 Statistics (Labour Costs Survey) Order 2018. 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 were 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.

Nacecoder

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.

NACE Rev.2 Sections A (Agriculture, forestry and fishing), T (Activities of households as employers) and U (Activities of extraterritorial organisations and bodies) are not covered in the survey as most employment in these sectors is not enterprise based.

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.

Quarters' 1 and 2 of 2011 and 2016 include temporary Census field staff in all outputs. Due to the large numbers involved a table is published which illustrates the effects of the field staff on earnings, hours and employment.

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 telephone, email or post 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

Registered 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 base enterprise employment on data from the latest revenue P35 files. The Business Register has a lag of between 12 and 18 months between the current quarter and the latest revenue P35 file. For this reason the Business Register is not a suitable measure of short term trends in employment. Thus, sectoral registered employment is adjusted to reflect the trends of the Labour Force Survey (LFS) sectoral employment. The LFS is designed to measure short term changes in employment. 

Average Employment

For respondent enterprises average employment refers to the average of the quarters' opening employment and closing employment. This variable is used as the denominator in calculating average earnings per person and average paid hours per person.

All Employees

All persons who have a direct employment contract with an enterprise as employees, who receive wages or salaries. 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.

Full-time Employees

Employees whose regular working hours are the same as the collectively agreed or customary hours worked in the enterprise, irrespective of the duration of the employment contract. Full-time employment often comes with benefits that are not typically offered to part-time, temporary, or flexible workers, such as annual leave, sick leave, and health insurance.

Part-time Employees

Employees whose regular working hours are less than the collectively agreed or customary hours worked in the enterprise. The definition of part-time varies from enterprise to enterprise but in general part-time employees work 80% or less of the regular hours of the enterprise. 

Apprentices/Trainees

All persons, both full-time or part-time, whose wages or salaries are governed by the fact that they work either under an apprenticeship contract or as part of a training program. 

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: payments made regularly at each pay period during the year, excluding all irregular and overtime earnings.

- Overtime earnings: payment for hours worked in excess of normal hours.

- Total earnings excluding irregular earnings: regular earnings + overtime earnings.

- Irregular earnings: bonuses which are not paid regularly at each pay period. For example: end of quarter or year productivity bonus.

- Apprentices/Trainees earnings: total of apprentices & trainees' regular wages and salaries, overtime and irregular bonuses and allowances.

- Total earnings: total of regular earnings, overtime earnings and irregular earnings.

Other Labour Costs

Other labour costs are costs to the employer, in addition to wages and salaries, of employing labour. They include the below categories:

- Statutory social contributions: statutory employers’ PRSI including the social security contributions for apprentices/trainees.

- Non-statutory social contributions: payments made by enterprises on behalf of their employees which include pension fund contributions, life assurance premiums, income continuance insurance as well as other employee related payments.

- Other expenses: other employee related payments e.g. study grants, etc.

- Benefits in kind (BIK); net cost of all goods and services made available to employees by the employer. For example, payments for 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). BIK is included as earnings by Eurostat for the Labour Costs Survey and the Labour Costs Index.

- Redundancy payments.

- Subsidies and refunds: amounts received by enterprises intended to refund part or all of the cost of wages and salaries and training costs. These may include training subsidies from SOLAS or Job Bridge as well as refunds from the Department of Employment Affairs and Social Protection (DEASP) for sick and maternity leave. These are deducted from the firms’ labour costs in the analysis.

Paid Hours

- Regular paid hours: These are normal working hours of employees, usually specified in the contract of employment and should include paid leave e.g. paid sick leave and annual leave.

- Overtime paid hours: Hours worked in excess of contracted hours.  

- Total paid hours: Sum of regular paid hours and overtime paid hours.

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 of 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 Hourly 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.  

Earnings and Labour Costs Annual Data 2018

Methodology for production of quarterly results

Production of EHECS Data

All enterprises with 50 or more employees are surveyed quarterly as well as a sample of enterprises which have between 3 and 49 employees inclusive. 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's 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 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. For enterprises that did not respond in 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.

After imputation, all enterprises with 50 or more employees are accounted for and included in the final dataset. All enterprises employing between 3 and 49 employees are allocated grossing factors to represent the entire population for their relevant industry sector and size class in the quarter. All enterprises' data are contained in the final quarterly dataset which is tabulated to produce the aggregates which are published in the Earnings and Labour Costs quarterly release.

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 across different classifications. However, in interpreting the trends and in undertaking direct comparison of the average level of earnings across sectors, some caution in interpretation is warranted. For example, the results presented here 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 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.

It should be noted that all earnings are gross amounts before deductions for PRSI, tax and other levies. This is particularly relevant to the public sector since March 2009 when the pension levy was introduced.

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 the hourly pay rates were unchanged. Similarly if the contracted weekly paid hours for a sector increased, this would have no effect on average weekly earnings but would reduce the average hourly earnings of the sector.

Estimated averages do not reflect differences in characteristics of the job or the employees, and since EHECS collects aggregate data from each enterprise it is not possible to correct for such differences using EHECS data.

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 paid hours, 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.

Seasonally adjusting the Earnings and Labour Costs series during the Covid-19 crisis period will be challenging until the scale and shape of its impact on the time series is better understood. This initial seasonally adjusted result might be revised as future observations become available. Users should be aware that there is increased uncertainty around the seasonally adjusted figures during this period.

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 Labour Force Survey (LFS) 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.

Earnings and Labour Costs Revisions implemented in Q1 2018
Earnings and Labour Costs data have been revised from Q1 2008 to Q4 2017. These revisions are reflected in both the Earnings and Labour Costs release for Q1 2018 and related PXStat tables. These revisions arise as a result of the introduction of the new Labour Force Survey, new population estimates as a result of the 2016 Census of Population and other minor updates to EHECS aggregation processes. The revisions are minor in nature, mainly affect aggregated NACE sectors B-S, B-E, D-E, K-L and R-S and do not change previously published trends in Earnings and Labour Costs data.

Earnings and Labour Costs Revisions implemented in Q2 2018

Earnings and Labour Costs data have been revised from Q3 2009 to Q1 2018. These revisions are reflected in both the Earnings and Labour Costs release for Q2 2018 and related PXStat tables. These revisions arise as a result of changes in the composition of the NUTS regions in the Labour Force Survey. The revisions are minor in nature, affecting aggregated NACE sectors B-S, B-E, D-E, K-L and R-S and do not change previously published trends in Earnings and Labour Costs data.

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