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 Q 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 = Chain to index from Q1 (149.5): –149.5 * = 156.0

LCI calculation in Denmark In Denmark the base period is Q Eurostat request base year The base period is changed to –The index is divided by the average index of –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 Q 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 weight (based on 2010) 135, –NACE D: index weight 5.096,91 –Unchained Index

LCI calculation in Eurostat Calculating the annual link –Average of the unchained index the previous full year –Annual link same quarter previous year (Q2 2010) –Annual link *136.29/100 =

LCI calculation in Eurostat Calculating the aggregated changes series: –The unchained index multiplied with the annual link –107.08*139.60/100 =

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/ =

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