Labour accounts THE CONTRACTOR IS ACTING UNDER A FRAMEWORK CONTRACT CONCLUDED WITH THE COMMISSION

ESA 2010 Population & labour inputs Why use population and labour measures? 1. To compare relative performance of countries or industries in terms of population and employees 2. Countries: GDP per head, GNI per head 3. Industries: value added, compensation of employment per worker, productivity measures

Consistency Definitions of population and employment must be consistent with the concepts used in national accounts E.g. production must be within the national accounts production boundary

How do we measure population and labour? Over a period, the average for the period is used We don’t use total population days available, or labour days available We must allow for seasonal variations if averages are taken from periods less than a year

Population The population of a country on a given date consists of all people who are permanently settled in the country, even if temporarily absent. This is consistent with the national accounts definition of units “resident” in a country: A unit is resident when it has a centre of predominant economic interest in the country for one year or more

Labour The economically active population comprises all persons who are in work, or available to work, on production within the national accounts production boundary The standards for measuring labour force statistics are kept by the International Labour Organisation (ILO)

Labour standards Resolution on collecting and compiling labour force data defines the labour force as individuals engaged in an activity included within the national accounts production boundary Employment measures the number of individuals engaged in productive activities falling within the national accounts production boundary

Labour force definitions Employees Employees are defined as persons who work for a resident institutional unit and receive remuneration for their labour The remuneration is recorded in the ESA as compensation of employees

Categories of employees Persons engaged under a contract of employment Civil servants under civil law, the military Outworkers if there is an explicit agreement on payment per unit of input – hours worked or piece work. Persons with a formal employment contract who are temporarily not available

Self-employment Self-employed persons are persons who are owners of unincorporated enterprises This includes Unpaid family workers Outworkers who are paid according to the outputs they provide – the contract is for the provision of goods and services Unpaid volunteers are self-employed if their work results in goods (not services)

Exception In the national accounts production boundary, owner-occupiers provide housing services to themselves As there is no labour input, owner-occupiers are not considered as self-employed persons

Employment and residence The activity of resident producer units is consistent with employment measures if employment includes residents and non-residents working for resident units So employment includes Non-resident seasonal workers Border workers (cross border daily to work)

Employment Employment also includes Employment excludes Armed forces serving abroad Diplomatic staff abroad Crew of fishing boats, cruise liners, oil platforms operated by resident units Employment excludes Residents who are border workers Foreign diplomatic staff Crew of fishing boats etc. operated by non-resident units

Employment For all cases see ESA 2010 11.17-11.18

Unemployment In line with the ILO resolutions, and the European Union Commission Regulation 1897/2000 Unemployment in a period includes those above a certain age who were A. without work B. currently available for work C. seeking work

The non-observed economy Employment, and compensation of employees, are in principle included within the national accounts production boundary for production that is not directly observed. So employment includes Illegal activity Underground activity (not illegal, but avoiding the scrutiny of the law) “informal” activity where no records are kept

Jobs A job is an explicit or implicit contract between a person and a resident unit

Hours worked Hours worked in an accounting period are the total hours worked in that period by an employee or self-employed person, which contribute to production within the national accounts production boundary This a more accurate measure for labour input than head-count, which includes part-time workers and workers temporarily not at work

Hours worked Hours worked are not those governed by administrative or legal agreements – they measure the hours actually worked. This includes the following

Hours worked include Work contributing to production Paid time on training Overtime – paid or unpaid Support tasks Stand-by during short disruptions Tea breaks On-call arrangements Etc. !

Hours worked exclude Hours paid but not worked such as annual leave public holidays paid sick leave parental leave Strikes “short leave” for medical visits, bad weather shutdowns

Measurement constraints ESA 2010 11.32 “Many surveys of enterprises record hours paid not hours worked. In those cases, hours worked have to be estimated for each job group, using whatever information is available about paid leave etc.” Comment – for “many” read “virtually all”

Full time equivalence Full-time equivalent employment, the number of full-time equivalent jobs, is defined as total hours worked divided by the average number of hours worked in full-time jobs within the economic territory Where hours worked is not available, full-time equivalence “may be the best proxy” – it can be estimated more easily and is more widely available

Labour accounts - sources Population Census Establishment surveys House hold Labour Force Survey Registers of population Taxes and Social Security records

Integration with national accounts Harmonisation of concepts and classifications Full coverage Quality assurance Balancing

Employment and employees Two main sources – establishment surveys and household labour force survey The confrontation of results generates “corrected” figures, based on national accounts concepts and largely using establishment data corrected by LFS as appropriate

Confrontation measurement problems Direct contradiction Different concepts Incomplete coverage Lack of links between different data sources The identities on the next slide drive the reconciliation

No. of employees = No. of main jobs No. main jobs + no. of second jobs = total jobs No. of jobs x annual earnings per job = sum of earnings Contracted hours + overtime hours = paid hours Annual paid hours per job x hourly regular earnings = annual regular earnings per job No. of jobs x annual bonuses = sum of bonuses Regular earnings + bonuses = total earnings

Example Labour account example.xlsx

Labour accounts Thank you for attention