Producing Hours Worked for the SNA in order to Measure Productivity: the Canadian Experience By Jean-Pierre Maynard, Andrée Girard and Marc Tanguay Canadian Productivity Accounts April 2006

Outline Mandate Methodology Survey instruments Estimation of jobs Integration to the Accounts Estimation of hours worked per job Quality of the data Concluding remarks

Mandate Produce an integrated database of labour statistics consistent with the Canadian System of National Accounts. Produce internationally comparable measures of labour input in terms of trends and levels. Official labour input use in Canadian productivity measures.

What is produced? Annual data : Estimates of jobs, hours worked and FTEs for : – 286 industries ; – 13 regions ( 10 provinces and 3 territories) ; – 3 SNA sectors (business, government and non-profit organisations) ; – 3 categories of workers (employee, self-employed employer jobs and own account self-employed jobs); Labour composition indices based on education and years of experience, nationally only (119 industries) Quarterly data : Jobs and hours worked estimates at national level for 15 industry groups and the business sector.

Methodology Two independent but concurrent exercises ∑∑∑(J imn x H imn ) = Vh imn J = Number of jobs H = Average hours worked per job Vh = Volume of hours worked Where i= industry, m=region and n=class of worker

Survey instruments Integration of two types of instrument: – Household surveys The Labour Force Survey The Census of Population The Survey of Labour Income Dynamics – Establishment surveys The Survey of Employment, Payroll and Hours worked, Public Institution Data Census of Mining, Annual Survey of Manufacturing, Statistics on Income Tax

Strengths and weaknesses of labour data sources to measure annual hours worked Household surveys Almost full coverage. Frame on current population estimates. Right concept of hours worked. Convertible from ILO to SNA. Drill down approach to collect hours worked. Proxy reporting. Industry classification consistency with other SNA sources. Only 12 reference weeks. Establishment surveys Industry classification consistent with SNA other sources. Collect jobs and payrolls technically from a census Covers only the employee jobs. Do not cover agriculture, fishing, religious organizations and private households. Paid or standard hours only. Many methodological changes over its history.

Estimation of jobs In Canada, all job estimates are adjusted to a benchmark for the economy as a whole. This benchmark starts with the Labour Force Survey estimate at the aggregate level. The industry breakdown for the employee jobs rely mainly on the establishment survey. In the case of self-employed categories, the industry detail is obtained by combining information from quinquennial census and from the Labour Force Survey.

Principles followed To produce an integrated database of labour statistics consistent with the CSNA: Compliance with the SNA’s 1993 concept. (Chapter XV11) Compliance with the primary input data from SNA’s Industry Accounts. Respect for the trends and levels produced by the source data.

Integration to the Industry Accounts Based mainly on the comparison of payroll data between the source data and the I/O tables. Highly automated. Labour input come from SEPH and LFS while IO payrolls are built from industry surveys and T4$ data. Own account construction adjustments Conceptual differences (retroactive payments, bonus, options, tips, etc.)

Integration of employee jobs

Interprovincial flows of workers In the SNA, the allocation by province is based on the province of employment. In the Labour Force Survey, the number of jobs is allocated by province according to the province of residence. In the SNA, we used administrative data (T4’s slips) and the Census to estimate the number of persons working in another province than their province of residence.

Jobs and hours by SNA large sectors SNA labour statistics are decomposed into business, government and non-profit institutions servicing households. The government sector is benchmarked to the administrative data on employment produced by the Public Institutions Division of the SNA. Most of the non-profit institutions are found in industries composed of establishments from two or three SNA sectors. When it is the case we split the number of jobs on the basis of the labour income data by sector produced by IO. The business sector is obtained residually. This is the sector we used for productivity analysis.

Estimation of hours worked per job LFS is conducted each month during a reference week that usually includes the 15th day. This reference week is not always representative of previous and following weeks because of special events. (public holidays such as Good Friday, Thanksgiving, etc.) Hours lost information collected from the LFS are used to estimate the hours lost of special events happening between the reference weeks. Daily weights are used to estimate hours lost during start week and end week of the month/year. Estimated separately for private and public industries.

Estimation of hours worked per job

Impact on the level of hours per job LFS X 52 (per person) LFS X 52 (per job) SNA AVH adjusted for holidays Change of denominator Corrections when moving from 12 to 52 weeks ABCB - AC - B % % % % % % % Average %

Impact on the trend of hours worked per job LFS X 52 (per person) LFS X 52 (per job) SNA AVH adjusted for holidays Change of denominator Corrections when moving from 12 to 52 weeks Growth A Growth BGrowth CB - AC - B 1998/1997-0,9-0,70,10,20,8 1999/19980,80,70,3-0,1-0,4 2000/19990,70,9-0,40,2-1,3 2001/2000-2,0-1,7-0,20,31,5 2002/2001-0,9 -1,00,0-0,2 2003/2002-1,7-1,5-0,80,30,7 Average0,10,2

Quality of the data Statistics on hours lost by reason of absence provide some evidence that annual hours worked per job estimated from the LFS are reasonable. (Table 3) LFS-TUS comparisons for 1998 shows that the LFS does not overestimate the average number of hours worked in Canada. (Table 4) The industry coding from household survey and establishment survey are reasonably comparable, both in terms of levels and trends. (Table 5)

Concluding remarks –In Canada, we rely heavily on the Labour Force Survey at the aggregate level to estimate the volume of work consistent with the SNA Main ingredient to produce a benchmark for the number of jobs (avoid the risk of double counting). Collect the right concept of hours worked. Collect sufficient information to resolve the reference week problem. Evidence that they can be used to produce unbiased estimates of hours worked per job. –Its industry coding correlates sufficiently well with the one produce by establishment surveys used heavily in the SNA.