Labour input indices overview

From Statistics Explained

Data from June 2014. Most recent data: Further Eurostat information, main tables and database.

This article presents the labour input indicators, which are business cycle indicators measuring for each quarter how the labour input used by industry, construction, trade and (other) services changes and provide important information for the analysis and forecast of economic developments in the European Union (EU).

Short-term business statistics (STS) provide three different indicators for the input of labour used by European businesses:

  • the number of persons employed (sometimes simply referred to as "employment"),
  • hours worked ("volume of work done"),
  • gross wages and salaries.
Figure 1: Number of persons employed in industry, construction, trade and other services, EU-28, seasonally adjusted, quarterly data, 2000-2014 (2010=100)
Source: Eurostat (sts_inlb_q), (sts_colb_q), (sts_trlb_q) and (sts_selb_q)

As of 2013 these three indicators are available for all economic areas covered by European short-term statistics, i.e. for industry, for construction, trade (wholesale and retail trade) and for services (encompassing market business services excluding finance, i.e. basically NACE Rev. 2, H-N).

Main statistical findings

Figure 2: Labour input indicators, industry, EU-28, seasonally adjusted, quarterly data, 2000-2014 (2010=100)
Source: Eurostat (sts_inlb_q)
Figure 3: Labour input indicators, construction, EU-28, seasonally adjusted, quarterly data, 2000-2014 (2010=100)
Source: Eurostat (sts_colb_q)
Figure 4: Labour input indicators, trade, EU-28, seasonally adjusted, quarterly data, 2008-2014 (2010=100)
Source: Eurostat (sts_trlb_q)
Figure 5: Labour input indicators, other services, EU-28, seasonally adjusted, quarterly data, 2009-2014 (2010=100)
Source: Eurostat (sts_selb_q)
Table 1: Employment, annual rates of change, industry, construction, trade and services, EU-28, EA-18, Member States, gross data
Source: Eurostat (sts_inlbgr_a), (sts_colbgr_a), (sts_trlbgr_) and (sts_selbgr_a)

During the last decade the number of employed persons has developed very differently in the main economic sectors – industry, construction, trade and (other) services. In industry the number of persons employed dropped – with very few exceptions – constantly from one quarter to the next. In the second half of 2008 this decrease even gathered momentum as a result of the financial and economic crisis. Since 2010 the level of employment in industry has remained nearly constant.

After several years of stagnation between 2000 and 2004 employment in construction rose rapidly and peaked in the first quarter of 2008. Afterwards an equally rapid decline set in which at the date of the latest statistical records was still continuing.

In trade and in services the development was steadier. Employment in trade (wholesale trade, retail trade and trade and repair of motor vehicles) displayed a steady increase until the first quarter of 2008 and then decreased for two years to stabilise again at the level which it had had around 2005. In (other) services the economic crisis became visible in the employment data towards the end of 2008 but the decline lasted only about one year and a month and afterwards a still continuing steady increase set in.

Figure 2 presents the development of the three labour input indicators for industry, Figure 3 for construction activities. In both cases the indicators for employment and for hours worked develop in a very similar fashion, although during the crisis the indicator for hours worked dropped a bit faster than the indicators for the number of persons employed which suggests that measures like the reduction of overtime were taken before dismissals or postponed recruitment. There is however a marked difference between these two quantity indicators and the development of the total gross wages and salaries. (Note that that all labour input indicators are based on total numbers and not on average earnings or average working times.)

In industry there was a relatively steady increase in total gross wages and salaries despite an ongoing reduction of actual total labour input. Following the crisis the remuneration indicator recovered relatively quickly and increased again despite a constant use of total labour input.

In construction the indicators for gross wages and salaries steadily increased between 2000 and 2008. With the onset of the economic crisis however wages and salaried declined rapidly like hours worked and employment. Since 2010 the indicator stagnated.

Figure 4 presents the development of employment, hours worked and gross wages and salaries for trade, Figure 5 presents these data for (other) services. The obligation to provide data on hours worked and gross wages and salaries for these two areas entered into force only in 2013. Backdata for these indicators only reach back for a few years. Therefore European aggregates can only be provided since 2008 (for trade) and since 2009 (for other services). For both areas the trends for employment and the hours worked are rather similar. Moreover, gross wages and salaries have again increased since 2010.

The impact of the financial and economic crisis and the extent of any subsequent recovery varied greatly between European Member States. Table 1 provides an overview of annual rates of change for the last three calendar years and thus mainly represents the effects of the aftermath of the crisis. In 2011 about half of the countries experienced a decline in industrial employment, in 2012 the level of industrial employment dropped in 22 countries (no data available for Italy).For the year 2013 the majority of countries still displays negative growth rates with a few exceptions as Germany, the Baltic States, Ireland, Hungary, Austria and Romania that register an increase of industrial employment.

Construction employment also declined in a majority of Member States in 2011. The reductions were particularly strong (i.e. higher than 10 %) in Bulgaria, Greece, Spain, Portugal and Slovenia. In 2012 17 countries experiences a decline in the employment in the construction sector and in 2013 the number of Member States of the European Union with declining construction employment was 19. For the employment in trade negative rates were in general much more moderate than in industry or construction. There were declining rates of employment in trade in 11 countries in 2011. In services (i.e. other services than trade) declining rates of employment in 2011, were only observed in 7 countries. However the overall situation worsened again in 2012 and 2013.

Data sources, aggregation and availability

Short-term statistics present data on the number of persons employed. This statistical concepts differs from other statistical employment concepts which are for example used by the labour force survey or national accounts. In short-term statistics the number of persons employed is collected by aggregating the number of persons employed in the statistical units, i.e. the businesses. The number of persons employed is thus in effect a number of jobs. If a person holds two jobs (e.g. regular daytime job and occasional week-end job) both jobs will be considered in the statistics. Persons employed are not identical with employees (i.e. persons who have a work contract with an employer and receive a remuneration in return for their work) but include for example unpaid family workers. Persons employed also include home workers, apprentices, persons on leave, part time workers, temporary workers and seasonal workers. Not included are persons supplied to the business by other enterprises or persons carrying out repair and maintanance work in the observation unit on behalf of other businesses.

The measure of hours worked is rather comprehensive, it not only includes the normal hours but also overtime, hours worked on holidays and time which is spent on the preparation of actual work, hours spent at the working place during which no actual work is done and even short periods of rest at the work place. Thus, in broad terms, hours worked represent hours paid. However, they do not include however hours paid but not worked (e.g. paid holidays or sick leave). They do also not include time spent for meal breaks or time for commuting between home and work place.

The indicators of wages and salaries include all remuneration in cash or in kind in exchange for work including bonuses, allowances and similar payments. Social contributions payable by the employee are also included even if they are withheld and transferred to the authorities by the employer. Not included are social contributions payable by the employer and payroll taxes. The statistical sources used to establish STS labour input data vary. In some cases special surveys are used, in others data are collected from administrative sources.

The STS regulation requires that Member States collect labour input data and transmit them to Eurostat at least quarterly. However for several Member States data are also available on a monthly basis (sts_intv_m).

Context

Employment is a variable that is important in both economic and social statistics. Labour input is one of the main costs of production. Employment, in its own right, is an important short-term indicator in monitoring the economy. The proportion of the working population in employment, the type of job they do and their working patterns are social variables of interest. The collection of short-term information on employment has a number of important uses:

  • to evaluate the economic situation to help monitor the economic cycle;
  • to calculate measures of productivity;
  • to help calculate income from employment in national accounts.

The collection of information in all the Annexes of the STS-regulations give a broad economic picture and shows the balance between services and industry. Note however that to a large extent, services in STS are business services, i.e. services consumed by business like market research, business consultancy, employment activities and also transport and communication but not public services or financial services.

See also

Further Eurostat information

Publications

Main tables

Industry (NACE Rev.2) (t_sts_ind)
Industry labour input index (NACE Rev.2) (t_sts_ind_labo)
Construction, building and civil engineering (NACE F) (t_sts_cons)
Construction labour input (teiis520)
Trade and services (t_sts_ts)
Wholesale and retail trade (NACE G, NACE Rev.2) (t_sts_wrt)
Labour input index (NACE Rev.2) (t_sts_wrt_li)

Database

Industry (NACE Rev.2) (sts_ind)
Industry labour input index (NACE Rev.2) (sts_ind_labo)
Construction, building and civil engineering (NACE F) (sts_cons)
Construction labour input index (sts_cons_lab)
Trade and services (t_sts_ts)
Wholesale and retail trade (NACE G, NACE Rev.2) (sts_wrt)
Labour input index (NACE Rev.2) (sts_wrt_li)

Dedicated section

Methodology / Metadata

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