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Labour and Income, Social Statistics.
Jesper Moltrup-Nielsen
+45 3917 3423

jmn@dst.dk

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Implicit index of average earnings

The Implicit index of average earnings is a quarterly statistic of the development in wages for all employees in Denmark, including students and young persons under 18. The indices are available by sector and economic industries and follow the classifications Dansk Branchekode (DB07) and sector (SBR).

Data description

The Implicit index of average earnings show the development in total wages per hour in private and public companies with at least 10 employees, as well as the entire public sector. The index is available by sector and economic industry.

The Implicit index of average earnings is a so-called unit value index, where wage trends are estimated on the basis of a simple salary average of all employees in the same sector and industry, regardless of the individual characteristics of the employees.

Thus, changes in staff composition within a given combination of sector and industry may have an impact on the measured wage development.

Employment conditions in the wage statistics are defined relatively narrowly, as a new employment relationship must be generated if, for example, there are changes in work function, job status, normal hours per week or form of employment.

The following employees with special ways of remuneration are not included in the index:

  • Employees receiving supplemental remuneration from other institutions or due to rehabilitation or similar are not compensated in the same way as the other employees in the enterprise (e.g. interns or those in flexijobs).
  • Employees working from home and where there are no registration of working hours, e.g. people getting remuneration for foster care.
  • Board members and similar people that are not employees. This includes resigned employees who receive termination pay or similar.
  • Employees who are taxed after specific rules (e.g. employees working abroad, employees working at sea or in flights).
  • Employees who are participating in specific programs aimed at the young and unemployed.
  • Employees where the remuneration only consists of fees.
  • Protected positions that has to do with rehabilitation.
  • Particular groups of employees, such as conscripted employees, city council members, election officials etc.

The development of the average earnings per hour is calculated by dividing total earnings by hours worked.

Total earnings is earnings including both the employers and the employees payments to pension schemes, and is excluding irregular payments such as bonuses and payments for holiday leave.

Hours worked are hours paid provided that hours of absence are unchanged. Normally hours worked are excluding hours of absence due to sickness, vacation, etc. But it is considered inexpedient that the results of the index are affected by e.g. an influenza pandemic. The hours worked are therefore not reduced in the case of absence due to sickness. Hours of vacation are also not subtracted, as the index should not be affected by shifts in holiday patterns that can change depending on the calendar. The index should instead only reflect changes that are of a statutory nature, such as the introduction of an extra week of vacation (e.g. the sixth week of vacation introduced for the whole public sector).

Classification system

The Implicit index of average earnings is disseminated divided by industry which follows the 10-, 19-, and 36-standard groups in Dansk Branchekode (DB07).

Dansk Branchekode (DB07) is the National version of EU's nomenklatur (NACE). The first four digits refer to NACE rev. 2, while the last two represent the Danish subdivision.

The definition of sectors follows the Classification by sector in the Statistical Business Register (SBR).

Sector coverage

Prior to 2013, the sector classification was determined by whether the reported data was collected via the reporting system for the private wage statistics, via reports to the state wage statistics or via reports on the wage statistics for municipalities and regions.

As of first quarter 2013, the sector definition follows the Classification by sector in the Statistical Business Register (SBR), which complies with ESA2010.

The Private sector includes the private companies, the public companies, private non-profit organizations and international organizations and sector not stated.

The Public sector includes (in the SBR) the non-market part of the public sector, ie. state administration and service, regional administration and service, municipal administration and service, and social funds and foundations.

Statistical concepts and definitions

Labour costs: Expenditure borne by employers in order to employ workers. A concept which has been adopted in the Community framework and complies broadly with the international definition of the International Conference of Labour Statisticians. Labour costs include compensation of employees, with wages and salaries in cash and in kind, employers' social contributions, vocational training costs, other expenditures, taxes relating to employment regarded as labour costs, less any subsidies received (Commission Regulation (EC) No 1726/1999 of 27 July 1999).

Statistical unit

Individual employment conditions for employees.

Statistical population

All employment relationships in Denmark.

Reference area

Employees in the economic territory of Denmark, excluding the Faroe Islands and Greenland.

Time coverage

These statistics cover the time period from the first quarter of 2005 and onwards.

Base period

First quarter of 2005=100.

Unit of measure

Index values and change compared to the same quarter last year (percent).

Reference period

The quarterly calculations are based on a pay period in the middle month of each quarter, i.e. February, May, August and November.

Frequency of dissemination

Quarterly.

Legal acts and other agreements

The legal authority to collect data is provided by the Act on Statistics Denmark section 6 and section 8, as subsequently amended (most recently by Act no. 610 of may 30th, 2018).

There are no regulations or guidelines directly related to the Implicit index of average earnings.

However, there is a regulation on Labor Cost Index (LCI) which is compiled based on the same data. The deliveries to Eurostat for LCI meet the requirements set by the Council Regulation (EC) No 450/2003 of 27 February 2003 on the labor cost index.

Cost and burden

The total response burden, including data collection for both the quarterly wage statistics and annual structure of earnings statistics, is according to the AMVAB-survey calculated to be 6.3 million DKK. in the latest figures from 2019

Comment

Please see the subject page on Indices of average earnings.