Enhancement of OECD Unit Labour Cost

3 December 2010

Eun-Pyo HONG and Frédéric PARROTCompetitiveness Indicators Unit

•Objectives

•Definition

•Comparison with existing ULCs

•Data availability and Timeliness

•Methods to cope with missing data

•EEQ UCLs

•Remaining issues and challenges

Contents

Objectives:• to produce more timely and comparable seasonally adjusted quarterly

ULCs for total economy for 35 countries (i.e. 33 member countries and two accession countries, Estonia and Russian Federation)

=> Early Estimates of Quarterly ULCs (EEQ ULCs)

OECD System of Unit Labour Cost and Related Indicators • About 17,000 annual and quarterly series since 2007 (Most MSs and

selected non-MSs) for 8 economic activities: ULCs; Total labour cost, and output; Labour productivity; Labour

compensation per unit labour input; Exchange rate adjusted ULCs; Real ULC or Income labour share; and PPP adjusted labour compensation per unit labour input

8 economic activities: Total economy, Manufacturing, Industry, Construction , Trade, transport and communication, Finance and business services, Market services, and Business sector excluding agriculture

Objectives

ULC = total labour cost / output = (compensation of employees/value added)*self employment ratio

where self employment ratio = hours worked for total employment/hours worked for employees; or = total employment / number of employees (in case of missing data)

Note: 1. Proxies for other variables are also in use, e.g.:

•Wages and salaries for compensation of employees or •GDP expenditure for value added

2. ULC = Labour compensation per unit of labour input / Labour productivity

Definition of ULC

Comparison with existing ULCs

EEQ ULCs (SA) Existing quarterly ULCs (SA) National data in use

Seasonally adjusted national component series

Raw national component series

Method Indirect method Direct method: SA ULCs is compiled from raw benchmarked (to their annual data) ULCs

Coverage Total economy only (can be extended to other economic activities)

Total economy and 7 other economic activities

Timeliness 75 days after reference quarters > 100 days after reference quarters Comparability more comparable with ULCs of ECB Less comparable

Data sources: •QNA database and •Other databases (e.g. MEI) in case of missing information

Data availability in QNA database: 6 groups•Group 1: all necessary data are available - 13 EU countries (AUT, CZE, DNK, EST, FIN, FRA, DEU, IRL, ITA, NLD, POL, SVN, ESP);•Group 2: some SA CoE and/or SA HW are missing - 4 countries (HUN, NOR, SVN, SWE);•Group 3: most raw series are missing - 1 country (PRT); •Group 4: complete set of HW (raw and SA) is missing - 10 countries (AUS, CAN, ISR, JPN, USA, BEL, CHE, GBR, GRC, LUX); •Group 5: both CoE (raw and SA) and HW (raw and SA) are missing – 2 countries (KOR, NZL); •Group 6: insufficient information for EEQ ULC compilation - 5 countries (CHL, MEX, RUS, ISL, TUR).

Data availability

EEQ ULCs can be compiled at T+75 days for 25 countries: • T+85 days or more: IRL, LUX, NLD, NZL, POL;• Not possible: CHL, ISL, MEX, RUS, TUR

Value added: • except IRL, LUX, NLD, NZL

Compensation of employees• except IRL, LUX, NLD, POL

Hours worked or employment• except GBR, IRL, LUX, NLD, POL

Timeliness

Data availability and timeliness Country GDP

NSA SA NSA SA NSA SA NSA SA NSA SA NSA SA NSA SA NSA SAAUS t+62 t+62 t+62 t+62 t+62 t+35/t+67t+35/t+67t+35/t+67t+35/t+67AUT t+45/t+71 t+45/t+71 t+45/t+71 t+45 t+45/t+71 t+45 t+45 t+45 t+45 t+71 t+71 t+71 t+71BEL t+45 t+69 t+69 t+69 t+69 t+69 t+69 t+69 t+69 Q110 Q110 Q409 Q409 Q409 Q409CAN t+60 t+60 t+60 t+10 t+10 t+10 t+10CHE t+63 t+63 t+63 t+76 t+76 t+62 t+62 BS(5/7)CHL till 2006 t+35 t+35CZE t+45 t+69 t+69 t+69 t+69 t+69 t+69 t+69 t+69 t+69 t+69 t+69 t+69DEU t+45 t+55 t+55 t+55 t+55 t+45 t+45 t+45 t+45 t+55 t+55 t+55 t+55DNK t+60 t+60 t+60 t+60 t+60 t+60 t+60 t+60 t+60 t+60 t+60 t+60 t+60ESP t+45 t+57 t+57 t+57 t+57 t+57 t+57 t+57 t+57 t+57 t+57 t+57 t+57 t+35 t+35 t+35 t+35EST t+45 t+70 t+76 t+70 t+70, Total t+70 t+70 t+70 t+70 t+70 t+70 t+70 t+70FIN t+69 t+69 t+69 t+69 t+69 t+69 t+69 t+69 t+69 t+69 t+69 t+69 t+69 t+55 t+55 t+55 t+55FRA t+45/t+85 t+45/t+85 t+45/t+85 t+69/t+85 t+69/t+85 t+45/t+85 t+45/t+85 t+45/t+85 t+45/t+85 t+69 t+69 t+69 t+69 t+64GBR t+23 t+23/t+62 t+58 Q409 Q409 Q409 Q409 July July July JulyGRC t+45 t+69 t+69 t+69 t+69 t+69 t+69 t+69 t+69HUN t+45 t+69 t+69 t+69 t+69 t+69 t+69 t+69 t+69 t+55 t+55 t+55 t+55IRL t+85 t+85 t+85 t+85 t+85 t+85 t+85 t+85 t+85 t+85 t+85 t+85 t+85 e t+33 e t+64ISL t+65 t+35 t+35ISR t+49 t+49 t+49 Q110 t+68 t+68 t+68 t+68 t+65 t+65 t+65 t+65ITA t+45/t+71 t+71 t+71 t+71 t+71 t+71 t+71 t+71 t+71 t+71, excl. Dt+71, excl. Dt+71, excl. Dt+71, excl. D

JPN t+50/t+71 t+50/t+71 t+50/t+71 t+50/t+71 t+50/t+71 t+35 t+35 t+35 t+35KOR t+45 t+45/t+65 t+45 t+35 t+35 t+35 t+35LUX Q110 Q110 Q110 Q110 Q110 Q409 Q409 Q409 Q409 JulyMEX t+55 t+55 t+55NLD t+84 t+84 t+84 t+84 t+84 t+84 t+84 t+84 t+84 t+84 t+84 t+84 t+84 BS(5/7)NOR t+50 t+50 t+50 t+50 t+50 t+50 t+50 t+50 t+50 t+50 t+50 t+67 t+67 t+67 t+67NZL t+84 t+84 t+84 t+67 t+67 t+67 t+67POL t+55 t+60 t+60 Q409 t+55 total Q409 Q409 Q409 Q409 t+67 t+67 t+67 t+67PRT t+45/t+70 t+70 Q110 (Eurostat) t+70 excl. D t+70 excl. D t+70 excl. D t+70 excl. D t+55 t+55 t+55 t+55RUS Q309 Q309 Q309 Q208 Q208 t+35 t+35SVK t+45 t+63 t+63 t+45 t+45 t+63 t+63 t+63 t+63 t+63 t+63 t+67 t+67SVN t+68 t+68 t+68 t+68 t+68 t+68 t+68 t+68 t+68 Q110 Q110SWE t+45 t+50/t+70 t+70 t+70 t+60/t+70 t+60/t+70 t+45/t+70t+30 Total, Ft+45/t+70 t+35 t+35 t+35 t+35TUR t+76 t+76 t+67 t+67 t+67 t+67USA t+45/t+57 t+45 t+10 t+10 BS BS

HOURS EMP HOURS EY EMP LFS EY LFSQNA MEI

QVA QCoE EMP EY

•UK: Labour Force Survey data are used instead of QNA employment data •Belgium, Greece and Slovenia: QNA employment & employees in persons used instead of QNA hours worked •Hungary: ULC Unit performed SA on QNA hours worked •Norway and Sweden: ULC Unit performed SA on QNA CoE and QNA employees' hours worked•Australia and Canada: LFS SA Civilian employment & employees used for QNA labour input•Japan: GDP was used for constant price value added and also used LFS Civilian employment & employees (SA by Labour Unit)•USA: LFS SA Civilian employment & BS SA Employees used for QNA labour input.•Korea: National quarterly proxy earnings series for QNA CoE; LFS civilian employment & employees; SA by ULC Unit of national quarterly earnings series, nsa

Methods to cope with missing data (1)

•Israel: QNA chained volume GDP by expenditure used instead of unavailable constant price gross value added; QNA CoE, nsa available until 2010Q1, 2010Q2 estimated by ULC Unit and SA by ULC unit until 2010Q2; QNA employment & employees in persons•New Zealand: National quarterly proxy earnings series for QNA CoE; LFS civilian employment & employees; SA by ULC unit of national quarterly earnings series, nsa•Switzerland: 2010Q2 for BS employees has been estimated by ULC Unit; then SA by ULC unit until 2010Q2; LFS Civilian employment used for QNA labour input •Portugal: CoE total economy from Eurostat until 2010Q1 and that of 2010Q2 was estimated by ULC Unit and SA by ULC Unit until 2010Q2

Methods to cope with missing data (2)

EEQ ULCs (1) (Percentage change on the previous quarter, Seasonally Adjusted, Total economy)

EEQ ULCs (2) (Broken down by Labour productivity and Labour compensation per unit of labour

input 2010 Q2 - percentage change, SA, Total economy)

• Availability of: – quarterly hours worked for all countries except 13 EU member countries

– seasonally adjusted data at NSOs: direct vs. indirect SA

– quarterly VA and CoE for some countries

– Timely data for some countries

• Development of ULCs for:– all new OECD MSs, i.e. Chile and Israel

– all G20 countries, i.e. BRIICS, Saudi Arabia and Argentina

– quarterly media release

• Creation of proper procedures and database to facilitate production and dissemination of EEQ ULC

Issues and challenges