Background Notes

Introduction 

The Earnings, Hours and Employment Costs Survey (EHECS) replaced the four-yearly Labour Cost Survey, and also replaced all other CSO short-term earnings inquiries. The EHECS results are comparable across sectors and include more detail on components of earnings and labour costs than was previously available.

Legislation

The survey information was collected by the Central Statistics Office (CSO) under the S.I. No 140 of 2013 Statistics (Labour Costs Surveys) Order 2013. The information collected is treated as strictly confidential in accordance with the Statistics Act 1993. The survey results meet the requirements for Labour Costs statistics set out in Council Regulation (EC) 530/1999.

Business Register

The CSO’s Business Register provides the register of relevant enterprises for the survey. An enterprise is defined as the smallest legally independent unit.

 Business Classification

The business classification used for the EHECS is based on the Statistical Classification of Economic Activities in the European Community (NACE Rev.2). The NACE code of each enterprise included in the survey was determined from the predominant activity of the     enterprise, based on information provided in this or other CSO inquiries.

 Nace Classification

NACE Rev.2 is the latest classification system for economic activities, updated from NACE Rev 1.1. A major revision of NACE was conducted between 2000 and 2007, in order to ensure that the NACE classification system remained relevant for the economy. The main changes that affected the release was the reclassification of some industrial enterprises from industry to services (principally in the software and publishing sectors) and the inclusion of air conditioning supply, sewerage, water management and remediation activities in industry.

 Coverage

The survey results relate to enterprises in the Nace Rev 2 Sections B – E (Industry), F (Construction), G (Wholesale & retail trade: repair of motor vehicles & motorcycles), H (Transportation & storage), I (Accommodation & food services activities), J (Information & communication), K-L (Financial, insurance & real estate activities), M (Professional, scientific & technical activities), N (Administrative & support services activities), O (Public administration & defence), P (Education), Q (Human health & social work activities) and R-S (Arts, entertainment, recreation & other service activities) with 3 or more employees. The data was collected at the enterprise level.

All enterprises with 50 or more employees and a sample of those with 3 to 49 employees are surveyed each quarter. The sample is based on the proportion of companies in each NACE 2 digit economic sectors in the 3 to 49 size classes (3 to 9, 10 to 19 and 20 to 49).

Earnings in the public sector are calculated before the deduction of the pension levy that was introduced in March 2009. For Q1 and Q2 2011 temporary census field staff are included in all calculations due to the large numbers involved.

Data Collection

The survey is conducted by post and questionnaires are issued in the last week of each quarter. Some returns are received electronically. All returns are scrutinised for accuracy. Where appropriate, firms are queried by post or telephone regarding incompleteness, apparent inconsistencies, etc. Information about the survey is on the CSO website and all questionnaires and instructions are available electronically there.

Definitions

Employees:

All full-time or part-time workers paid a specific wage or salary or who had a contract of employment are defined as employees. Persons not working for salary e.g. family members, directors, partners, outside pieceworker’s etc., are not considered employees but other persons engaged. These workers are included separately but not used in the calculation of derived variables. All employment figures are rounded to the nearest hundred.

Part-time Employees:

Part-time employees are defined as those who normally worked less than around 30 hours per week. These included persons who worked for some whole days per week as well as those who worked for part of the day each day.

Apprentices

Apprentices are defined as those whose wages/salaries are governed by the fact that they work either under an apprenticeship contract or as part of a training program. They are included in the calculation of earnings and hours data. They were also combined with full-time and part-time employees in determining the size group to which enterprises were classified.

Wages and Salaries

All wages and salaries payments are gross (i.e. before deduction of income tax and employees' PRSI contributions and levies such as the public sector pension levy). In the analysis, the total wages and salaries are divided into:

– Regular earnings i.e. pay and allowances paid at each pay period, even if the amount may vary.

– Overtime, i.e. payments for working in excess of normal hours, usually paid at a premium.

– Irregular bonuses and premiums, pay and allowances not paid at each pay period, i.e. annual or quarterly bonuses etc.

Other Costs

The following are the other categories of labour costs:

– Statutory employers’ PRSI including the social security contributions for apprentices.

– Other social costs; which encompass pension fund contributions, life assurance premiums, income continuance insurance as well as other employee-related payments paid by the employer.

– Benefits in kind; which include private use of company cars, stock options & share purchase schemes, voluntary sickness insurance, staff housing and other free or subsidised benefits (e.g. canteen facilities, childcare provision, health costs).

– Other labour costs.

– Redundancy payments.

Subsidies and Refunds

These are amounts received by firms under the various state schemes (IDA employment incentive scheme, grants etc.) as well as refunds from the Department of Social Protection (DSP) for sick and maternity leave. These are deducted from the firms’ labour costs in the analysis.

Derived Variables

Average annual earnings

Annual average earnings are the sum of annual regular earnings, annual overtime earnings and annual irregular earnings, divided by the average annual employment.

Average annual other labour costs

Total annual other labour costs are divided by the average annual employment to get average annual other labour costs.

Average annual total labour costs

The sum of average annual  total earnings  and annual average other labour costs.

Total annual earnings

This is the sum of total annual regular earnings, total annual overtime earnings and total annual irregular earnings.

Total annual other labour costs

This is the sum of annual other labour costs which includes redundancy payments, employers contribution to social security, other social costs, benefits in kind and other labour costs.  Subsidies and refunds are deducted.

Total annual labour costs

This is the sum of total annual earnings and total annual other labour costs.

Methodology for production of annual results

All enterprises with 50 or more employees are surveyed quarterly as well as a sample of enterprises which have between 3 and 49 employees inclusive. The classifications by size of enterprise are based on total persons engaged on the first day of the quarter.  Quarterly results are added to produce annual data at the 2-digit NACE level.

Weighting

For enterprises with 3 to 49 employees inclusive, a weighting factor (the reciprocal of the sampling fraction) is used to weight the estimates to the total population for both employees and enterprises. The CSO Business Register forms the basis of the sampling frame used for weighting the sample data to the population. Decay factors are calculated for each size class and sector to adjust the non-sampled element of the register for the respondent non-relevant enterprises.

Imputation

Imputation is carried out for non-respondents in the greater than 50 employees’ categories. Where an enterprise responded in the previous quarter ratio-imputation is used to estimate figures for the current quarter while for enterprises that did not respond in the previous quarter a stratum average imputation method is used to estimate the missing variables. These estimates are based on respondent enterprises of a similar size and activity.

Final Estimates

After imputation, all enterprises with 50 or more employees are accounted for and included in the final dataset. For those cells where a sample survey of enterprises is used (enterprises employing between 3 and 49 employees), the results are expanded using the grossing factors to cover the entire population for the relevant industries in the quarter. Macro edits are carried out at this stage and any outliers are investigated and corrected. Coherence of the data is ensured by scrutinising quarter on quarter changes.

Interpretation of results

The series presented in this release and all estimates deriving from the EHECS survey are primarily of use as an indicator of trends in average earnings across different classifications. However, in interpreting the trends and in undertaking direct comparison of the average level of earnings across sectors some caution in interpretation is warranted. For example, the results presented here are based on raw earnings levels. To get a true picture of differences in earnings levels of different employees,  comparisons should take account of differences in the characteristics of employees,  such as length of service, educational attainment level, nature of work etc., none of which are available via EHECS. The additional  information available from the  National Employment Survey (NES) allows for a more detailed analysis of differences in earnings levels and should be referred to by users seeking more detailed information on earnings determinants than is available from EHECS.

Public Sector Organisations

Public sector organisations consist of the following:

•     Civil Service
•     Defence
•     Garda Síochána
•     Education
•     Regional bodies
•     Health
•     Semi State, both commercial and non-commercial

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