The COVID-19 pandemic in Ireland has had a significant impact on the Earnings and Labour Costs (ELC) release. Preliminary estimates for the third Quarter (Q3) of 2020 and Final estimates for Quarter 2 (Q2) 2020 are being published tomorrow, 25 November 2020. The aim of this Technical Note is to outline to ELC users the impact of COVID-19 on the ELC release being published tomorrow.
The ELC release is published based on data collected by the Earnings, Hours and Employment Costs Survey (EHECS). The EHECS collects data from enterprises with three or more employees in the NACE Rev 2 Industrial Sectors B–S inclusive.
The following are the groupings of NACE industrial sectors that are used when presenting ELC data:
Sector Group Sector Name
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
Q Human health & social work activities
R-S Arts, entertainment, recreation & other service activities
All enterprises with 50 or more employees and a sample of those with 3 to 49 employees are surveyed as part of the EHECS each quarter.
The information collected from an enterprise as part of the survey includes:
Imputation is carried out for non-responding enterprises with 50 or more employees. Where an enterprise responded in at least one of the previous four quarters ratio-imputation is used to estimate figures for that enterprise for the current quarter. For enterprises that did not respond in any of the previous four quarters 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.
For enterprises with 3 to 49 employees inclusive, a weighting factor (the reciprocal of the sampling fraction) is used to weight the estimates up to the total population for both employees and enterprises. Enterprises with 50 or more employees are assigned a weight of 1 as the EHECS sample consists of a census of these enterprises.
All enterprises' data are contained in the quarterly dataset which is tabulated to produce the aggregates which are published in the ELC quarterly release. Results for the most recent quarter are published initially as “Preliminary” estimates and are revised and relabelled as “Final” when the next quarterly release is published three months later.
During Q3 2020, three major schemes were being operated by the Government to support those whose income from employment had been affected due to COVID-19.
The COVID-19 Pandemic Unemployment Payment (PUP) scheme, which is administered by the Department of Social Protection (DSP), provides a social welfare payment to those who lost their employment because of the COVID-19 crisis.
The Revenue Temporary Wage Subsidy Scheme (TWSS) was operational during Q3 2020, for the months of July and August 2020, enabling employees, whose employers are affected by the pandemic, to receive significant supports directly from their employer through the payroll system. The scheme ended on 31 August 2020.
As of the 01 September 2020, the TWSS has been replaced by the Employment Wage Subsidy Scheme (EWSS). (See Revenue website for more information on the EWSS scheme).
EWSS payments in respect of September payroll submissions were paid by Revenue to eligible enterprises in October.
The Central Statistics Office (CSO) have engaged extensively with both the Revenue Commissioners and the DSP to understand the mechanics behind the various income supports. The CSO have also engaged with Eurostat, the European statistical agency, to determine the statistical treatment of these income supports for the purposes of the collection of data for EHECS and the reporting of the related outputs.
Any payments related to the PUP scheme are not collected by EHECS or recorded in the ELC release. Such payments are paid by DSP to a person who has lost income from employment and where no attachment in the form of an employment contract is maintained between the employer and employee. Eurostat has confirmed that such payments should not be recorded in labour costs statistics.
TWSS payments are recorded as follows in the ELC release:
EWSS payments are recorded as follows in the ELC release:
Data for Earnings, Hours and Employment Costs Survey (EHECS) is collected quarterly at enterprise level. Questionnaires for Q3 2020 were issued to enterprises at the end of September 2020.
Due to the unprecedented emergency, Government measures were put in place in response to COVID-19, which resulted in the sudden closures of non-essential businesses at the end of Q1 2020. These restrictions were ultimately extended, with some sectors being affected for some or all weeks of Q2 2020. Some of these restrictions continued into Q3 2020 and closures affected the ability of enterprises to respond during the Q3 2020 EHECS data collection period.
The overall response rate for the Preliminary estimates for ELC Q3 2020 is 46%. This contrasts with the comparable response rate for Preliminary estimates of 54% for ELC for Q3 2019 and of 42% for ELC for Q2 2020. Because of the low response rates, 39% of enterprises required imputation for Q3 2020.
Enterprises engaged with the CSO to outline their continued difficulties in accurately recording the TWSS on their EHECS return.
Caution is therefore advised in relation to drawing inferences from the Preliminary estimates for Q3 2020.
We understand the difficulties enterprises faced in sending us the required data and acknowledge the efforts made by our survey respondents during this time. The CSO is hopeful that businesses who have been unable to submit their Q3 2020 return yet will be able to provide this data in the coming weeks for inclusion in the Q3 2020 Final ELC Release, scheduled for publication in February 2021.
Data in relation to changes in the composition of employment with respect to the individual characteristics of employees (e.g. age, education or gender), employment types (e.g. permanent or temporary contracts) and sectoral shifts are not collected by EHECS. When considering the change in earnings, it should be noted that there is a compositional effect due to the significant changes in employment in certain sectors. The composition of the labour market in Q3 2020 is very different to the composition of the labour market in previous quarters including Q3 2019, against which the annual changes are measured. There were significantly fewer employments in certain sectors in Q3 2020 and a significant number of employments being supported by TWSS and EWSS in Q3 2020.
As advised above, many enterprises have engaged with the CSO to advise that they have difficulties recording TWSS payments as wages, refunds or both. Because of the difficulties encountered for the EHECS survey and the impact of those on the ELC release for Q3 2020 the CSO have undertaken an analysis of administrative data for Q3 2020 from the Revenue Commissioners, to add further context to changes in employment and earnings presented in the Earnings and Labour Costs release. The CSO will be presenting some high-level results of that analysis in the fourth series of the Labour Market Insight Bulletin, which will be published alongside the ELC release tomorrow. This bulletin will include some sectoral analysis to quantify the percentage change in the volume of all employment and earnings between Q1 2020, Q2 2020 and Q3 2020 as well as an analysis of the earnings for employments that were active in more than one quarter.
The Earnings and Labour Costs Q3 2020 (Final) and Q4 2020 (Preliminary Estimates) release is currently scheduled to be published on 25 February 2021 and, as usual, any amendments to the schedule will be signalled on the CSO release calendar.
Previous reviews of Preliminary and Final estimates indicated that Preliminary figures can be accepted as a suitable indicator for quarterly trends. Analysis of the results for individual NACE industrial sectors highlighted that the change from Preliminary to Final estimates was broadly in the range of plus or minus 5%. However, response rates can significantly impact on the quality of data at the sectoral level.
In relation to Preliminary estimates for Q2 2020, response rates were lower than in Q2 2019 and the labour market was significantly impacted for the majority of the quarter. The change from Preliminary to Final estimates largely remained in the range of plus or minus 5% but a larger sectoral change was recorded in the Arts, Entertainment, Recreation and other services activities sector.
Government measures put in place in response to COVID-19 related to some or all weeks of Q3 2020 for some sectors of the economy. Given the continued changeability in the labour market in Q3 2020, it is anticipated that there could also be a more significant change between the results being published as Preliminary tomorrow for Q3 2020 and those published as Final early next year.
We understand the difficulties that enterprises have faced and are continuing to face. The CSO wish to thank all survey respondents who supplied their data and engaged with the CSO in relation to the difficulties they faced both sending data and recording the information required. We appreciate the continuing efforts of survey respondents to get information to us and it is by collecting survey information that we will be able to report on the effects of COVID-19 on our economy.
If any users have any questions or need any clarification in relation to anything outlined in this Technical Note or the Earnings and Labour Costs release, please contact us at firstname.lastname@example.org
For information, this technical note was issued on 24 November 2020.