Technical Note – Impact of COVID-19 on the Earnings and Labour Costs release – updated Quarter Q3 2021
The COVID-19 pandemic in Ireland continues to have a significant impact on the Earnings and Labour Costs (ELC) release. Preliminary estimates for the third Quarter (Q3) of 2021 and Final estimates for Quarter 2 (Q2) 2021 are being published tomorrow, 01 December 2021. The aim of this Technical Note is to outline to ELC users the impact of COVID-19 on the ELC release being published tomorrow.
Earnings and Labour Costs (ELC) Background Information
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.
COVID-19 Income Supports
During Q3 2021, there were two main schemes 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), operated to provide a social welfare payment to those who lost their employment because of the COVID-19 crisis.
The Employment Wage Subsidy Scheme (EWSS), which is administered by the Revenue Commissioners, was also operational during Q3 2021. The EWSS enables employees, whose employers are affected by the pandemic, to receive significant supports directly from their employer through the payroll system. This scheme replaced the Temporary Wage Subsidy Scheme on 01 September 2020.
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.
EWSS payments are recorded as follows in the ELC release:
Effect of COVID-19 on data collection and response rates from the Earnings, Hours and Employment Costs Survey (EHECS) for Q3 2021
Data for the Earnings, Hours and Employment Costs Survey (EHECS) is collected quarterly at enterprise level. Questionnaires for Q3 2021 were issued to enterprises at the end of September 2021.
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 have been lifted and re-imposed at various stages throughout 2020 and 2021 and have affected the ability of some enterprises to respond during the Q3 2021 EHECS data collection period.
The overall response rate for the Preliminary estimates for ELC Q3 2021 is 46%. This is comparable to the response rate for Preliminary estimates of 45% for ELC for Q2 2021, 46% for ELC for Q3 2020 while the response rate in Q3 2019 was 54%. Because of the low response rate, 40% of enterprises required imputation for Q3 2021.
Some enterprises have engaged with the CSO to outline their difficulties in accurately recording the Government income support measures on their EHECS return. Caution is therefore advised in relation to drawing inferences from the Preliminary estimates for Q3 2021.
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 response rate for Final estimates for Q2 2021 increased to 55%, which compares to a Final response rate of 56% for the period Q2 2020 and 64% for the period Q2 2019.
The CSO is hopeful that businesses who have been unable to submit their Q3 2021 return yet will be able to provide this data in the coming weeks for inclusion in the Q3 2021 Final ELC release, scheduled for publication on 01 March 2022.
Composition of employment and the ELC release
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 2021 is very different to the composition of the labour market in previous quarters, including Q2 2021 and Q3 2020 against which the quarterly and annual changes are reported in the ELC release.
COVID-19 Impact on methodology for the ELC release for Q3 2021
The Earnings Analysis team within the CSO have engaged with Eurostat and colleagues from the Methodology division within the CSO to determine what changes were required to the usual methodology used for the ELC release due to the impacts of COVID-19.
Definitions of the variables included in the ELC release are available in the background notes of the ELC release which are also available separately here
Registered employment refers to the employment of respondent enterprises at the end of the reference quarter.
Average employment refers to the average of the quarters’ opening employment and closing employment.
Average weekly earnings are calculated by dividing the total earnings for the quarter by the average number of persons employed during the quarter and then dividing that by 13 (the number of weeks in a quarter).
Average weekly paid hours are calculated by dividing the total paid hours for the quarter by the average number of persons employed during the quarter divided by 13 (number of weeks in a quarter). Total paid hours are the sum of regular paid hours and paid overtime hours, where regular paid hours are the normal working hours of an employee and not the hours actually worked.
Average hourly earnings are calculated by dividing the total earnings for the quarter by the total paid hours for the quarter.
Average hourly other labour costs are calculated by dividing the sum of other labour costs (costs to the employer, in addition to wages and salaries, of employing labour with any subsidies and refunds received by the employer deducted) for the quarter by the total paid hours for the quarter.
The ELC release presents aggregate results which are based on enterprises’ survey returns. Some enterprises have engaged with the CSO to advise that they have issues recording EWSS payments as refunds for their EHECS return. As a result, EHECS data was linked with an administrative data source from the Revenue Commissioners that contains information about the EWSS scheme to allow for the correction of reporting errors. The linkage and analysis were undertaken by the CSO for statistical purposes in line with the Statistics Act, 1993 and the CSO Data Matching Protocol.
Registered employment is adjusted at a sectoral level to reflect the trends of the Labour Force Survey (LFS) sectoral employment, which is the official source of employment. A new framework regulation governing the production of European Statistics on persons and households (Integration European Social Statistics Framework Regulation – IESS FR) came into force on 01 January 2021. The CSO had to introduce changes to the LFS questionnaire in Ireland from Quarter 1 (Q1) 2021 because of the IESS regulation. Employment estimates in the Earnings and Labour Costs release for Q1 2021 and Q2 2021 were adjusted based on preliminary estimates from the Labour Force Survey for those quarters. These estimates have since been revised in line with the IESS Regulation and as a result of further refinement of NACE classifications. The estimates for Q2 2021 were subject to an embargo at the time of publication of the Earnings and Labour Costs Q1 2021 (Final) Q2 2021 (Preliminary Estimates). The revised estimates for Q1 2021 together with the estimates for Q2 2021 will be updated in the PxStat tables alongside the ELC release tomorrow 01 December 2021.
Labour Market Insight Bulletin Series 9
Because of the difficulties encountered for the EHECS survey and the impact of those on the ELC release for Q3 2021 the CSO have undertaken an analysis of administrative data for Q3 2021 from the Revenue Commissioners. The CSO will be presenting some high-level results of that analysis in the ninth 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 quarterly percentage change in the volume of employment and earnings by sector from Q1 2020 through to Q3 2021 as well as the annual changes from Q3 2020 to Q3 2021 and an analysis of the earnings for employments that were active in more than one quarter. Additionally, analysis will be presented in relation to employments and earnings directly supported by the EWSS scheme.
There are methodological differences in the calculation of weekly earnings in the ELC release and the Labour Market Insight Bulletin Series.
The ELC is based on survey data which collects aggregated information from enterprises and presents information in relation to both earnings (wages and salaries) and other labour costs (other costs to the employer, in addition to wages and salaries, of employing labour which includes social contributions, expenses, subsidies, benefits in kind). The analysis included in the Labour Market Insight Bulletin Series 9 is based on Revenue’s employee level tax data and data provided by Revenue in relation to the TWSS and EWSS. Earnings estimates provided includes earnings and taxable benefits in kind.
The method of calculation of variables in the ELC release is outlined above. Average weekly earnings are calculated by dividing the total earnings for the quarter by the average number of persons employed during the quarter and then dividing that by 13 (the number of weeks in a quarter). Average weekly earnings in the Labour Market Insight Bulletin Series are calculated by summing the total payments received by an employee in a quarter and dividing by the number of insurable weeks worked by the employee in that quarter.
Q3 2021 Final and Q4 2021 Preliminary results – due for publication on 01 March 2022
The Earnings and Labour Costs Q3 2021 (Final) and Q4 2021 (Preliminary Estimates) release is currently scheduled to be published on 01 March 2022 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 2021, while response rates were lower than in Q2 2019 (the most recent comparable quarter before the onset of the COVID-19 pandemic), the change from Preliminary to Final estimates remained in the range of plus or minus 5%.
Given the increased volatility in the labour market in Q3 2021, it is anticipated that, because of the increased employment churn and lower response rates, particularly where responding and non-responding enterprises have been affected differently by the COVID-19 crisis, there may be a more significant change between the results being published as Preliminary tomorrow for Q3 2021 and those published as Final in March of 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 continue to report on the effects of COVID-19 on our economy.
If users have questions or need clarification in relation to anything outlined in this Technical Note, the Earnings and Labour Costs release or the Labour Market Insight Series 9, please contact us at email@example.com
For information, this technical note was issued on 30 November 2021.