Labour Cost Index

In the fourth quarter of 2020, the preliminary working-day adjusted Labour Cost Index (LCI) for the whole observed economy (sections B to S of ÖNACE 2008) rose by 11.6% compared to the previous year’s figure. This rise is created by increases in gross wages and salaries by 10.7% and in indirect labour costs by 14.4%, in each case per hour worked. In the third quarter of 2020 the working-day adjusted LCI went up by 0.2%.

Note: As a result of the corona pandemic, there have been corresponding reactions on the labour market since March 2020, such as company closures and short-time work, quarantine, recommendations on overtime and vacation reductions and others. In most economic sectors these reactions can be measured very quickly as fewer hours worked. However, the labour costs often remain at the same level, as the short-time working allowance (to reduce labour costs) is cleared with the Public Employment Service (AMS) with a delay. In addition, some employers bear the constant labour costs without short-time work allowance and/or there is no immediate or no reaction with dismissals. The mentioned AMS data are updated monthly and relate to subsidies granted a few months ago, so the index values for the current and previous quarters (third and fourth quarters of 2020) are considered as provisional.

Manufacturing sector +4.4% (sections B to F of ÖNACE 2008)

In the manufacturing sector the labour costs per hour worked changed between 0.1% and 5.4%. The highest increase of the LCI was recorded in section B – mining and quarrying, here the LCI rose by 5.4% (+4.6% wages and salaries, +7.8% indirect labour costs). In the section with the most employees, C - manufacturing, an increase of 4.5% was recorded. Relative to section C, higher labour costs per hour were noted in sections E - water supply and waste management and F – construction by 4.8% respectively 5.1%. In section D – electricity, gas, steam and air conditioning supply the lowest increase was calculated with 0.1%.

Index excluding bonuses

In the manufacturing sector the working day adjusted index excluding bonuses grew by 3.6% compared to the previous year’s quarter. Thus, it increased slightly less than the index including bonuses (+4.4%).

Info: Bonuses are defined as payments which are not paid in every remuneration period (e.g. 13th and 14th monthly pays, exceptional length-of-service awards) and voluntary severance pays (e.g. golden handshakes).

Services sector +14.9% (sections G to S of ÖNACE 2008)

In general, the preliminary calculation showed a higher burden on employers in the services sector than in the manufacturing sector due to the corona pandemic.

Sections G to N of ÖNACE 2008 +14.8%

In the economic section with most enterprises G – wholesale and retail trade; repair of motor vehicles and motorcycles the LCI increased by 12.8% compared to the previous year’s quarter (wages and salaries +12.3% and indirect labour costs +14.8%). The strongest economic consequence of the corona pandemic, in the sense of an increase in labor costs per hour worked, was measured in section I - accommodation and food service activities with 54.0%. But also in other services sectors like in the sections J - information and communication with 16.8% and H – transportation and storage with 13.4% high increases were recorded. The smallest increase was recorded in the section K – financials and insurance activities with 3.1%.

Sections O to S of ÖNACE 2008 +15.1%

The working day adjusted index in sections O to S went up by 15.1% (gross wages and salaries by +13.9%, indirect labour costs by +19.2%, each per hour worked) relative to the previous year’s figure.

Info: Developments of the current and previous quarter are provisional and may be revised with the publication of the next quarter. In addition, each third quarter, the index values are revised up to the first quarter of the previous year due to the availability of final data.

Note: Currently sections H to N and P to S have no significant effect regarding working days; consequently, unadjusted series and working-day adjusted series will be identical until working-day adjustment will be possible.

Info: The calculation of the labour cost index is based on administrative data and statistical surveys; therefore, index values are subject to some random fluctuation. In the services sector this is mainly caused by fluctuations in the hours actually worked as collected by the microcensus labour force survey.

Results of the labour cost index in the EU member states and other participating countries (currently Norway and Turkey) are published by Eurostat in a publicly available database (‘Labour costs’ > ‘Labour cost index’ > ‘Labour cost index by NACE Rev. 2 activity - nominal value, quarterly data (lc_lci_r2_q)’).

Please consult our German website for tables containing further information.

Results (overview): Labour Cost Index (working-day adjusted), whole economy (ÖNACE 2008 sections B to S)


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