Labour Cost Index

In the second quarter of 2021, the preliminary working-day adjusted Labour Cost Index (LCI) for the whole observed economy (sections B to S of ÖNACE 2008) has declined by -0.2% compared to the previous year’s figure. This reduction is due to the increase in gross wages and salaries by 2.1% and the decrease in indirect labour costs by -7.3%, in both cases per hour worked. In the first quarter of 2021, the working-day adjusted LCI decreased by -3.3%.

Note: Since its beginning in March 2020, the corona virus pandemic has led to developments on the labour market, such as company closures, short-time work, the recommendation for employees to use their overtime and annual leave, quarantine and others. These developments and the state support for short-time work do lead to some extent to significant movements in labour costs per hour worked. The short-time work support (to reduce labour costs) can sometimes only be processed and paid out from the Austrian Public Employment Service (AMS) with a delay. The AMS provides this data on a monthly basis and some of it also includes short-time work support from several months ago, therefore the revision of the previous quarter (first quarter 2021) may be higher than usual in some sections.

Manufacturing sector 1.2% (sections B to F of ÖNACE 2008)

In the manufacturing sector the labour costs per hour worked have increased most in section E - water supply and waste management with 1.8% (wages and salaries +2.5%, indirect labour costs -0.5%) in relation to the same quarter of the previous year. In the section with the most employees, C - manufacturing, a growth of 1.5% was recorded. In the other sections, mainly also moderate movements were recorded: F - construction +1.6%, B – mining -1.1% and D – electricity, gas, steam and air conditioning supply with -3.8%.

Index excluding bonuses

In the manufacturing sector the working day adjusted index excluding bonuses went up by 3.5% compared to the previous year’s quarter. Thus, it increased more than the index including bonuses (+1.2%).

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

Services sector -0.8% (sections G to S of ÖNACE 2008)

Sections G to N of ÖNACE 2008 -0.2%

In the economic section with most enterprises and employees G – wholesale and retail trade; repair of motor vehicles and motorcycles the LCI increased by 4.0% compared to the previous year’s quarter (wages and salaries +7.5% and indirect labour costs -6.3%). The most significant movement in the services sector was a decrease in section I - accommodation and food service activities with -10.9%. This strong decrease was primarily due to extensive short-time work support to many employers in this section. The state short-time work support also lead to reductions in other services sectors, such as N – administrative and support service activities with -4.8%, H – transportation and storage with -3.7% and M – professional, scientific and technical activities with -0.2%. In section K - financial and insurance activities, however, the decrease of -3.6% was not due to state subsidies, but rather to a general decrease in labour costs with a simultaneous increase in the number of hours worked.

Sections O to S of ÖNACE 2008 -1.5%

The working day adjusted index of sections O to S dropped by -1.5% (gross wages and salaries by -1.5%, indirect labour costs by -5.0%, each per hour worked) in relation to the previous year’s figure.

Info: The 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 do not have any 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 number of hours actually worked as collected by the microcensus labour force survey.

The results of the labour cost index in the EU member states and other participating countries (currently Iceland, Norway, United Kingdom and Serbia) 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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