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Statistical bulletin: Index of Labour Costs per Hour (ILCH) Q3 2013 (experimental)

Released: 17 December 2013 Download PDF

Key Points

  • The whole economy Index of Labour Costs per Hour (ILCH) increased by 0.3% in the third quarter of 2013 compared with the same quarter in 2012. This means the cost of labour increased slightly year on year in Q3 2013, before inflation is taken into account.
  • Wage costs per hour worked increased by 0.5%, while non-wage costs per hour worked decreased by 0.5% in Q3 2013.
  • Private sector labour costs per hour increased by 0.6% in the second quarter of 2013 while public sector labour costs per hour increased by 0.1%.

User Engagement

We are constantly aiming to improve this release and its associated commentary. We would welcome any feedback you might have and would be particularly interested in knowing how you make use of these data to inform our work.

Please contact us via email: ster@ons.gsi.gov.uk or telephone Grace Anyaegbu on +44 (0)1633 456398.

Summary

The Index of Labour Costs per Hour (ILCH) is a measure of the cost of having an employee for an hour of work. It represents the total cost of employing an individual, which is primarily the earnings of the employee, but also includes non-wage costs. It is also known as the Labour Cost Index (LCI); the index is produced by all member countries of the EU and collated by Eurostat.

Four versions of ILCH are calculated for each aggregate, measuring changes in:

  1. Total labour costs per hour worked

  2. Wage costs per hour worked

  3. Other labour costs, primarily National Insurance contributions and occupational pensions, as well as sickness, maternity and paternity pay, per hour worked

  4. Total labour costs, excluding bonuses and arrears, per hour worked

The labour cost component of ILCH is mainly drawn from the Monthly Wages and Salaries Survey (MWSS); the hours worked component of ILCH is drawn from the Labour Force Survey (LFS). Other costs are estimated using a range of other sources including the Annual Business Survey (ABS) and Annual Survey of Hours and Earnings (ASHE). ILCH index figures are estimates in current prices, meaning that they are published not adjusted for inflation. ILCH data are not currently seasonally adjusted.

ILCH statistics are currently designated as experimental. Experimental statistics are those official statistics undergoing further development work before they are submitted for assessment as a National Statistic by the UK Statistics Authority.

Main Results

Whole economy labour costs per hour increased by 0.3% in Q3 2013 compared with the same quarter a year earlier. Total labour costs include wages and salaries, benefits in kind and employer social contributions (pension and national insurance contributions, sickness, maternity and paternity pay). 

The growth in wage costs per hour worked was 0.5% while non-wage costs per hour worked decreased by 0.5%. Wage costs include benefits in kind, wages and salaries. Non-wage costs include sickness, maternity and paternity pay, national insurance contributions and pension contributions.

Figure 1 shows the annual change in Labour Costs (per hour) for the whole economy, private and public sector. The 0.3% increase in whole economy labour costs in Q3 2013 compares with an increase of 0.6% in Q2 2013.

Figure 1: Labour Costs per Hour year on year growth – whole economy, private sector and public sector, Q1 2009–Q3 2013

Figure 1: Labour Costs per Hour year on year growth – whole economy, private sector and public sector, Q1 2009–Q3 2013
Source: Monthly Wages and Salaries Survey, Labour Force Survey - Office for National Statistics

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Private sector labour costs (per hour) increased by 0.6% in Q3 2013, caused by a combination of an increase in labour costs being partly offset by a rise in hours worked per job.

Public sector labour costs (per hour) increased by 0.1% in Q3 2013 compared to a year earlier. The modest increase in labour costs (per hour) in the public sector has been caused by a small rise in wage costs per hour being partly offset by decreases in other costs per hour.

Results by Industry

The industry with the highest growth in labour costs in Q3 2013 was arts, entertainment and recreation, with labour costs per hour having increased by 9% compared to a year earlier.

Wholesale trade experienced the second largest growth in labour costs per hour in Q3 2013 with an increase of 6% compared to a year ago. Other industries that experienced growth in Q3 2013 include Chemical manufacturing, Food, beverages and tobacco manufacturing and Engineering and allied industries.

Basic metals and metal products manufacturing experienced the greatest decline in labour costs in Q3 2013 compared to a year earlier. Labour costs (per hour) in this industry declined by 8%. Agriculture, forestry and fishing; electricity, gas and water supply and mining and quarrying also experienced decreases in labour costs per hour compared with a year earlier.


Figure 3: Labour costs (per hour) year on year growth by industry, Q3 2013

Figure 3: Labour costs (per hour) year on year growth by industry, Q3 2013
Source: Monthly Wages and Salaries Survey, Labour Force Survey - Office for National Statistics

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Background notes

  1. Quality
    A Quality and Methodology Information Report for ILCH (148.9 Kb Pdf) is available. This report describes, in detail the intended uses of the statistics presented in this publication, their general quality and the methods used to produce them. 

  2. International Comparisons
    The UK Labour Costs Index (LCI) is comparable with other Labour Cost Index numbers produced by other EU member states. Eurostat regularly publishes a news release detailing the key results in each quarter.

  3. Seasonal Adjustment
    The Index of Labour Cost per Hour is not seasonally adjusted. This means that regular variations including effects due to the number of days in a quarter are included in the index.

  4. Experimental Statistics
    Experimental statistics are those which are in the testing phase, are not yet fully developed and have not been submitted for assessment to the UK Statistics Authority. ILCH is designated as an experimental statistic. Further information on experimental statistics can be found on the ONS website.

  5. Details of the policy governing the release of new data are available by visiting www.statisticsauthority.gov.uk/assessment/code-of-practice/index.html or from the Media Relations Office email: media.relations@ons.gsi.gov.uk

Statistical contacts

Name Phone Department Email
Grace Anyaegbu +44 (0)1633 456398 Short Term Earnings ster@ons.gsi.gov.uk
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