Labour Accounts Mark de Haan Introduce yourself Arbeidsrekeningen Labour Accounts Mark de Haan Introduce yourself Any knowledge, interest on the subject? Labour accounts, important part of national accounting One of the three key systems: SU, SA, LA National accounting is not only about monetary data! Netherlands: income approach is very strong in terms of data sources Economic growth is nice, but rising employment and declining unemployment is even better! De krimp van ruim 3% in 2009 ging nauwelijks gepaard met banenverlies. De dip die daarop volgde was misschien minder heftig, echter een banenverlies vanaf 2011-Q, soms met 40.000 op kwartaalbasis hakt er stevig in. Dit maakt de crisis heel zichtbaar. Labour productivity is a key source of welfare Labour cost a key determinant of (international competetivenss) So, let’s talk about labour for a while.

Arbeidsrekeningen Content Concepts inleiding: een vd 3 deelsystemen, toevoegen. Arbeidsprod: feedback inpassing International guidelines Employment Compensation of employees (and mixed income) Labour Accounts Frameworks Data confrontation Labour market dynamics Price and volume measurement Key data sources Labour force survey Employees’ registers Overview of information in ESA and SNA labour: monetary (compensation) and non-monetary data (employment). Accounting approach: integrating a range of different data sources Accounting applications: dynamics, labour price index A brief review of data sources: highlighting some aspects in the Netherlands

International Guidelines Arbeidsrekeningen International Guidelines SNA 2008 Chapter 7 – Distribution of income compensation of employees, mixed income Chapter 19 – Population and labour inputs labour force, labour inputs, productivity, data sources ESA 2010 Chapter 4 – Distributive transactions compensation of employees (D.1) Chapter 11 – Population and labour accounts (un)employment, jobs, non-observed economy, labour input, labour input at constant prices, productivity Main focus of this part of the course is on labour input and not so much on populations (needed to calculate GDP per head.) Labour related transactions, labour input Labour force = beroepsbevolking Productivity measurement has already been introduced

International Obligations Arbeidsrekeningen International Obligations ESA transmission program, <<er uit?>> Tables 1 (aggregates) and 3 (by industry): Compensation of employees Employment in, persons / hours worked / jobs Employees / Self-employed Yearly: A*21 (t+9 months) / A*64 (t+21 months) Quarterly: A*10 (t+60 days) Labour links to two tables in the EU transmission program Quarterly and annual data

Arbeidsrekeningen Employment Employment covers all persons engaged in a productive activity that falls within the production boundary of the national accounts (domestic production units). Employment = Employees + Self-employed persons Most if not all production requires labour Employment from the ESA point of view addresses domestic economic activity (analogy to domestic output and GDP) in contrast to employed residents Within the ESA production boundary. All kinds of activities inside the household are excluded Employment covers employees and self-employed persons

Empoyees and self-employed Arbeidsrekeningen Empoyees and self-employed Employees are persons who, by agreement, work for a resident institutional unit and receive a remuneration recorded as compensation of employees. Employees provide labour and not a service This not always an easy distinction: consultants and other service providers Employee

Employees and self-empoyed Arbeidsrekeningen Employees and self-empoyed Self-employed persons are persons who are the sole owners, or joint owners, of the unincorporated enterprises in which they work, excluding those unincorporated enterprises that are classified as quasi-corporations. Observed via the Chambers of commerce Or the tax authorities …but not necessarily: small, illegal or black activities Often a one to one relationship between measuring output and required labour (using same assumptions) Self-employed

Employment and Jobs A person can have more than one job. Contract a Arbeidsrekeningen Employment and Jobs A person can have more than one job. Contract a Contract b Contract c, ect… In the Dutch LA we observe first of all jobs From this we derive ‘empoyed persons’ by the undoubling of jobs. In this process we also determine whether a person is employee or self-employed. (I think we do this based on size of job, not the income earned from a job). Persons having both an employee job and a job as a self-employed person are classified according to their principle activity by income.

Four variables to measure employment Arbeidsrekeningen Four variables to measure employment Person A 1) has a job for 18 hours a week = 0.5 fte 2) and runs a small business for (on average) 10 hours a week = 0.25 fte Person A represents: 1 employed person, 2 jobs, 28 hours worked (a week) and 0.75 fte. For variables are used to measure empoyment, number of work persons, jobs, fte’s and hours. Each has its purpose, this will be shown in a next slide. A small illustration…

Employment measures Employment, the Netherlands, 1969-2012 Arbeidsrekeningen Employment measures Employment, the Netherlands, 1969-2012 The four employment indicators visualized for the Netherlands Empoyed persons, relevant in relation to empoyment/unempoyment Jobs is about labour positions, vacancies etc., the amount of jobs in a particular industry branch Hours worked is the key measure of labour volume (productivity) A weaker measure is fte’s particularly because their duration may change over time (fte’s are not part of ESA transmission).

Employment measures Employment, the Netherlands, 1969-2012 Arbeidsrekeningen Employment measures Employment, the Netherlands, 1969-2012 Increasing number of jobs per person At least two observations could be made:… We observe a rise in job’s per person

Employment measures Employment, the Netherlands, 1969-2012 Arbeidsrekeningen Employment measures Employment, the Netherlands, 1969-2012 Increasing number of part time jobs Secondly, employment in fte lags behind empoyment in jobs, indicating an increasing number number of part time jobs in the Netherlands

Arbeidsrekeningen Defining a Job A job is an explicit or implicit contract between a person and a resident institutional unit to perform work in return for compensation for a defined period or until further notice. Contract relates to labour input and not the provision of a service; Work means any activity which contributes to the production of goods and services within the NA production boundary; Compensation is either in the form of wage (employees) or mixed income (self-employed). As mentioned key unit of observation in the employee’s register underlying the employment statistics in the Netherlands The concept of contract is less clear (I think) in the context of the self-employed. Family workers Job size Labour compensation.

Representation of a job Arbeidsrekeningen Representation of a job Resident Institutional Unit Person Contract Perform work Compensation

Characteristics of units, persons and labour contracts Arbeidsrekeningen Characteristics of units, persons and labour contracts Nace Rev.2 Region (working) Institutional sector Full-time/part-time Fixed/flexible Contract Region information is included, fits directly in the regional accounts Employment by sector, government, sector information is still somewhat incomplete in the business register of the Netherlands. Sector information includes the unincorporated businesses LA Netherlands include part-time full-time jobs, but no longer fixed, flexible (information can no longer be obtained from source statistics). LA has information on characteristics persons Contribution to output, no increase in hours worked However, upgrading of labour quality has a significant lowering effect on labour producivity. Sex Age Attainments Region(living)

Empoyment measures: Total hours worked Arbeidsrekeningen Empoyment measures: Total hours worked Includes: Work of employees and self-employed; Contractual hours and (un)paid overtime; Work time spent on training; Coffee/tea breaks. But excludes: Hours paid for but not worked such as holidays and sick leave; Meal breaks; Time spent on commuting; Education other than training.

Compensation of employees and self-employed Arbeidsrekeningen Compensation of employees and self-employed Employees: Compensation of employees (D.1) Self-employed: Mixed income (B.3) We close the discussion on labour intput (questions left?) and continue our discussion on labour income. Obviously, this income should be measured in close connection to labour volumes in order to obtain meaningful estimates of labour costs per hour worked or per full time equivalents This is not trivial. Adjustments in compensation of employees as part of SUT balancing need to be translated back to labour volumes. Good position in Netherlands: source statistics on labour are of much, much higher quality than business surveys

Compensation of employees (D.1) Arbeidsrekeningen Compensation of employees (D.1) Compensation of employees (D.1) the total remuneration, in cash or in kind, payable by an employer to an employee in return for work done by the latter during an accounting period, and includes: Wages and salaries (D.11): cash or in kind. Employers’ social contributions (D.12): Actual, pension/non-pension (D.121) Imputed, pension/non-pension (D.122) De beloning van werknemers heeft twee componenten: 1. lonen 2. Werkgevers’ premies. Die laatste kunnen worden verdeeld in: pensioen (wel/niet) en actueel/geimputeerd (straks meer).

Wages and salaries (D.11) in cash Basic wages and salaries; Arbeidsrekeningen Wages and salaries (D.11) in cash Basic wages and salaries; Payments for overtime; Bonuses; Commuting allowances; Holiday pay; Commissions, tips etc.; Saving schemes; Exceptional payments for employees leaving the company. Two ways to receive wages: in cash and in kind. Employees leaving the office Stam BV’s: aanvulling op ww of pensioen.

Wages and salaries (D.11) in kind Arbeidsrekeningen Wages and salaries (D.11) in kind Free of charge, or at reduced prices, to be used outside work time for own needs, or that of family members: (subsidized) Meals and drinks; Accommodation services; Provision of transportation and services of vehicles; Provision of sports facilities; Child care; Stock options. Dividing line: for own use of needed as part of the job.

Employers’ social contributions (D.12) Arbeidsrekeningen Employers’ social contributions (D.12) Contributes to the social security of the employee Actual (D.121) versus Imputed (D.122)* Pension versus non-pension (e.g.sickness, maternity, disability, redundancy) Operation costs of the social security scheme adds to consumption of households. *Imputed contributions = increase in benefits (or entitlements) - employers’ actual contributions; - contributions of the employee; + operation costs Imputed contributions: there are increasing entitlements of employer directly to the empoyer, however no direct contribution payments to a social security fund (the latter will not exist). Pension entitlements based on actuary principles.

Arbeidsrekeningen Mixed income (B.3) Balancing item, gross/net = value added – compensation of employees Self-employed (unincorporated enterprises) recorded under the Households Sector (S.14). Mixed income implicitly includes: Compensation of labour; Compensation of capital. Both items can only be split based on assumptions

Employment and residence Arbeidsrekeningen Employment and residence Domestic economy Rest of the World Perform work Perform work

Employment and residence: Bridging two concepts Arbeidsrekeningen Employment and residence: Bridging two concepts ESA (residency employer) + Residents working for non-resident producers − Non-residents working for resident producers − Conscript military forces − Resident workers living permanently in an institution − Resident workers under, and above, certain age levels (− Small jobs) Labour force statistics (residency employee)

Labour accounts The labour market demand supply Jobs persons employed Arbeidsrekeningen Labour accounts demand supply Jobs persons occupied vacancies employed unemployed Main income category (wages, mixed income, benefits, none,...) Industry branch The labour market inactive Vraag (in banen, bedrijven) Aanbod (in personen, huishoudens, voorheen SAM) Beroepsbevolking (excl. inactive)

Accounting approach: obtaining overall consistency Arbeidsrekeningen Accounting approach: obtaining overall consistency average earnings per year 25 000 x number of jobs 300 = total earnings per year 7 500 000 earnings per hour 18,8 average hours per year 1 330 number of Jobs total hours per year 399 000 Old picture (labour accounts not part of NA) Several data sources (indicated by colours) Providing part of the picture: Average earnings per job/hour Number of jobs/hours Number of hours per job Etc. Accounting approached helped to enhance data consistency Situation has changed: Micro approach Very good and complete data sources Characteristics from supplementary sources are added (or imputed) at micro level LA accounts is one place in the ERN doing micro analysis

Labour accounts Possible extensions: Labour market dynamics Arbeidsrekeningen Labour accounts Possible extensions: Labour market dynamics Changes in labour market positions Labour Price Index and Labour Volume index Labour is not a homogenous input Value index = Volume index x Price index Shifts between labour categories will be recorded as volume change and thus be excluded from the labour price index. Dynamics, changes in jobs does not show changes in job positions. These dynamics are shown in supplementary tables, making use of information on duration of jobs (or job positions) Price and volumes: measuring the true labour productivity

Main data sources Labour Force Survey Employees’ registers Arbeidsrekeningen Main data sources Labour Force Survey Employees’ registers Observed unit Person Job Scope Sample Integral Coverage Employees + Self-employed Employees Employment Hours actually worked Hours paid

Key data sources used in the Dutch Labour Accounts Arbeidsrekeningen Key data sources used in the Dutch Labour Accounts Empoyers (employment and compensation of employees) Quarterly basis: Employees’ Registers Annual basis: Employees’ Registers Self employed (employment and mixed income) Quarterly basis: Labour Force Survey Annual basis: Tax Registers

Arbeidsrekeningen Any questions…? Thank you!