Statistical presentation

Data description

The standardised index of average earnings shows the developments in pay levels for employees in Denmark, adjusted to the extent possible for changes in the labour market’s occupational composition. The meaning of this can best be illustrated by an example: Consider an industry where skilled workers that, all other things being equal, are paid more are replacing unskilled workers. This means that the average earnings in the industry increases, but in the standardised index of average earnings this change in occupational composition will not result in a higher index value by itself as the development in pay level is calculated for each group separately and then weighted together (with fixed weights) in the calculation of the index.

The standardised index of average earnings is designed drawing upon inspiration from price index theory, where employees performing similar work within the same industry and sector are grouped in so-called homogeneous groups. These groups form the basis of the calculation of base indices, which are calculated to reflect the development in average hourly earnings for each of the homogeneous groups. The base indices are then weighted together to sub- and total indices (indices by sectors, industries and main occupations) by means of fixed annual weights. The weights for each homogeneous group are specified as the group’s share of the whole population’s total annual payroll. Index values for the sub- and total indices are then linked together into a complete series of indices starting in the first quarter of 2016. In this way, the index measures the developments in hourly earnings cleared (as far as possible) of effects of changes in the occupational composition in the labour market.

Each quarter, we publish an index value and an annual increase by sector, industry (DB07) and main occupation (according to DISCO-08). Only sub- and total indices are published, i.e. indices showing the development in pay levels at industry, main occupation and sector levels. The documentation of the variables used in the index calculation are available here.

The standardised index of average earnings does not include employment relationships for which hourly earnings cannot be measured (e.g. employees who do not have a fixed salary and where time factors are not part of the calculation of pay), nor are employment relationships with special forms of payment (e.g. fees or charges) included in the index calculation. Earnings of youth under 18 years and apprentices are also excluded.

Classification system

The standardised index of average earnings is published at industry level based on the Danish Industrial Classification 2007 (DB07).

The delimitation of sectors complies with the classification by sector in the Statistical Business Register, which is used to group institutional units with similar characteristics.

In addition, the earnings index is published by main groups of occupation in accordance with Statistics Denmark’s classification of occupation (DISCO-08).

Sector coverage

The statistics cover employees in the sector enterprises and organisations (private sector) and the public sector at municipality, regional and state level.

Statistical concepts and definitions

Homogeneous groups: Groupings of employees who perform similar work defined by the variables sector, industry (the 36-grouping), occupation (a grouping in 53 groups based on the DISCO classification’s level 3, however, in a few cases level 4) and forms of payment (paid by the hour or fixed salaried).

Hourly earnings: The hourly earnings are calculated as total earnings divided by hours worked.

• Total earnings are the earnings in total including the employee’s as well as the employer’s pension scheme contributions, if any, but exclusive of holiday pay and other payments made on an irregular basis
• Performed hours are defined as paid working hours excluding regular absence (sickness and holiday)

Individual weight: Weight indicating the proportion of the individual employment relationship to a full-time position. This means that a person working full time will have the weight 1, whereas a person working part time will have a weight less than 1. The weight is calculated as the hours performed (minus any overtime for employees paid by the hour) divided by the standard number of hours for a full-time employee. For employees with a fixed salary, standard hours are used (contractual hours).

Key enterprises: Key enterprises are defined annually for the private sector and are the 5 percent biggest enterprises in each industry – based on the number of actual employees and the pseudo employment, i.e. the number of employees represented by the specific, sampled enterprise.

Sample weight: Weight ensuring that employment relationships from employees in the private sector are weighted to correspond to the target population since figures reported by the private sector are from a sample. The sample weights are thus a combination of the design weight that reflects the weight of the enterprise in the sample’s strata as well as a correction weight that takes non-response and voluntary reporting into account.

Payroll weight: Weight used to aggregate the base indices to sub- and total indices. Payroll weight is the individual homogeneous group’s share of total payroll calculated based on data from the annual earnings statistics (total earnings excl. irregular payments).

Base index: Base index is the most detailed level in the standardised index of average earnings. The base indices show the increase in average hourly earnings for each homogeneous group since the reference quarter for the weight year. The base indices are not published.

Sub- and total indices: Sub- and total indices consist of index series at sector, industry and main occupation level. These indices are aggregated based on base indices weighted together using the payroll weight.

The annual increase: Indicates the rise in the index value in one quarter against the same quarter the preceding year.

Statistical unit

Individual employment relationships for employees. Note that an employee may be included multiple times, if he or she is registered with several employment relationships.

Statistical population

All employment relationships in Denmark, exclusive of apprentices and young people under 18 years and employees in the industry Agriculture, forestry and fishing.

Reference area

Denmark exclusive of the Faroe Islands and Greenland.

Time coverage

These statistics cover the period from the first quarter of 2016 and forward.

Base period

The average of the index value for the four quarters in 2016 is index=100.

Unit of measure

Index and the annual increase is measured in percent.

Reference period

The statistics describe the development in earnings for a given quarter.

Frequency of dissemination

Quarterly.

Legal acts and other agreements

The statutory basis for collection of data is provided in sections 6 and 8 of the Act on Statistics Denmark, cf. Act No 610 of 30 May 2018.

There are no statutory instruments or guidelines directly related to the standardised index of average earnings.

However, there is a regulation concerning the Labour Cost Index (LCI), which is calculated on the basis of the same data. LCI is an index showing the short-term development in labour costs – total costs of employing labour, and in this way, it differs from the implicit and standardised indices of average earnings, since these only focus on the earnings aspect.

It is the implicit index of average earnings that is used as input for LCI. The deliveries to Eurostat for LCI comply with the requirements made by the EU, cf. Regulation (EC) No 450/2003 of the European Parliament and of the Council of 27 February 2003 concerning the labour cost index.

Cost and burden

The total reporting workload for the earnings statistics, which includes the data collection for the indices of average earnings as well as the annual structure of earnings surveys, amounts to DKK 6.3 million according to an analysis by AMVAB (activity-based measurement of administrative burdens on businesses) from 2019.

Comment

You can find further information on the subject page for Earnings or by contacting Statistics Denmark directly.