Home > Statistics > Labour cost index > 2017 > 4th quarter > Cost of an hour worked decreased by 0.2 per cent in October to December year-on-year

Published: 9 March 2018

Cost of an hour worked decreased by 0.2 per cent in October to December year-on-year

Private sector labour costs decreased by 0.2 per cent in October to December 2017 when compared with the respective period of the year before. Seasonally adjusted labour costs decreased by 0.4 per cent in October to December 2017. There was one less working day in the fourth quarter of 2017 than in the corresponding period of 2016. In the Labour Cost Index, a decrease in the number of working days usually has an increasing effect on costs.

In the private sector, labour costs without one-off pay items, such as performance-based bonuses, decreased by 0.7 per cent in October to December 2017 compared to the corresponding quarter one year ago. Over the same period, the index of wage and salary earnings for the private sector went up by 0.6 per cent.

Year-on-year change in labour costs in the private sector from the corresponding quarter of the previous year

In the central government sector, the cost of an hour worked declined by 4.2 per cent in October to December 2017 when compared with the respective period of the year before. The extension of working time according to the Competitiveness Pact and lower social insurance contributions had an effect on the decline in labour costs. Seasonally adjusted labour costs went down by 3.6 per cent. Labour costs without one-off pay items decreased by 4.1 per cent over the same period. Over the same quarter, the index of wage and salary earnings in the central government sector went down by 0.8 per cent.

In the local government sector, the cost of an hour worked decreased by 1.3 per cent in October to December 2017 when compared with the respective period of the year before. The decline in labour costs was mainly caused by lower social insurance contributions. The year-on-year change in labour costs without one-off pay items was a fall of 1.3 per cent. Over the same period, the index of wage and salary earnings in the local government sector went down by 1.0 per cent.

Compared to the year before, the average decrease of labour costs during 2017 was 1.1 per cent in the private sector, 3.8 per cent in the central government sector and 2.6 per cent in the in the local government sector. The faster rise in hours worked than in wage and salary costs mostly explains the fall in the annual level labour costs in the private sector. About a third of the decline in costs was due to lower social insurance contributions. In the public sector, both cuts in holiday bonuses according to the Competitiveness Pact and lower social insurance contributions had a significant effect on the decrease in annual level labour costs. Seasonally adjusted average changes in labour costs in 2017 were a decline of 1.1 per cent in the private sector and of 3.6 per cent in the central government sector.

Year-on-year change in labour costs according to TOL 2008, 4th quarter 2017

Code	Industry	Labour costs, year-on-year change
		Labour costs	Labour costs, without one-off pay items	Labour costs, seasonally adjusted
B to S	Total, private sector	-0,2	-0,7	-0,4
B to E	Manufacturing	-1,4	-0,9	-1,5
F	Construction	-1,1	-1,6	-1,2
G to N	Business service activities	1,4	0,3	1,3
J to R	Central government	-4,2	-4,1	-3,6
D to S	Local government	-1,3	-1,3	..

The cost per an hour worked went down by 1.4 per cent in manufacturing industries (B to E) and by 1.1 per cent in construction (F) in October to December 2017. In business service activities (G to N), the cost of an hour worked went up by 1.4 per cent over the same period.

In manufacturing industries in the fourth quarter of 2017, there was a rise of 1.3 per cent in the food industry and of 0.8 per cent in the chemical industry in the cost of an hour worked. In the metal industry and the forest industry labour costs went down by 3.4 per cent and 0.2 per cent respectively. Among service industries, the biggest rise in costs, 6.1 per cent, was in information and communication. The rise in costs was due to the growth in wages and salaries subject to preliminary withholding tax. In transportation and storage, costs increased by 0.9 per cent.

The seasonally adjusted cost of an hour worked in all manufacturing (B to E) went down by 1.5 per cent in October to December 2017 compared with the corresponding period last year. In construction (F), the seasonally adjusted cost of an hour worked decreased by 1.2 per cent and in business service activities (G to N) increased by 1.3 per cent.

In manufacturing industries seasonally adjusted cost of an hour worked went down by 3.4 per cent in the metal industry and up by 1.4 per cent in the food industry in the October to December period of 2017 from the same period of the previous year. In business service activities, seasonally adjusted costs rose by 2.7 per cent in trade, by 6.0 per cent in communication activities and by 0.8 per cent in transportation and storage. In financial and insurance activities there was a 0.5 per cent fall in the seasonally adjusted costs.

The Labour Cost Index measures the change in wage and salary costs calculated per hour worked. Hours actually worked refer to the working hours an employee has spent on his/her actual duties. Hours worked include Sunday and overtime work but not paid hours off work, like the hours of annual leaves, national holidays or paid sickness absences.

In the index, hours worked or the structure of personnel have not been standardised. The cost of an hour worked is calculated directly as the ratio of industry-specific wages and salaries sum and social insurance contributions to the hours worked for each quarter. The change in average labour costs is affected by changes in regular earnings, performance-based bonuses and other one-off pay components, social insurance contributions, as well as changes in the number of hours worked and the structure of the labour force.

Source: Wages, Salaries and Labour Costs, Statistics Finland

Inquiries: Pekka Haapala 029 551 3460, Annina Rouvinen 029 551 3525, Petri Ruohonen 029 551 3465, Maija Lahtinen 029 551 3645, tvkindeksi@stat.fi

Director in charge: Sami Saarikivi

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Appendix tables

• Appendix table 1. Labour costs, Labour Cost Index 2012=100 (9.3.2018)
• Appendix table 2. Labour costs, percentage changes, Labour Cost Index 2012=100 (9.3.2018)
• Appendix table 3. Labour costs, excluding one-off items, Labour Cost Index 2012=100 (9.3.2018)
• Appendix table 4. Labour costs, excluding one-off items, percentage changes, Labour Cost Index 2012=100 (9.3.2018)
• Appendix table 5. Seasonally adjusted labour costs, Labour Cost Index 2012=100 (9.3.2018)
• Appendix table 6. Seasonally adjusted labour costs, percentage changes, Labour Cost Index 2012=100 (9.3.2018)
• Appendix table 7. Standard Industrial Classification 2008 (9.3.2018)

Revisions in these statistics

• Revision of data (9.3.2018)

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Updated 9.3.2018