Home > Statistics > Labour cost index > 2016 > 2nd quarter > Cost of an hour worked decreased by 2.4 per cent in April to June year-on-year

Published: 8 September 2016

Cost of an hour worked decreased by 2.4 per cent in April to June year-on-year

Private sector labour costs decreased by 2.4 per cent in April to June 2016 when compared with the respective period of the year before. Seasonally adjusted labour costs went down by 0.9 per cent in April to June 2016. The drop is mainly explained by the fact that in the second quarter of 2016 there were three more working days than in the corresponding quarter in 2015.

Differences in the number of working days and, thus, also in working hours, were mainly caused by Easter falling on the first quarter in 2016, while in 2015 it was in the second quarter. In the private sector, labour costs without one-off pay items, such as performance-based bonuses, decreased by 2.2 per cent in April to June 2016 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 1.3 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 5.4 per cent in April to June 2016 when compared with the respective period of the year before. Labour costs without one-off pay items decreased by 5.7 per cent over the same period. Seasonally adjusted labour costs went down by 3.5 per cent. Over the same period, the index of wage and salary earnings in the central government sector went up by 2.0 per cent.

In the local government sector, the cost of an hour worked decreased by 2.6 per cent in April to June 2016 when compared with the respective period of the year before. Labour costs without one-off pay items went down by 2.5 per cent. Over the same period, the index of wage and salary earnings in the local government sector went up by 1.2 per cent.

Also in the public sector, the decline is primarily explained by the higher number of working days during the second quarter of 2016 compared to the corresponding quarter of the previous year.

Year-on-year change in labour costs according to TOL 2008, 2nd quarter 2016

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	-2,4	-2,2	-0,9
B to E	Manufacturing	-3,2	-2,8	0,6
F	Construction	-1,5	-1,9	-1,3
G to N	Business service activities	-2,1	-1,9	-1,9
J to R	Central government	-5,4	-5,7	-3,5
D to S	Local government	-2,6	-2,5	..

The cost per an hour worked in manufacturing industries (B to E) decreased by 3.2 per cent, in construction (F) by 1.5 per cent, and in business service activities (G to N) by 2.1 per cent in April to June 2016. In manufacturing industries, the decrease in wages and salaries subject to preliminary withholding tax accelerated the drop in labour costs. In construction, the growth in hours worked strengthened the decline in costs.

In manufacturing industries, the biggest drop in the cost of an hour worked was found in the metal industry, 4.2 per cent. The cost of an hour worked without one-off pay items fell by 3.0 per cent in the metal industry. In the forest industry, costs went down by 2.9 per cent, and in the food industry by 3.5 per cent. In service industries, the biggest decline was seen in financial and insurance activities, 4.3 per cent. In trade, the costs went down by 0.1 per cent.

The seasonally adjusted cost of an hour worked in all manufacturing (B to E) increased by 0.6 per cent in April to June 2016 compared with the corresponding period last year. In construction, the seasonally adjusted cost of an hour worked fell by 1.3 per cent and in business service activities it decreased by 1.9 per cent.

The seasonally adjusted cost of an hour worked went down by 1.7 per cent in the forest industry and by 4.0 per cent in the metal industry in April to June 2016 from the same period of the previous year. In wholesale and retail trade, costs decreased by 0.1 per cent.

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, tvkindeksi@stat.fi

Director in charge: Mari Ylä-Jarkko

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Appendix tables

• Appendix table 1. Labour costs, Labour Cost Index 2012=100 (8.9.2016)
• Appendix table 2. Labour costs, percentage changes, Labour Cost Index 2012=100 (8.9.2016)
• Appendix table 3. Labour costs, excluding one-off items, Labour Cost Index 2012=100 (8.9.2016)
• Appendix table 4. Labour costs, excluding one-off items, percentage changes, Labour Cost Index 2012=100 (8.9.2016)
• Appendix table 5. Seasonally adjusted labour costs, Labour Cost Index 2012=100 (8.9.2016)
• Appendix table 6. Seasonally adjusted labour costs, percentage changes, Labour Cost Index 2012=100 (8.9.2016)
• Appendix table 7. Standard Industrial Classification 2008 (8.9.2016)

Revisions in these statistics

• Revision of data (8.9.2016)

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Updated 8.9.2016