Home > Statistics > Labour cost index > 2020 > 4th quarter > Private sector cost of an hour worked decreased by 1.2 per cent in October to December year-on-year

Published: 11 March 2021

Private sector cost of an hour worked decreased by 1.2 per cent in October to December year-on-year

According to Statistics Finland, private sector labour costs decreased by 1.2 per cent in October to December 2020 when compared with the respective period of the year before. Seasonally adjusted labour costs went down by 0,6 per cent in October to December 2020. There was one more working day in the fourth quarter of 2020 than in the corresponding period of 2019. In the Labour Cost Index, an increase in the number of working days usually has a decreasing effect on costs.

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

In the private sector, labour costs without one-off pay items, such as performance-based bonuses, decreased by 1.3 per cent in October to December 2020 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 1.9 per cent.

In the central government sector, the cost of an hour worked increased by 0.6 per cent in October to December 2020 when compared with the respective period of the year before. The year-on-year change in labour costs without one-off pay items was a 0.7 per cent increase. Seasonally adjusted labour costs went up by 0.8 per cent. Over the same quarter, the index of wage and salary earnings in the central government sector went up by 2.3 per cent.

In the local government sector, the cost of an hour worked increased by 1.3 per cent in October to December 2020 when compared with the respective period of the year before. The year-on-year change in labour costs without one-off pay items was a 1.0 per cent increase. Seasonally adjusted labour costs went up by 1.8 per cent. Over the same period, the index of wage and salary earnings in the local government sector went up by 2.2 per cent.

In the private sector, the decrease in costs was mainly due to lower social insurance contributions. The reduction in the employer's TyEL contributions, which began on 1 May 2020, was valid until the end of the year. In the central government sector, hours worked increased as absences decreased. However, the wages and salaries subject to preliminary withholding tax increased more, and therefore the cost of an hour worked increased also. In the local government sector, the rise in costs was mainly due to the fact that the number of hours worked decreased more than the wages and salaries subject to preliminary withholding tax.

Year-on-year change in labour costs according to industry (TOL 2008) and sector, 4th quarter 2020

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

Changes by industry

The cost per an hour worked went up by 0.3 per cent in construction (F) in October to December 2020 compared with the corresponding period last year. In manufacturing industries (B to E), costs went down by 2.2 per cent and in business service activities (G to N) 0.9 per cent.

In manufacturing industries in the fourth quarter of 2020, the cost per an hour worked went down by 3.7 per cent in the forest industry, 3.2 per cent in the chemical industry, 2.7 per cent in the metal industry and 1.9 per cent in the food industry. Among service industries, the biggest fall in costs, 2.0 per cent, was in transportation and storage. In financial and insurance activities, the costs went up by 0.2 per cent.

The seasonally adjusted cost of an hour worked went up by 0.9 per cent in construction (F). In manufacturing industries (B to E), costs went down by 1.4 per cent and in business service activities (G to N) 0.3 per cent in October to December 2020 compared with the corresponding period last year.

In manufacturing industries, seasonally adjusted cost of an hour worked went down by 2.2 per cent in the forest industry, 2.6 per cent in the chemical industry, 1,9 per cent in the metal industry and 1.2 per cent in the food industry in the October to December period of 2020 from the same period of the previous year. In business service activities, seasonally adjusted costs fell by 1.4 per cent in transportation and storage. In financial and insurance activities, the seasonally adjusted costs went up by 1.6 per cent.

The Labour Cost Index measures the change in wage and salary costs calculated per hour worked

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 subject to preliminary withholding tax 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.

Starting from the first quarter of 2019, the wages and salaries sum of the labour cost index is based on the Incomes Register. The wages and salaries sum are used to raise the labour costs reported by the data providers to the industry level.

Source: Wages, Salaries and Labour Costs, Statistics Finland

Inquiries: Pekka Haapala 029 551 3460, Tanja Jumisko 029 551 3695, Katri Lepikkö 029 551 3233, Tuomas Lahti 029 551 3299, tvkindeksi@stat.fi

Head of Department in charge: Hannele Orjala

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Appendix tables

• Appendix table 1. Labour costs, Labour Cost Index 2016=100 (11.3.2021)
• Appendix table 2. Labour costs, percentage changes, Labour Cost Index 2016=100 (11.3.2021)
• Appendix table 3. Labour costs, excluding one-off items, Labour Cost Index 2016=100 (11.3.2021)
• Appendix table 4. Labour costs, excluding one-off items, percentage changes, Labour Cost Index 2016=100 (11.3.2021)
• Appendix table 5. Seasonally adjusted labour costs, Labour Cost Index 2016=100 (11.3.2021)
• Appendix table 6. Seasonally adjusted labour costs, percentage changes, Labour Cost Index 2016=100 (11.3.2021)
• Appendix table 7. Standard Industrial Classification 2008 (11.3.2021)

Revisions in these statistics

• Revision of data (11.3.2021)

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Updated 11.3.2021