Indices of Average Earnings for the Private Sector (Discontinued)

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Personal Finance and Welfare, Social Statistics
Uwe Pedersen

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Indices of Average Earnings for the Private Sector 2019

The purpose of the index of average earnings is to indicate trends in earnings for different industries in the private sector exclusive of enterprises categorised as public administration or -services (state, regional or municipal). The index of average earnings was first published for the first quarter of 1994 under the name the index of average earnings in the private sector. Since then the index has been published based on the Danish Industrial Classification of 1996 (DB96), Danish Industrial Classification of 2003 (DB03) and since the third quarter of 2008 based on the Danish Industrial Classification of 2007 (DB07). Moreover, the index of average earnings replaced the index of hourly earnings for workers in manufacturing industry and the index of monthly earnings for salaried employees in manufacturing industry, which were discontinued at the end of 1997.

Statistical presentation

The index of average earnings comprises all employees, salaried employees (white collar employee or officials) and wage-earners (blue collar workers) as well as apprentices and young people under 18 years employed in a business enterprise with 10 or more persons in the private sector. The entire private sector is covered by the indices, including e.g. employees in private schools and private hospitals. Still, the index does not include enterprises belonging to either the agriculture or fisheries industries. In accordance with the nomenclature DB07 (Danish Industrial Classification 2007), the the index is broken down by industry and since the third quarter of 2008 published at the most detailed level according to the 36-grouping in DB07. For a period between the first quarter of 2005 and the second quarter of 2008, the indices were only published at the 10-grouping level.

Statistical processing

Data are collected from the private enterprises and organisations that are included in the sample and cover the second month of the quarter in question. To start with, a rough search for errors is performed on the data. Then, the change in the average earnings per hour from the previous quarter is calculated for each enterprise. Only enterprises where data exists for both quarters are included in the computations. The average hourly wage per observations in the sample is then weighted to take account of all enterprises in a specific branch of economic activity in the population. A total figure for the average hourly wage and the rate of increase from the last quarter is then calculated for each branch of economic activity. After this the index point and the annual rate of increase is calculated for each branch. Finally the total index point and annual rate of increase is found as a total for all branches.

Relevance

Private corporations and organisations in Denmark and abroad, and ministries and other public institutions are the most frequent users of the index. The index is especially used in relation to regulation of contracts. In addition to that, the index plays a vital part in the wage negotiations of employees in the public sector.

Accuracy and reliability

The accuracy and reliability is mainly affected by two factors. First of all, the index is based on a sample, which in itself cause some uncertainty. Second of all, there is some uncertainty connected to the completeness in the collected data, which is often caused by errors in the way the system is generated for transmission of data. An example of this is a payroll system where the different wage compositions are not correctly linked or reported, and thus give an inaccurate picture of the development of wages. The problem with errors like these is that they tend to be difficult to discover. For example would reporting of a low and wrong value for irregular payments result in too high calculation of wage developments, as the irregular payments could not be separated from the wage component.

Timeliness and punctuality

The index of average earnings is published approximately 60 days after the end of the quarter in question. The punctuality of the publication is considered high and there has been no delays of any kind during the last years.

Comparability

The index of average earnings for Corporations and Organizations replace the index of average earnings of the private sector which was last published for the fourth quarter of 2013. The comparability of the two indices is considered to be high. The difference has to do with the new applied delimitations of the sectors, where some of the public owned enterprises, such as Danish Railways (DSB) and some of the municipal owned resource centers, now according to the new delimitations of the sectors belong to “the index of average earnings of Corporations and Organizations”. The new sector delimitations were applied in the indices going back to first quarter of 2013, where it caused a small data breach.

Accessibility and clarity

These statistics are published in the Statbank under Implicit index of average earnings.