Statistical processing

Source data

Corporations and organizations: For the part of the statistics which covers the majority of the private sector, the primary data is reported by business enterprises employing 10 or more full-time employees. Annual data about each individual employee's earnings and conditions of employment are reported for the calendar year under survey by these business enterprises. The primary data is collected in collaboration with the Danish Employers' Confederation and the Danish Employers' Association of the Financial Sector. The information is collected by the organisations from their affliates and is passed on to Statistics Denmark. Information is also collected by Statistics Denmark from non-affiliates.

General government: For the part of the statistics which covers the majority of the public sector, the primary data is accessed from the public wage transfer systems. For the central government sector, data on absence is reported by the Agency for the Modernisation of Public Administration.

Frequency of data collection

Data is collected once a year - in January - for *Corporations and organizations *. Data for General government are collected on monthly basis.

Data collection

The design of the survey implies that great emphasis is widely attached to making use of existing administrative data stored by the business enterprises in their own wage systems.

-Corporations and organizations: The data collection system is designed to explore the potentials of the latest computer technology for efficient and rational reporting of data. In this respect, a Standard for Electronic Statistical Reporting has been developed, which is used by wage agencies and respondents utilizing standard systems and by business enterprises, which have developed their own wage system. Most respondents make use of an electronic system for reporting data. Respondents without an electronic system fill data in an Excel based worksheet to report.

-General government: For the part of the statistics which covers the majority of the public sector, the primary data is accessed from the public wage transfer systems. For the central government sector, data on absence are reported by the Agency for the Modernisation of Public Administration.

Data validation

The submitted material is inspected for errors. In this control both the reported individual employment relationship but also an overall assessment of the company compared to previous periods is addressed. If there are significant changes in the reported data compared to previous years the respective company is consulted regarding the correctness of the submitted material. It must be assumed that not all errors in the reports are found when troubleshooting, why the statistics may be subjected to some uncertainty. The uncertainty is likely to lie especially in the calculation of hours worked. Especially the reporting of compensated absences may be deficient. In addition, there may be be errors in period demarcations, which is of great importance for the calculation of both rendered and agreed word hours. The quality of data is constantly improved through feedback to businesses , as well as through general updating and improving.

Data compilation

The statistics include all employees in the entire labour market. The statistics cover all business enterprises in General government sector. For the sector group *Corporations and organizations *, all business enterprises, with the exception of Agriculture and fisheries, employing 10 or more full-time employees are included in the statistics.

The statistics only cover employees with permanent employment comprising a lower limit for the scope of work. The delimitation is conducted in accordance with the rules contained in the Act on contracts of employment. This implies that the employee must have been employed for more than a month.

The statistics only comprise people employed in accordance with the so-called "normal terms". Consequently, the following groups are excluded from the statistics: •Employees who are paid an exceptionally low wage rate due to disablement or the like. •Employees who are paid on a commission basis. •Employees who are not liable to tax in accordance with the general regulations in Denmark, including, e.g. sailors working on ships recorded in the international shipping register. •Foreign residents working in Denmark but who are liable to tax in accordance with the taxation rules of their country of origin. •Danish residents stationed abroad, who are paid in accordance with local rules. While Danish residents working abroad who are paid and liable to tax in accordance with the usual rules in Denmark, are included in the statistics.

The primary data for the public sector exclude data reported on earnings for persons in employability enhancement measures (sheltered jobs) and for persons who are paid on a fee basis, conscripts, Ph.D. students, some groups of temporarily engaged teachers, student assistants, and a few other groups.

Persons in employability enhancement measures (sheltered jobs) who are employed on normal terms are included in the statistics for the private sector. This does not have an effect on hourly earnings as they are employed on normal terms. It is not possible to distinguish these persons via the data reported for the statistics.

There are relatively great differences in the degree of coverage in the various industries in the private sector. Consequently, the occupations included in the statistics have been weighted. The enterprises are classified by industry and size on the basis of data from the Central Business Register. The degree of coverage is established for each industrial size group and using this as basis a weight is calculated, which is subsequently linked to each occupation in the group in question. The weights are used for raising figures vis-á-vis the entire target group for the purpose of achieving representative and close to complete coverage of the statistics among the enterprises.

Although the degree of coverage is slightly higher in the public sector compared to the private sector, there are also here observations, which due to a low quality, are excluded from the statistics. The statistical unit is the individual job, which is defined as a person employed with a specific employer and engaged in a specific occupation. A new job is established where there are any changes in an employee's employer, workplace, occupation or other personal characteristics

Consequently, an employee can be included with several observations in the statistics.

There are different types of employment and terms of employment for employees. Some employees receive pay during holidays as well as during public holidays, while others save up holiday pay and/or public holiday pay. Some employees are paid during sickness, while others claim sickness benefits. Some employees have a pension schemes financed by their employer, while others have a pension scheme where the contributions are fully or partially paid by the employees themselves. For some employees, earnings are calculated on the basis of the number of hours worked, while others receive a fixed monthly salary, etc.

For purposes of comparing earnings, regardless of the type of employment and terms of employment, some concepts of wages and salaries have been defined in order to ensure data comparability.

There are two main concepts. Earnings per hour worked and standardized hourly earnings.

Earnings per hour worked: Earnings per hour worked is earnings related to the number of hours worked. Earnings per hour worked indicate the employer's wage cost per hour in employing a given employee.

Earnings comprise each employee's total earnings in connection with his/her job, including the employee's as well as the employer's share of any contributions to pension schemes and income in the form of fringe benefits subject to taxation.

The number of hours worked is the number of hours actually performed by an employee, including overtime hours worked, but exclusive of hours off in connection with public holidays and hours of absence due to sickness, maternity, etc.

In the statistics, earnings are divided into the following components per hour worked: •Overtime payment, overtime bonus and not the total overtime payment. •Sickness with pay etc., earnings and other payments in connection with absence, including payments for days off due to sickness, holidays, special holidays, care, etc. •Nuisance bonuses, e.g. shift-work bonuses and various forms of bonus for dirty work. •Fringe benefits, only include fringe benefits, which are included in A-income, i.e. the value of free cars, board and lodging free of charge. •Pension contributions - both employee's and employer's contributions, including ATP (The Danish Labour Market Supplementary Pension Fund). •Irregular payments, e.g. bonus payments, payments for surpluses readjustments of earnings, etc. •Basic earnings, such as basic, qualification and functional earnings, etc. as well as holiday and public holiday allowances, special holiday allowance, gross allowances and optional scheme. •Special holiday allowance (only for fixed salary-earners) •Holiday payments, which includes payments for holidays and and pubic holidays, but not the special holiday allowance which is calculated manually.

Earnings per hour worked can be used for many purposes. When earnings are related to the number of hours worked, it provides the employer with an indication of the average wage costs per hour worked. One advantage of this concept of earnings is that it takes into account the underlying terms of earnings and employment reported to the statistics when comparisons across occupations are being made. For example, an additional day off will give rise to higher earnings per hour worked.

While earnings per hour worked are suited for conducting analyses of wage costs, earnings are less suited for showing which earnings an individual person has achieved as the result of being employed as an employee. For this purpose, it would be expedient to apply the standardized hourly earnings.

Standardized hourly earnings: Standardized hourly earnings are standardized earnings related to the hours worked. The standardized hourly earnings are the concept of earnings that is the closest concept with regard to the wages and salaries that have been "agreed" upon between the employee and employer. The concept indicates the amount that an employee received per hour worked, irrespective of the number of days in which the employee has been absent due to sickness or hours worked in addition to the working time agreed.

Consequently, the standardized earnings are earnings without payments for overtime hours and absence.

The standardized paid hours are not a homogeneous hourly concept. In order to obtain the standardized hourly earnings, the standardized earnings must be related to the number of hours worked. Some elements of the standardized earning are achieved exclusively during those hours in which the employee is at his/her job, other components of earnings are also achieved during the employee's absence, and others are again achieved in connection with working overtime hours. In contrast to earnings per hour worked, it is, however, not sufficient to be content with one single number of hours worked in the compilation of the standardized hourly earnings

For a detailed description of how each individual component of earnings is standardized, reference is made to chapter 4.5.2 of the publication entitled "Lønstatistik - metode og nye begreber" (Earnings statistics - methodology and new concepts).

In the statistics, the standardized hourly earnings are divided into the following components per standardized paid hour worked: Nuisance bonuses, e.g. shift-work bonuses and various forms of bonus for dirty work. Fringe benefits, only include fringe benefits, which are included in A-income, i.e. the value of free cars, board and lodging free of charge. Pension contributions - both employee's and employer's contributions, including ATP (The Danish Labour Market Supplementary Pension Fund). Irregular payments, e.g. bonus payments, payments for surpluses readjustments of earnings, etc. Basic earnings, such as basic, qualification and functional earnings, etc. as well as holiday and public holiday allowances, special holiday allowance, gross allowances and optional scheme. Special holiday allowance (only for fixed salary-earners) Holiday payments, which includes payments for holidays and and pubic holidays, but not the special holiday allowance which is calculated manually.

Standardized monthly earnings: The advantage of the standardized hourly earnings is that they can be converted into monthly earnings based on a weekly working time of 37 hours. All components related to earnings per standardized paid hour can be converted into a monthly basis by multiplying by 160.33.

Statistical concepts: The average figures published in the statistics are weighted. The weights consist of the number of hours worked in each individual job and - with regard to employees in the private sector - the share of the raising that has been allocated to the employee.

The earnings for a given group of employees can be described in greater detail by means of, e.g. the median and quartiles. The median and quartiles must be considered as a supplement to the average earnings per hour, where extremely high or low values have an impact.

The median earnings indicate the "mid-point" earnings and are defined as the earnings that divide the group, implying that half of the group has higher earnings and the other half has lower earnings. In other words, one half of the employees receive earnings above the median and the other half receives earnings below the median.

The lower quartile indicates the earnings achieved by the lowest paid one-fourth of the employees or less, whereas the upper quartile indicates the earnings achieved by highest paid one-fourth of the employees or above. This implies that earnings for half of the employees range between the lower and the upper quartiles.

In distributing earnings to the median and quartiles, it is possible to obtain an overview of how earnings are distributed, and at the same time it is ensured that very high earnings don't give rise to biased earnings.

Number of fulltime employees in the earnings statistics

The number of fulltime employees in the earnings statistics is measured on the basis of a 37 hour working week, thus 1924 hours per year.

The number of fulltime employees does not show the number of employed, but adjust the total sum of employment contracts in either an upward or downward direction in order to calculate the corresponding number of fulltime employees in the statistics of earnings.

The number of fulltime employees only show the number of fulltime employees among the enterprises in the statistics of earnings, i.e. those enterprises who are required to report to Statistics Denmark, and whose reports are found to uphold a quality which makes them suitable for annexation in the statistics of earnings.

The number of fulltime employees is therefore NOT applicable as a measure of employment.

Adjustment

No adjustments are made other then what is already described under data validation and data compilation.