ISTAT – Istituto Nazionale di Statistica

April 2011

Structure of Labour Cost Survey for the year 2008

Implementation of the Commission Regulation 698/2006

and therefore Council Regulation 530/1999 Commission Regulation 1737/2005 Commission Regulation 973/2007

Quality Report

ITALY

(Contact person: S Cardinaleschi OCC/E cardinal@istat.it +39-06-46736159

F. Rocci OCC/E rocci@istat.it +39-06-46736370)

ISTAT – Istituto Nazionale di Statistica

Index INTRODUCTION PART I - QUALITY EVALUATION CRITERIA

I.1 ACCURACY I.1.1 Sampling errors I.1.2 Non sampling errors

I.2 TIMELINESS AND PUNCTUALITY I.3 ACCESSIBILITY I.4 COMPARABILITY I.5 COMPLETENESS

PART II - SPECIFIC METHODOLOGICAL NOTES II.1 GENERAL INFORMATION

II.1.1 Introduction II.1.2 Sources II.1.3 Reference period II.1.4 Scope of the survey II.1.5 Variables and definitions II.1.6 Dissemination of national data on quality by Eurostat

II.2 SURVEY STRATEGY II.2.1 Sample design, selection procedure, stratification and size of the sample II.2.2 Handling of non-response II.2.3 Grossing up

PART III - COHERENCE III.1 INTRODUCTION III.2 THE DIFFERENT SOURCES AT A GLANCE

III.2.1 Labour Cost Survey III.2.2 The Labour Cost Index III.2.3 National Accounts – compensation of employees III.2.4 Structural Business Survey – personnel cost III.2.5 Labour Force Survey – number of weekly hours of work (annualized)

III.3 CONCLUSION Annex 1

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INTRODUCTION In accordance with the Commission Regulation No 698/2006 of 5 May 2006 concerning quality evaluation of Structural Statistics on Labour Cost and Earnings, Istat provides Eurostat with the required information on Quality Indicators and Specific Methodological Notes concerning Labour Cost Survey year of reference 2008. The statistical responsible is Mrs. Stefania Cardinaleschi; Mrs Fabiana Rocci and Mr. Stefano De Santis contributed to some parts of this report. In particular Rocci is responsible for Parts I and II; while De Santis is responsible for Part III1.

This quality report is structured as follows: a descriptive analysis of each applicable quality evaluation criteria2 and specific methodological notes are reported in the text, while required tables with quality indicators on Accuracy and Response are described in Annex I.

PART I - QUALITY EVALUATION CRITERIA Chapter One includes information on five dimensions of the European Statistical System (ESS) quality definition, namely accuracy, timeliness and punctuality, accessibility and clarity, comparability, completeness and coherence.

I.1 ACCURACY

In the general statistical sense denotes the closeness of computations (or estimates) to the exact values. Accuracy is defined by the size of possible gap between measurement and true but unknown population parameters. This possible gap consists of the so-called errors.

There are two possible kinds of errors:

1. SAMPLING errors related to the sampling design, measured by the relative error (coefficient of variation=CV)

2. NON SAMPLING errors related to other aspects of the data production process quantified by a set of specific indicators dealing with the effects of list status, total and item non response, editing and imputation criteria.

The LCS2008 is the result of a mixture of a sample and a census, respectively on the private and on the public sectors. Furthermore, also a mixed strategy of collection, between direct survey and administrative data, of data has been used. Hence, the indicators of accuracy about the sampling errors will be given only with regards the data collected on the sample, while the indicators of accuracy about the non sampling errors will be given with regards that part of data collected trough the direct survey.

1 Coefficient of variation, sampling frame and sample weights of LCS 2008 were done by Mrs. Francesca Inglese. 2 As requited in Reg. 698/2006

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I.1.1 Sampling errors

Sampling is always connected with the trade off between accuracy and data collection burden. A sampling rate of 100% (census) eliminates random effects but maximize the burden.

The LCS2008 is the result of a mixture of a sample and a census, respectively on the private and on the public sectors. Hence, the indicators of accuracy about the sampling errors will be given only with regards the data on the private sector.

In this regards, variance estimates and coefficients of variation have been calculated for the two interest variables “Total Annual Labour Cost D”(defined as follows D=D1+D2+D3+D4-D53) and “Hourly labour Cost”(defined as D/B1) providing separate data for each of the following estimation domains:

NACE Rev.2 section,

Enterprise size class ( 10_49, 50_249, 250_499, 500_999, 1000 and over),

NUTS1.

The following tables are transmitted in Annex 1:

Table 1 – LCS 2008 – ITALY - Coefficient of Variation of Annual Labour Cost and Hourly Labour Cost by section of economic activity

Table 2 – LCS 2008 – ITALY - Coefficient of Variation of Annual Labour Cost and Hourly Labour Cost by employees size class

Table 3 – LCS 2008 – ITALY - Coefficient of Variation of Annual Labour Cost and Hourly Labour Cost by Nuts1

As shown in Tables 1-3 of Annex 1 levels of the relative error of the parameter Hourly labour Cost is almost ever less than the prefixed percentage of 5% estimated at the moment of the allocation; this good result is mainly due to the fact that the efficiency of the sample had been guaranteed by the use of the same parameter as Auxiliary Information to guide the computation of the sample number in the strata. The strategy consisted of selecting a bigger number of units from the strata with a bigger variability.

As far as the second interest parameter is concerned, namely the Annual Labour Cost, levels of Coefficient of variation are higher in average, but still it is almost ever less than the prefixed percentage of 5% .

I.1.2 Non sampling errors

I.1.2.1 Coverage and list errors

The target population on which the survey has been designed is defined by the private businesses and institutions and public institutions belonging to the section B-S Nace Rev. 2, except the section O. In order to identify the statistical units to be surveyed the whole universe has been divided into three type of units, with respect to the available information 3 The correct definition of variables are given by the Commission Reg.1737/05

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about the list of units and their economic characteristics. In this view, three lists have been used, two of them were already available, while for the last one an ad hoc reconstruction of the frame has been done because a proper list was non available. Hence, the three registers are:

a) ASIA (Statistical Register on Active Business) Register. It consists of a statistical Business Register resulting from the logical and physical combination of data resident in statistical and administrative sources (Tax Register, Register of Enterprises and Local Units provided by the Chambers of Commerce, Social Security Register, Work Accident Insurance Register, Register of the Electric Power Board) treated with statistical methodologies. It supplied official information about the economic activity and about the average employment in the reference year. A sample of the private business was drawn from this list (reference year 2007) and data were due to be collected only through a direct survey.

b) S13 list (statistical Register of the Public Institutions), list of units included by Istat in the S13 domain that is the “General government” institutional sector in European System of National and Regional Accounts, see ESA (1995). The information supplied by this list is not about employment. In this view, a census has been done on this list in order to evaluate also the frame of the population according the number of employees, that was necessary to evaluate data only on units with more than 10 employees. Data were due to be collected both with a direct survey and integrated with administrative data where non response occurred. Reference year 2007.

c) the problem was to identify the list of all the institutions operating in the Section P, since they have specific characteristics and are not included in the list S13 (except the universities that were available form the S13). Hence, in this case the first need was to define the list of units, then to proceed to the estimation of the target parameters. To this purpose, a specific model using administrative data has been applied. A more detailed description of this ad hoc method can be found in Cardinaleschi, Spinelli (2009)4. The first version of this system has been designed and applied in the context of the SES2006, according to the reference month of October. This system has been fully implemented for LCS2008, where we have considered the whole year as reference period.

As a consequence, the measure of any problem of misclassification can be related only to the first two registers. As regards the list on the private sector, the out of scope units added to wrong addresses and to change of status sum up to a final list error of 9.3% of total initially sampled units. No specific replacement has been performed at the level of the starting list. On the other side, as regards the list S13 the percentage is higher, about the 40%. This can be explained with the identification of all the units out of scope with regards to the size class, indeed about the 75% of the list errors are due to the out of scope ones (less than 10 employees).

4 Cardinaleschi S.- Spinelli V. Integration of Administrative Registers and Statistical Archives. The Case of the Eurostat Structures of Earning Survey in Italy . NTTS 2009, New Techniques and Technologies in Statistics, Bruxelles (Belgium), February 18-20, 2009.

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I.1.2.2 Measure errors

Measurement errors have been detected with selective editing procedures including scatter plot and histograms of annual hours, annual labour cost and compensation of employees. Finally deterministic imputation has been used. Total measurement errors affected only 0.1% of the records, resulting to be negligible.

I.1.2.3 Non response errors

Unit response rate

Unit response rates by economic activity, size class and macro region have been calculated according two different definitions both presented in Annex1 and are gathered with respect to the sampled units (private sector).

The first set of results (Tables 4-6) refers to the so-called Effective Response rate, net from replacement and integration from other sources; this ratio, expressed as percentage, of “valid usable returning questionnaires “to the number of the in-scope “mailed questionnaires” gives an indication of the total response of business and therefore their burden.

The final Response rate, taking into account the replacement and the integration procedures used is described in the second group of tables (Tables 7-9).

Two sets of results are presented in Annex 1 according to the following list:

Table 4 – LCS 2008 – ITALY - Effective response rate, net from replacement and integration from other sources, by section of economic activity

Table 5 – LCS 2008 – ITALY - Effective response rate, net from replacement and integration from other sources, by employees size class

Table 6 – LCS 2008 – ITALY - Effective response rate, net from replacement and integration from other sources, by Nuts1

Table 7 – LCS 2008 – ITALY - Final response rate, including replacement and integration from other sources, by section of economic activity

Table 8 – LCS 2008 – ITALY - Final response rate, including replacement and integration from other sources, by employees size class

Table 9 – LCS 2008 – ITALY - Final response rate, including replacement and integration from other sources, by Nuts1

Item response rate

Item response rate has been calculated for the interest variable Total Annual Labour Cost, it is 93.0% and it is very high due to the many recalls have been done in order to obtain answer on the main variables. On the total number of values for this variable, the 19,2% of them have been changed, of which 7.0% changed from blank to a value and 12,2% from a value to an another.

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Overall imputation rate

The overall imputation rate gives the imputed values for all variables as a percentage of the total number of values for these variables and it is 27,1%; it has been computed for the 34 mandatory variables according to Commission Reg. 1737/2005.

I.2 TIMELINESS AND PUNCTUALITY

Questionnaire have been sent out in July 2009; data collection went on till June 2010 delay mainly due to the difficulty of getting back questionnaire from big enterprises.

Preliminary results were sent to Eurostat after the deadline, 24 months after the year of reference of the survey. After Eurostat feed back, few corrections were needed and the official delivery of updated tables to Eurostat dated February 2011.

I.3 ACCESSIBILITY

Online dissemination of LCS 2008 detailed tables will be available in April 2011 in the Istat web site www.istat.it , within the framework of the publication “Statistica in breve” the most efficient format for a quick dissemination of results. No results are sent back to responding units included in the sample.

I.4 COMPARABILITY

Labour Cost Survey complied with the definition of variables adopted in Commission Regulation 1737/05 and integrated by Commission Regulation 973/2007 (for transmission of Nace Rev 2)

I.5 COMPLETENESS

No restriction on NACE coverage was performed. Estimation have been provided for private and public Businesses and Institutions, for section Nace Rev1.1. , for section Rev 2 and for more than 9 employees.

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PART II - SPECIFIC METHODOLOGICAL NOTES II.1 GENERAL INFORMATION

II.1.1 Introduction

The first Labour Cost Survey took place in Istat for reference year 1997 in all sectors of economic activity from C to K of NACE Rev. 1.

In order to improve the performance of the editing process in terms of quality, timeliness and enterprise burden reduction in 1999 Istat coordinated a Commission of National Experts; the aim of this Task Force was to study the global survey strategy of the two four-yearly structural surveys on Structure of Labour Cost and Earnings according to the Council Reg.530/99 request. For year of reference 2000 a new questionnaire taking into account the proposals of the Expert Commission was successfully adopted.

The LCS for reference year 2004 (carried out in 2005-2006) covers NACE rev.1 Sections C to K and sections from M to O (for the first time) for all private enterprises and Institutions employing more than 9 persons.

The LCS for reference year 2008 (carried out in 2009-2010) covers NACE Rev. 2 Sections B to N and from P to S for both all private enterprises and Institutions and also, for the first time, for the public Institutions employing more than 9 persons. Data are published also according to the NACE Rev. 1 Section C to K and from O to P.

II.1.2 Sources

The source of data on Labour Cost is the LCS 2008 survey for all the private sector; on the other side, data on the public sector has been collected both with a direct survey and with administrative data. In this case, a census based on a direct survey had been designed, with integration of total no response through administrative data for the all the units belonging to the list S13, except the ones of the Section P (education) that are not Universities. Indeed, all the units working in public education – except the universities – have been estimated on the base of administrative data with a specific model, because of their specific characteristics.

The questionnaires have been collected through an internet-base system: first statistical units were contacted by mail, they were supplied with every necessary information and specific identification key to send the data by the specific Istat website. Afterwards, during the following six months, the no respondent units received, together with the same previous information to access the website, also the paper questionnaire. At last a final recall by telephone was done to a specific set of no respondent units, which purpose was to make respondents use the internet-base system.

Furthermore, both administrative (i.e. business register for sampling) and statistical auxiliary sources of information have been used in different steps of the procedure in order to optimise the quality of final results and the efficiency of the editing and imputation process.

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II.1.3 Reference period

Labour Cost Survey refers to year 2008.

II.1.4 Scope of the survey

LCS 2008 covers all sectors of economic activity B to N NACE Rev. 2 (C to K NACE Rev.1) and P to S NACE Rev. 2 (M to P NACE Rev.1) for private business and Institutions and public Institutions with at least 10 employees. A pilot Study on the extension of Labour Cost Survey to sectors M to O, namely Education, Health and Social Services, and to small business (less then 10 employees) had been carried out in 2003-2004; aim of the pilot study was to verify if existing statistical and administrative sources could comply with Reg.530/99 request. The following experience of the SES 2006 gave further elements to definitely implement the extension to the public sector, both based on a direct survey and on administrative data.

The extension to section O and to enterprises and institution with less than 10 employees is still considered to be optional .

II.1.5 Variables and definitions

Each variable is defined according to Commission Regulation 1737/2005.

II.1.6 Dissemination of national data on quality by Eurostat

No national data on quality shall be published without the agreement of Istat.

II.2 SURVEY STRATEGY

II.2.1 Sample design, selection procedure, stratification and size of the sample

The target population of the LCS2008 was identified by three different lists of statistical units, two of which previously gathered and one on purpose built internally in the survey, using administrative data.

The sample design has been organized in a way to have a different scheme according to the list: 1. a sample for the private enterprises with a direct survey; 2. a census on the public institutions belonging to the list S13 (that included Universities), whose data was collected by direct survey and integrated with administrative data to achieve the census; 3. the sector of Education (except the Universities) were estimated only with administrative data.

In this view, the features of the sample design will be described according to the list of units:

a) The LCS sample design on the private businesses consists of a random stratified sample for enterprises with 10 or more person in employment. The sample list was drawn from ASIA (Italian business register) 2007, available at the moment of the survey design: the target population (Universe) consists of around 198,000 units (of which 3,598 enterprises count for 250 or more employees) and 8,770,000 employees. A stratified sample has been studied for enterprises with 10 to 249 employees, which fulfils the bond of 5% for coefficient of variation of a transformed linear function of hourly labour cost. The total number of the strata were 1,430,

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obtained from the combination of 80 2-digit economics activities Nace Rev. 2, 4 employees size-class, and 5 nuts1 region. Multivariate allocation procedures fulfilling accuracy and precision of estimates for each study domain was made also to take into account the more detailed classification Nace Rev. 2, in order to obtain the optimal the number of units to be selected in each stratum. According to this purpose, minimum number per stratum was of 10 elements and full survey has been among stratum with less than 15 units (for about 500 units) or among the ones on enterprises with 250 and more employees (3,598 enterprises). Where possible, an increase of 17% of sample was performed in order to prevent the negative effect of total non-response. The definitive sample included 24,299 businesses. During the survey 2,250 units of the list (9.3%) resulted to be out of scope and therefore were excluded. Summary table including all relevant features of the sampling design is shown in Prospect 3.

b) The LCS sample design on the public institutions consists of a census for units with 10 or more person in employment, from the list S13 (statistical Register of the Public Institutions, including Universities). This list S13 includes 1,245 units, it did not gathered any information on the employment, that have been properly estimated. During the survey 508 units of the list (40.8%) resulted to be out of scope and therefore were excluded (of which about 300 to be under the 10 employees).

c) The list of institutions belonging to the Education sector - except Universities - has been estimated to be of 11,469 statistical units by the integration of administrative and statistical archives.

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Prospect 2a - LCS 2008- Frame of the private sector: population by Nace rev.2 section (distribution %)

Nace Rev.2 Percentage distribution

B 0.4 C 38.0 D 0.2 E 1.0 F 14.4 G 16.2 H 5.7 I 6.7 J 2.8 K 1.0 L 0.3 M 3.5 N 4.7 P 0.6 Q 2.5 R 0.9 S 1.1

Total 100.0

Prospect 2b - LCS 2008- Frame of the private sector: population by employees class (distribution %)

Size class Percentage distribution

10_49 87.2 50-249 11.0

250-499 1.0 500-999 0.5

1000 and more 0.3

Total 100.0

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Prospect 2c - LCS 2008- Frame of the public sector- list S13 : population by Nace rev.2 section (distribution %)

Nace Rev.2 Percentage distribution

C 0.1 F 3.4 G 0.6 I 3.5 J 7.9 M 17.3 N 7.0 P 27.6 R 32.7 S 0.1

Total 100.0

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Prospect 3-LCS 2008 – Summary table: Main features of sampling design

table below has been completed using the following explanatory notes: • “1/1 for more than …. employees” represents the size (in terms of the number of employees) of the first level units

which were covered exhaustively, i.e. 100% covered rather than sampled. • “Sampling rate” represents the number of first level units in the sample survey expressed as a % of the total

number of units in scope (i.e. in the population). • “Response rate” represents the number of first level units whose responses have actually been used, expressed as

a % of the number of first level units in the sample. • “Coverage rate” represents the total number of employees in the first level units actually covered by survey

expressed as a % of the number of employees in the units in scope (i.e. in the population).

Main sampling procedure One stage stratified random sample survey

Records used for sampling Business register.

Observed unit Enterprise

Local unit

Characteristics of stratification:

(Number of regions, branches of economic activity and size class of enterprise used)

4 employees class

80 economic activities (2-digit)

5 Nuts1 regions

Sampling fraction in each size class (in terms of the number of units)

1/1 for units with more than 249 employees

Size class: Sampling fraction 10-49: 6.8

50-249: 40.7

Overall sampling rate (including those units exhaustively covered) 12.3

Net Response rate 43.1%

Overall final sample size (number of units actually used) including integrated units

15,592

Coverage rate 70.7%

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II.2.2 Handling of non-response

II.2.2.1 Unit no-response

So as to minimize the non response rate, special telephone lines were set up to help information providers in answering the questions; one written reminder together with a new copy of the questionnaire was sent out two months later, while special follow-up of major enterprises has been carried out to ensure minimum response in “critical cells; nearly all business with 250 or more employees which had not yet responded received telephone calls. Treatment of Total Non Response was different according reference list, for the private businesses and institutions statistic models has been applied, already successfully tested in the previous round of LCS, to the elementary data of the two sources used for SBS (Structural Business Survey) data, namely PMI (Small Medium Enterprises Survey) and SCI (System of Financial Account of Business employing more than 100 people). Other missing units had been replaced with random selection of small enterprises respondent to PMI belonging to the same strata of the missing units.

Due to the availability of the Business Register at the moment of the launching of the survey (as already mentioned above it referred to year 2007), a strategy for the updating of the frame was performed using information about the existence of enterprises from the structural surveys carried in Istat.

Reweighing with post stratification model has been adopted to deal with unit non-response considering ASIA business register as it stood on year 2008.

On the other side, the census on the public institutions belonging to the list S13 has been achieved integrating the questionnaires with administrative data from the Budget and Financial Accounts of the State Administration, year 2008 (source: Ragioneria Generale dello Stato of the Ministry of Finance) .

II.2.2.2 Item non response

The procedure of Editing and Imputation was mainly based on deterministic models.

II.2.3 Grossing up

Direct weights in each stratum have been adjusted to take into account the non response pattern.

Responding units have been post-stratified and the final weight resulted from the standard procedure implemented in Istat according to the calibration estimators. Numbers of business and employees in the frame provided by ASIA register reference year 2008 have been used as auxiliary variables.

Final weights guarantee the convergence of the results to the known totals of the auxiliary variables of the following estimation domain:

Subsection of economic activity (Nace rev.2) and employees class (10-19, 20-49, 50-99, 100-249, 250-499, 500 and more)

Subsection of economic activity (Nace rev.2) and 5 macro regions (Nuts1 2003).

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PART III - COHERENCE III.1 INTRODUCTION

An analysis on links and coherence is presented in the following part, in order to evaluate the different labour cost concepts across different sources. The discussed sources include the Labour Cost Survey (LCS), the Labour Cost Index (LCI), compensation of employees of National Accounts (NA) as well as personnel cost of Structural Business Statistics (SBS) and the Labour Force Survey (LFS) with regards to the worked hours. Section 2 shortly discusses every collection and presents preliminary results from data comparisons, while section 3 summarizes the results with regard to coherence between LCS and LCI, NA, SBS and LBS.

III.2 THE DIFFERENT SOURCES AT A GLANCE

European labour cost statistics provide a detailed picture of the level, structure and short-term development of labour costs. The frameworks, definitions and coverage are under regulation of the European Parliament and defined according to Commission Regulation (EC) no 530/1999 of 9 march 1999 and Commission Regulation (EC) 1737/2005 of 21 October 2005 amending Regulation (EC) no 1726/1999 (as regards LCS); Regulation (EC) no 450/2003 of the European Parliament and of the council of 27 February 2003 and COMMISSION REGULATION (EC) No 224/2007 of 1 March 2007 amending Regulation (EC) No 1216/2003 (as regards LCI). These collections serve to show the structure (LCS), level (LCS) and short-term development (LCI) of labour costs in the EU. Additional information on labour costs is also included in National Accounts (NA) and collected in Structural Business Statistics (SBS), although in far less detail.

Ideally, they build one system which is internally coherent, but differences in coverage, statistical unit used and concepts in defining the items may produce some differences. This analysis aims to identify discrepancies in the data provided by the various survey and evaluate the causes of potential differences.

III.2.1 Labour Cost Survey

Labour Cost Survey is a four-yearly survey which provides detailed information on structure and level of labour costs, hours worked and hours paid. The LCS cover units with 10 and more employees and all economic activities except agriculture, fishing, public administration, private households and extra-territorial organisations. Data is broken down by economic activity and enterprise size. Regional data is available according to the NUTS-classification (at NUTS level 1). The reference years of the surveys covered are 2000, 2004 and 2008 (next survey: reference year 2012). LCS are based on legislation and data become available approximately 2 years after the end of the reference period. Very detailed information on cost components and hours worked/paid are available. In the LCS, total labour costs D are defined as D1+D2+D3+D4-D5 where D1, compensation of employees is made up of salaries and wages (D11) and employers' social contributions (D12). D2 refers to vocational training costs paid by the employer; D3 are other expenditures paid by the employer and D4 taxes paid by the employer. D5 refers to subsidies received. Variables D1, D11 and D12 and their definitions tally in principle with those of LCS; SBS and NA are comparable to items personnel cost. Finally, B1 represent the hours worked, that is the amount of hours worked during the reference year, defined as the sum of all time spent on direct and ancillary activities in order to produce goods and

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services. This variable, theoretically, should correspond with the average number of hours normally worked by the person, asked in LFS.

III.2.2 The Labour Cost Index

The quarterly Labour Cost Index (LCI) measures the cost load arising from the production factor 'labour', showing the short-term progress of the total hourly costs. The LCI is defined as a Laspeyres index of labour costs per hour worked, chain-linked annually, available broken down by cost items component (wages and salaries, employers' social contributions) as well as by economic activity, covering the economic activities of industry and services (including public administration).

The labour cost index is based on a limited concept of total cost (D1+D4-D5) and is available for the breakdowns wages and salaries (D11) and other cost (D12+D4-D5). According to the LCS 2008, this concept of total cost covers for the EU27 roughly 99% of the total cost concept including D2 and D3. Some Member States provide the LCI excluding irregular bonuses (D11112). Coverage of the LCI includes enterprises of all sizes, but is limited to NACE Rev. 2 sections B-S (NACE Rev. 1 C to O). The LCI Regulation is an output-oriented Regulation, leaving data providers the choice of data sources. The reference year of the index is 2008.

Prospect 5 - LCS vs. LCI (2008-2004 %diff., NACE rev. 1.1 sections C-K

LCS LCS LCI

NACE rev. 1.1

C 14.0 22.7D 13.3 14.6E 13.5 13.8C,D,E 13.4 14.4F 9.2 14.8G 13.5 13.3H 5.4 12.6I 11.8 11.3J 14.5 14.6K 8.0 11.9G,H,I,J,K 11.0 11.7 Total 12.0 12.9

From a general point of view taking into account the differences in definitions and coverage that affect both numerator and denominator (labour cost and hours worked) of the two statistics the percentage changes 2008/2004 are very similar. The large difference in C, Mining and quarrying, a very small section with just few large firms in Italy, probably depend on the different economic classification of the units in the two statistics (KAU and

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firm). Other sections, Hotel and restaurant (H) and Construction (F), show rather large divergences which cannot be easily explained.

III.2.3 National Accounts – compensation of employees

National Accounts (NA) are the implementation of comprehensive and consistent accounting techniques to quantify the economic activity of a nation, combining data from many statistical source . As a matter of fact, techniques of data combination and integration vary, depending on the compilation approach, the statistical source available, the particular account in the system of accounts and the timeliness of data release and other factors. NA provide a coherent and consistent macroeconomic picture of the economy as they broadly present the production, income and expenditure activities of the economic actors (corporations, government, households). All stages of production, distribution and use of income are covered, focusing on aggregates by industry and institutional sectors. So NA items (D1, D11, D12) are quite similar to those used in the labour cost collections except for the coverage, differences regarding the enterprise size and the economic activities: indeed all units and all sectors are included in the NA (the data are broken down by NACE rev 1.1). Prospect 6 - LCS vs. NA (2008, NACE rev. 1.1 sections C-O, labour cost per capita – euro and %diff.)

Nace rev.2 NA LCS % diff.

C 44,778 57,142 -21.6D 36,001 39,305 -8.4E 51,193 57,219 -10.5F 28,360 36,263 -21.8G 29,658 35,263 -15.9H 29,334 21,819 34.4I 45,192 41,206 9.7J 66,763 72,296 -7.7K 31,415 32,933 -4.6M 49,751 35,030 42.0N 38,089 41,922 -9.1O 40,020 36,512 9.6 Total 36,633 38,772 -5.5

The comparison of LCS and NA data shows quite pronounced differences, due to the differences in coverage (all the enterprises in NA; enterprises with 10 and more employees in LCS). Being the labour cost increasing with enterprise dimension, LCS’ labour cost appears higher in almost all NACE sectors. However, several sectors of activity show divergences which seem too large to be explained by the abovementioned reasons (i.e.: C - Mining and quarrying, H - Transportation and storage and M - Professional, scientific and technical activities).

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III.2.4 Structural Business Survey – personnel cost

Structural Business Survey (SBS) cover industry, trade and services. They describe the economy through the observation of the behaviour (structure, conduct and performance) of business unit across the European Union (EU). Data are available for the EU-27 and a very detailed economic classification level (several hundred economic activities) as well as according to the size of enterprises. Therefore the information provided is more detailed than National Accounts. The SBS Regulation is an output-oriented Regulation, leaving data providers the choice of data sources. In most countries a combination of survey and administrative data is used. The main indicators within SBS are generally collected and presented as monetary values, or as counts, in contrast to short-term business statistics (where the data are presented as indices). Personnel costs as defined in the SBS are the total remuneration, in cash or in kind, including wages and salaries and employers' social security costs (compulsory and voluntary social contributions). This concept of personnel cost coincides largely with the definitions of D1; although other differences may exist, regarding items classified as salaries and wages which can be found under D12 in the LCS as well as the difference in coverage (enterprise size, types of workers included) and the statistical units analyzed (enterprises rather than a mix of enterprises and local units – like in Public Educational Sector for LCS). Prospect 7 - LCS vs. SBS (2008, NACE rev. 2 sections B-N, labour cost per capita – euro and %diff.)

Nace rev.2 SBS LCS % diff. B 57,005 59,682 -4.5C 36,864 39,060 -5.6D 57,288 61,495 -6.8E 39,391 39,406 0.0F 31,591 36,371 -13.1G 30,522 35,241 -13.4H 37,436 38,996 -4.0I 19,869 21,885 -9.2J 48,336 53,130 -9.0L 34,074 50,526 -32.6M 39,510 48,979 -19.3N 22,941 23,371 -1.8

Total 33,561 37,156 -9.7

The comparison between the LCS on the one hand and SBS on the other shows similarities with the previous one. Since LCS is based on enterprises with 10 or more employees, while Structural Business Survey covers enterprises of all sizes, it is no surprise that LCS’ labour cost are on average higher than the SBS in all sectors of activities.

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III.2.5 Labour Force Survey – number of weekly hours of work (annualized)

The European Union Labour Force Survey (EU LFS) is conducted in the 27 Member States of the European Union in accordance with Council Regulation (EEC) No. 577/98 of 9 March 1998. The EU LFS is a big household sample survey providing quarterly results on labour participation of persons inside/outside the labour market. All definitions apply to persons aged 15 years and over living in private households. Labour Force Survey provides a very large set of information; the “average number of usual weekly hours of work in main job” data is used to make a comparison with the B1 concept, although great differences may exist as a consequence of the differences existing between an offer-side survey (LFS) and a demand-side survey (LCS). As a matter of fact, LCS provides detailed data on the worked hours paid by the enterprises, while LFS results are related to the number of hours actually/usually worked by the individuals (workers) during the reference week includes all hours including extra hours, either paid or unpaid (that is, this includes all hours worked including overtime, regardless of whether people were paid) It excludes travel time between home and workplace, and main meal breaks (normally taken at midday). LCS reports on hours effectively paid by enterprises, while LFS reports data on hours worked asking to individuals. Prospect 8 - LCS vs. LFS (2008, NACE rev. 2 sections B-S, number of usual annual hours of work in main job and %diff.)

Nace rev.2 LFS LCS % diff. B 2,095 1,712 22.4C 2,014 1,639 22.9D 1,999 1,661 20.3E 1,862 1,622 14.8F 2,019 1,665 21.3G 1,892 1,613 17.3H 2,029 1,640 23.7I 1,781 1,405 26.8J 1,999 1,604 24.6K 1,953 1,538 27.0L 1,806 1,638 10.3M 1,882 1,641 14.7N 1,675 1,415 18.4P 1,381 1,231 12.2Q 1,776 1,462 21.5R 1,675 1,461 14.6S 1,766 1,528 15.6

Total 1,857 1,541 20.5

Finally, the prospect 7 shows the differences between the annualized value of weekly hours of work in LFS and the (only apparently) analogous concept of annual worked hours in LCS. As a matter of fact, the comparison of the number of hours worked between LFS and LCS shows great discrepancies in all NACE sectors (from 15.6% up to 27%). There

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are several explanations of this evidence. Firstly, a statistical bias should be related with the conversion to yearly terms of hours worked during the reference week. Secondly, these divergences are related to the statistical domain (enterprises vs. individuals) and differences in the abovementioned definition of the hours worked concept.

III.3 CONCLUSION

Coherence with the LCS on the one hand and NA and SBS on the other appears difficult to evaluate due to the differences in coverage, but it seems that differences take place mainly as a consequence of the exclusion of very small enterprises in the LCS (less then 10 employees) as well as the statistical unit used (mix of enterprises and local units rather than firms). The differences in definitions of single cost items in the several collections of data seem to be much less important.

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Structure of Labour Cost Survey for the year 2008

Implementation of the Commission Regulation 698/2006

and therefore Council Regulation 530/1999 Commission Regulation 1737/2005 Commission Regulation 973/2007

Quality Report

Annex 1

ITALY

(Contact person: S. Cardinaleschi cardinal@istat.it +39-06-46736159

F. Rocci OCC/E rocci@istat.it +39-06-46736370)

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Index of the tables Accuracy Table 1 - Coefficient of Variation of Annual Labour Cost and Hourly Labour Cost by section of economic activity Table 2 - Coefficient of Variation of Annual Labour Cost and Hourly Labour Cost by employees size class Table 3 - Coefficient of Variation of Annual Labour Cost and Hourly Labour Cost by Nuts1

Response -

Table 4 – LCS 2008 – ITALY - Effective response rate, net from replacement and integration from other sources, by section of economic activity

Table 5 – LCS 2008 – ITALY - Effective response rate, net from replacement and integration from other sources, by employees size class

Table 6 – LCS 2008 – ITALY - Effective response rate, net from replacement and integration from other sources, by Nuts1

Table 7 – LCS 2008 – ITALY - Final response rate, including replacement and integration from other sources, by section of economic activity

Table 8 – LCS 2008 – ITALY - Final response rate, including replacement and integration from other sources, by employees size class

Table 9 – LCS 2008 – ITALY - Final response rate, including replacement and integration from other sources, by Nuts1

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ACCURACY Table 1 – LCS 2008 – ITALY - Coefficient of Variation of Annual Labour Cost and Hourly Labour Cost by section of economic activity

section of

economic activity

Annual Labour Cost

(D=D1+D2+D3+D4-D5)

Hourly Labour Cost

(R=D/B1)

CV CV B 1.3 1.3 C 0.8 0.5 D 5.1 1.8 E 1.6 1.3 F 2.0 1.8 G 1.9 1.5 H 2.6 1.4 I 2.7 2.5 J 4.1 2.4 K 7.5 2.5 L 6.8 6.3 M 2.3 1.5 N 3.2 1.3 P 3.5 3.7 Q 1.4 1.7 R 4.1 3.7 S 3.2 2.4 total 0.8 0.5

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Table 2 – LCS 2008 – ITALY - Coefficient of Variation of Annual Labour Cost and Hourly Labour Cost by employees size class

Annual Labour Cost Hourly Labour Cost employees size class (D=D1+D2+D3+D4-D5) (R=D/B1)

CV CV E10-49 0.8 0.7 E50-249 0.7 0.6 E250-499 2.0 1.0 E500-999 3.8 1.7 E1000 3.6 2.1 total 0.8 0.5 Table 3 – LCS 2008 – ITALY - Coefficient of Variation of Annual Labour Cost5 and Hourly Labour Cost by Nuts1

Annual Labour Cost Hourly Labour Cost Nuts1

(D=D1+D2+D3+D4-D5) (R=D/B1)

CV CV ITC 1.5 0.9 ITD 1.7 0.8 ITE 2.3 1.1 ITF 2.2 1.3 ITG 3.9 1.6 total 0.8 0.5

5 For Regional data, information refers to Compensation of employees (variable D1)

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RESPONSE Table 4 – LCS 2008 – ITALY - Effective response rate, net from replacement and integration from other sources, by section of economic activity

section of economic activity effective response rate

%

B 42.3 C 41.5 D 60.0 E 47.8 F 43.5 G 48.6 H 45.0 I 41.0 J 40.2 K 71.7 L 45.0 M 46.0 N 37.0 P 37.7 Q 45.6 R 29.4 S 33.9 total 43.1

Table 5 – LCS 2008 – ITALY - Effective response rate, net from replacement and integration from other sources, by employees size class

employees size class effective response rate

%

E10-49 7.1 E50-249 44.9 E250-499 59.0 E500-999 66.2 E1000 76.0 total 43.1

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Table 6 – LCS 2008 – ITALY - Effective response rate, net from replacement and integration from other sources, by Nuts1

NUTS1 effective response rate %

ITC 54.4 ITD 51.4 ITE 36.9 ITF 29.1 ITG 29.0 total 43.1

Table 7 – LCS 2008 – ITALY - Final response rate, including replacement and integration from other sources, by section of economic activity

section of economic activity effective response rate

% B 75.4 C 74.4 D 86.7 E 79.0 F 67.8 G 77.5 H 74.8 I 65.2 J 70.3 K 75.4 L 68.0 M 66.4 N 64.6 P 57.9 Q 70.7 R 48.9 S 60.0 total 70.7

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Table 8 – LCS 2008 – ITALY - Final response rate, including replacement and integration from other sources, by employees size class

employees size

class final response rate

%

E10-49 14.0 E50-249 79.8 E250-499 98.1 E500-999 98.9 E1000 98.6 total 70.7

Table 9 – LCS 2008 – ITALY - Final response rate, including replacement and integration from other sources, by Nuts1

NUTS1 final response rate

%

ITC 79.6 ITD 78.0 ITE 66.7 ITF 58.3 ITG 59.2 total 70.7