Wage Index

0. Registration entry for subjects

0.1 Name

Wage Index

0.2 Subject area

Wages, salaries and income

0.3 Responsible authority; office, division, person etc.

Statistics Iceland
Wage statistics
Email: wages@statice.is
Telephone: (+354) 528 1250

0.4 Purpose and history

The wage index is a monthly index and is calculated and published according to the legal act on the wage index No. 89/1989. Aggregated index for the entire labour market has been published monthly since January 1989. According to the legal act the index is intended to reflect, to the extent possible, changes in total wages of all employees paid for fixed hours (i.e. all wages paid for day-time and fixed overtime hours, including additional payments and bonuses), excluding irregular payments (irregular overtime, irregular bonuses etc.). Employers' social contributions and taxes are excluded. Calculation of the index is based on a comparison of wages and salaries for two consecutive months.

The breakdown of wage index shows the changes of regular hourly wages in the private sector by occupational group and economic activity. The index also shows changes of wages in the public sector.

0.5 Users and application

Users of the wage index and sub-indices are individuals, private business enterprises, national and international organisations, employees' organisations and employers' associations, ministries and public institutions.

0.6 Sources

The wage index is based on the data collected through the Statistics Iceland Icelandic survey on wages, earnings and labour costs (ISWEL). The survey is based on a sample of private companies and municipalities and is performed by Statistics Iceland. In addition data is collected directly from the Central Government for all employees. Data is collected monthly directly from the company's payroll systems and contains information on all labour cost. Quality checks are performed and data is edited according to present rules in order to eliminate data items that are not reflecting real wage change. The ISWEL is intact with regulations on surveys on earnings and labour in the European Economic Area.

0.7 Legal basis for official statistics

Statistics collected, generated and disseminated by Statistics Iceland are governed by act on Statistics Iceland No. 163/2007.

0.8 Response burden

The Icelandic survey on wages, earnings and labour costs (ISWEL) is based on a lengthy tradition of collecting data directly from the software each company uses for calculating wages, i.e. from the administrative records of the enterprise. Monthly, each company sends a text file containing detailed information on earning structure and cost items, together with background data on the individuals and the company. Taking advantage of data collection by direct access minimises the bias caused by recording. Moreover, the expense and nuisance companies associate with data collection and the time lost through reporting is kept to a minimum. This is important, since a substantial number of companies are obliged to participate in the survey on a regular basis so as to maintain a representative sample. In order to collect metadata on each company and its pay structure, great effort is expended on the inclusion process for each enterprise as it enters the survey.

0.9 EEA and EU obligations

No EU or EEA rules apply.

1. Contents

1.1 Description of content

The purpose of the index is to reflect changes in total wages paid for fixed working hours. The base of the wage index is December 1988. The base for the breakdown is, however, December 2014.

The wage index is calculated in two levels. In the base level wage changes for paired individuals are calculated for two consecutive months as a Fisher ideal index. In the aggregation level a chained Laspeyres index is used to weight the base levels together. The weight structure of the index is based on administrative registers. The industrial classification used is ÍSAT95 is the Icelandic equivalent to NACE rev.1 classification and the occupational classification is to ÍSTARF95, an Icelandic version of ISCO-88. Each economic activity and occupation group is given a weight based on their share in total wages. The weights for occupation groups and industries are revised annually.

The wage index is published monthly about 20 days after the end of the reference month.

·Wage index 1989-2018

The brake down of the wage index is published monthly about 90 days after the end of the reference month.

·Monthly wage index by sector from 2015
·Monthly wage index in private sector by occupational group from 2015
·Monthly wage index in private sector by economic activity from 2015

Older tables with quarterly brake down are maintained.

Quarterly wage index by sector from 2005
Quarterly wage index in private sector by occupational group from 2005

1.2 Statistical concepts

Paired sample
The comparison covers only those employees who are in the same job, within the same company and same industry, during the two relevant months.

Regular wages
Regular monthly salaries are the remuneration for regular working hours excluding payments for overtime as well as piecework, irregular bonuses and various other irregular payments. Regular working hours are defined as ordinary working hours according to collective agreements, both daytime and shift-work hours.

Population is defined as all employees 18 years or older working in companies with minimum 10 employees. The population frame is based on the monthly PAYE (Pay As You Earn) data.

Same job
Occupations are classified according to ÍSTARF95, an Icelandic version of ISCO-88. The comparison covers only those who are in same job (5 digit code) during the two relevant months.

Same company in same industry
Industries are classified according to ISAT08 which is the Icelandic equivalent to NACE rev.2 classification (down to 5 digit level).

From 2018 sectors are based on the ESA 2010 classification of National Accounts. The public sector only consists of the General Government (S.13). Others belong to the private sector.

Until 2017 the public sector consisted of those getting remunerated by the municipalities or by the Central Government Accounting Office. There are only small differences between those two definitions.

Private sector
The wage index is based on data collected from companies operating in the following industries in the private sector: Manufacturing (C), Electricity and steam supply (D), Water supply and waste management (E), Construction (F), Wholesale and retail trade (G), Transportation and storage (H), Information and communication (J - only divisions 58-61, Information Technology - divisions 62-63 are missing), Financial and insurance activities (K), and in the year 2018 engineering activities (M - only division 71) was added.

Public sector
The sample of public servants covers employees in a sample of municipalities, including the capital city of Reykjavik (local government), as well as data on employees from The Central Government Accounting Office (central government).

Weights are used to reflect the whole labour market. The weights are renewed annually. The weight of the private sector is 75% of the total in the year 2010.

2. Time

2.1 Reference periods

Reference period for the wage index is the previous month. The wage index for January is published around 22nd of February and is based on comparison of wages between December and January. The breakdown for January is published at the end of April.

2.2 Process time

Processing for the wage index is 20-24 days. Processing time for the decomposed wage indices is 80 to 90 days.

2.3 Punctuality

The wage index is published according to the advance release calendar at 9:00 am. The advance release calendar for each year is published on the web site of Statistics Iceland http://www.hagstofa.is.

2.4 Frequency of releases


3. Reliability and security

3.1 Accuracy and reliability

The Icelandic survey on wages, earnings and labour costs is a sample survey. The sample is a stratified cluster sample where the sample unit is the local activity unit and the observation unit is the employee. The target population contains all local activity units with no fewer than 10 employees. The population frame is based on monthly PAYE (Pay As You Earn) data. PAYE data reflects the sum of wages reported to the tax authorities.
The population is stratified in sections and subsections according to NACE Rev. 2. Activity units with more than A/m employees are selected with a probability of 1 (where A is the number of employees in the stratum and m is the number of activity units to be selected from the stratum). For the rest of the population a simple random sample (srs) is selected from each stratum.

During visits to participating companies technical aspects concerning the software for wage calculations are addressed along with details on entering records such as classification of occupations according to ÍSTARF95 standard. The company's wage structure is examined assigning payroll items to the wage items of the survey to ensure coordination with other companies. Population frame is updated yearly and new companies are simultaneously included into the survey as other quit participation. Efforts are continuously made to improve the data quality through feedback to the enterprises and through updating and improvement of the quality checking system. Quality checks are made continuously and data is edited by using a set of pre-defined rules. Data entries for an individual in the first two months in new job and last two entries in job are eliminated from the index. Continuous efforts are made to ensure the quality of the data.

3.2 Sources of errors

In the calculation of an index various errors can arise. e.g. sampling errors (coverage errors. non-response errors) which may occur if the sampled companies do not reflect the population accurately. The population frame is based on monthly PAYE (Pay As You Earn) data. Errors can arise if enterprises are incorrectly registered according to the industry classification. in cases of companies operating in more than one industry but only registered in one of the industries. if newly established companies are not a part of the population frame etc. In order to minimize errors due to imperfect population frame. effort is made to improve the data on regular basis.

3.3 Measures on confidence limits/accuracy

The statistical uncertainty is not calculated.

4. Comparison

4.1 Comparison between periods

The wage index is comparable over time.

4.2 Comparison with other statistics

The wage index is intended to be a timely indicator of general changes in wages since 1989. The breakdown is published since 2015 and is intended to reflect changes in regular wages in private sector by occupational group and economic activity. as well as overall changes in regular wages in the public sector.

4.3 Coherence between preliminary and final statistics

Preliminary statistics are not published.

5. Access to information

5.1 Forms of dissemination

Basic data is stored by Statistic Iceland and is not accessible to others.
Statistics Iceland operates in accordance with the United Nations Fundamental Principles of Official Statistics. The European Statistics Code of Practice as well as the Act on the Protection of Privacy regarding the processing of personal data. Furthermore Statistics Iceland has laid down its own Rules of Procedure for Treating Confidential Data.

5.2 Basic data; storage and usability

Basic data is stored by Statistic Iceland and is not accessible to others than employees of the Wage unit.

5.3 Reports

No reports are published about the wage index.

5.4 Other information

Further information is provided by the department of Wages, income and education.

© Hagstofa �slands, �ann 3-5-2018