New statistics on wage development, the Total Wage Index, has been published. The index provides further information on the Icelandic labour market. The Total Wage Index reflects total wage development including changes due to changes in the composition of the labour force and working hours. The calculation of the Total Wage Index is based on the sum of total wages and salaries, for paid hours. The Total Wage Index will be published on a quarterly basis and is published back to the year 2008.
In the 1st quarter of 2018 the annual increase of total wages for each paid hour was 4.9% from the 1st quarter of 2017, thereof 4.4% in the private sector and 5.1% in the public sector. The annual increase varied between economic activities as can be seen in figure 1. Annual increases between the 1st quarter of 2017 and 2018 were highest in the economic activity sections of Water supply; sewerage; waste management and remediation activities (E) or 7.6%, and in the Accommodation and food service activities (I), 6.5%. The lowest increase was in Financial and insurance activities (K), 0.2%, due to large bonus payments in the 1st quarter of 2017. Annual increases in other economic activities were between 4.1% and 6.2%.
Notes: Economic activities: Manufacturing (C), electricity, gas, steam and air conditioning supply (D), water supply; sewerage, waste management and remediation activities (E), construction (F), wholesale and retail trade; repair of motor vehicles and motorcycles (G), transportation and storage (H), accommodation and food service activities (I), information and communication (J), financial and insurance activities (K), professional, scientific and technical activities (M) and administrative and support service activities (N). Economic activities: Public administration, defence, compulsory social security (O), education (P), human health and social work activities (Q), arts, entertainment and recreation (R) and Other service activities (S), economic activities are published as one group (OTS). Sector: Private sector (Alm) and Public sector (Opi).
The change between the 1st quarter of 2017 and the 1st quarter of 2018 is affected by pay raises stipulated in collective agreements and corporate agreements. For example, a general pay raise of 4.5% was stipulated in May 2017 in the private sector and of 3.0%-4.5% in the public sector in June 2017. Furthermore, the composition of the labour force has changed during the period. For example immigrants were 17.5% of the labour force in the 1st quarter of 2018 but were 15.1% in the same quarter of 2017. At the same time the number of employed persons increased by 4.6%, according to labour force register data.
The Total Wage Index applies to all economic activities except Agriculture and fishing (A), Activities of households as employers (T) and Activities of extra-territorial organisations and bodies (U). The economic activities Public administration, Defence, compulsory social security (O), Education (P), Human health and social work activities (Q), Arts, entertainment and recreation (R) and Other service activities (S) are published as one group (OTS).
About the Total Wage Index
The Total Wage Index is based on the methodology of the Labour Cost Index according to the Council Regulation no 450/2003. The Total Wage Index is compatible to the wage section of the Labour Cost Index (WAG – wages and salaries) with the exception that the index is based on paid hours, rather than hours worked, and payments for sick hours are here counted as wages rather than labour cost (OTH – labour costs other than wages and salaries) as in the Labour Cost Index. The Total Wage Index composes all those who receive wages and salaries from employers who have 10 or more employees, except those who fall within the economic activities of Agriculture and fishing (A), Activities of households as employers (T) and Activities of extra-territorial organisations and bodies (U).
The results are preliminary and revised on a quarterly basis. The results are part of a development project which Statistics Iceland has been working on where calculations are based on exploitation of varied data sets. Information on total wages is based on tax related wages from administrative data, Pay as you earn data. Paid hours are estimated with a multimodal statistical evaluation and are among else based on data from Statistics Iceland surveys, particularly the Icelandic Survey on Wages, Earnings and Labour Cost, and also administrative data.
The base year for the index is the average for the year 2012. The base year changes every fourth year according to the methodology of the Labour Cost Index. Estimated quarterly revisions of the Total Wage Index follow the Eurostat publication of the Labour Cost Index, or about 70 days after the reference period ends.