1. Main points
Estimated annual growth in labour costs per hour for employees across the whole economy, seasonally adjusted, increased by 3.4%.
Wage costs per hour worked increased by an estimated 3.7% and non-wage costs per hour worked increased by an estimated 2.7%, compared with Quarter 2 (Apr to June) 2018.
The value of labour costs were estimated at £20.00 per hour at whole economy level. Wage costs contributed £17.00 and non-wage costs, such as pensions and National Insurance contributions, made up the rest.
The industry with the highest labour costs is the finance and insurance activities industry, with labour costs of £44.30 per hour. The accommodation and food service activities industry has the lowest labour costs, at £10.60 per hour.
2. Changes in labour costs per hour
Figure 1: Whole economy labour costs per hour increased by an annual 3.4% in Quarter 2 2019
Labour costs per hour year-on-year growth, seasonally adjusted – whole economy, private sector and public sector, UK, Quarter 1 (Jan to Mar) 2010 to Quarter 2 (Apr to Jun) 2019
Source: Source: Office for National Statistics – Monthly Wages and Salaries Survey, Labour Force Survey
Notes:
- Q1 refers to Quarter 1 (January to March), Q2 refers to Quarter 2 (April to June), Q3 refers to Quarter 3 (July to September) and Q4 refers to Quarter 4 (October to December).
- r is revised data
- p is provisional data
Download this chart Figure 1: Whole economy labour costs per hour increased by an annual 3.4% in Quarter 2 2019
Image .csv .xlsWhole economy labour costs per hour increased by 3.4% in Quarter 2 (Apr to June) 2019 compared with Quarter 2 2018, before inflation is considered.
Growth was lower in the private sector (3.1%) than the public sector (4.0%). This pattern is consistent with recent quarters but is a reversal of the pattern seen from late 2014 to late 2017. The recent pattern has been driven by changing levels of bonus and arrears payments. This has been affected by the health and social work subsector in which the timing of pay rises for some NHS staff is different in 2019 compared with 2018. When both bonus and arrears payments are excluded, the difference in labour cost growth between private and public sectors is smaller.
Figure 2: Wage costs have stronger growth than non-wage costs in Quarter 2 2019
Whole economy Index of Labour Costs per Hour, by component, seasonally adjusted, UK, Quarter 1 (Jan to Mar) 2000 to Quarter 2 (Apr to June) 2019
Source: Office for National Statistics – Monthly Wages and Salaries Survey (MWSS); Labour Force Survey (LFS)
Notes:
- Q1 refers to Quarter 1 (January to March), Q2 refers to Quarter 2 (April to June), Q3 refers to Quarter 3 (July to September) and Q4 refers to Quarter 4 (October to December).
- r is revised data
- p is provisional data
Download this chart Figure 2: Wage costs have stronger growth than non-wage costs in Quarter 2 2019
Image .csv .xlsWage costs per hour worked in Quarter 2 2019 were 3.7% higher than in Quarter 2 2018, and non-wage costs were 2.7% higher. This wage growth is consistent with the quarterly growth reported by the Average Weekly Earnings.
The longer time series highlights a pronounced relative increase in non-wage costs in Quarter 2 (Apr to June) 2003, when new National Insurance contribution (NIC) rates were introduced.
Nôl i'r tabl cynnwys3. The value of labour costs
In response to user feedback, data and commentary associated with the value in British pounds of labour costs at whole economy and industry level have been included in this bulletin for the first time. These changes do not affect the methodology of the existing index-based estimates.
Figure 3: Labour costs increased to £20.00 per hour in Quarter 2 2019
Labour costs per hour levels, seasonally adjusted, not adjusted for inflation – whole economy, UK, Quarter 1 (Jan to Mar) 2011 to Quarter 2 (Apr to June) 2019
Source: Source: Office for National Statistics – Monthly Wages and Salaries Survey (MWSS); Labour Force Survey (LFS)
Notes:
- Q1 refers to Quarter 1 (January to March), Q2 refers to Quarter 2 (April to June), Q3 refers to Quarter 3 (July to September) and Q4 refers to Quarter 4 (October to December.
- p is provisional data
Download this chart Figure 3: Labour costs increased to £20.00 per hour in Quarter 2 2019
Image .csv .xlsLabour costs increased to £20.00 per hour in Quarter 2 (Apr to June) 2019, which is the highest since the series began (not adjusted for inflation).
Wage costs increased to £17.00 per hour, which makes up 85% of total labour costs at whole economy level. Non-wage costs increased to £3.10 per hour in Quarter 2 2019.
Nôl i'r tabl cynnwys4. Labour costs by industry
Figure 4: wage costs and non-wage costs per hour vary by industry
Labour costs per hour (£) by industry, seasonally adjusted, UK, Quarter 2 (April to June) 2019
Source: Source: Office for National Statistics – Monthly Wages and Salaries Survey (MWSS); Labour Force Survey (LFS)
Notes:
- Q1 refers to Quarter 1 (January to March), Q2 refers to Quarter 2 (April to June), Q3 refers to Quarter 3 (July to September) and Q4 refers to Quarter 4 (October to December).
Download this chart Figure 4: wage costs and non-wage costs per hour vary by industry
Image .csv .xlsThe industry with the largest labour costs per hour in Quarter 2 2019 was the finance and insurance activities industry, at £44.30 per hour, followed by the mining and quarrying industry at £35.40 per hour. Labour costs per hour were lowest in the accommodation and food service activities industry, at £10.60 per hour.
Nôl i'r tabl cynnwys5. Labour Costs per Hour data
Labour costs per hour in the UK
Datasets | Released 13 September 2019
Changes in the costs of employing labour analysed by sector and industry.
6. Glossary
Labour costs per hour is a measure of the cost of having an employee for an hour of work. It represents the total cost of employing an individual, which is primarily the earnings of the employee but also includes non-wage costs.
Wage costs include wages and salaries (including bonuses and arrears) and benefits in kind.
Non-wage costs include sickness, maternity and paternity pay, National Insurance contributions and pension contributions.
Nôl i'r tabl cynnwys7. Measuring the data
Quality
The Index of UK Labour Costs per Hour estimates Quality and Methodology Information report contains important information on aspects such as how the output is created and its strengths and limitations.
Index of UK Labour Costs per Hour (ILCH) statistics are currently designated as experimental. Experimental Statistics are those that are in the testing phase, are not yet fully developed, and have not been submitted for assessment to the UK Statistics Authority.
Further information on Experimental Statistics is available.
International comparisons
The Index of Labour Costs per Hour (ILCH) is also known as the Labour Cost Index (LCI); the index is produced by all member countries of the EU and collated by Eurostat.
The UK LCI is comparable with other Labour Cost Index numbers produced by other EU member states.
Recent changes to methodology
In Quarter 2 (Apr to June) 2017, the methodology used to estimate the National Insurance contributions changed as a result of the discontinuation of a variable in the input data source, causing a break in the series. As a result, other costs per hour series (and therefore the labour costs per hour series) were affected from Quarter 2 2017, as follows:
- the year-on-year comparisons for Quarters 2, 3 (July to Sept) and 4 (Oct to Dec) 2017 and Quarter 1 (Jan to Mar) 2018
- the quarter-on-quarter comparisons for Quarter 2 2017
The discontinued variable concerned the contracting out of state pensions and so those industries predominantly in the public sector were most affected.
User engagement
We aim to constantly improve this release and its associated commentary. We welcome any feedback you might have and are particularly interested to know how you make use of these data.
Please contact us at earnings@ons.gov.uk.
Nôl i'r tabl cynnwys8. Strengths and limitations
The figures in this bulletin come from both household and business surveys, which gather information from a sample rather than from the whole population. The sample is designed to be as accurate as possible given practical limitations such as time and cost constraints. Results from sample surveys are always estimates, not precise figures. This can have an impact on how changes in the estimates should be interpreted, especially for short-term comparisons.
As the number of people available in the sample gets smaller, the variability of the estimates that we can make from that sample size gets larger. Estimates for small groups (for example, industries within the manufacturing sector), which are based on quite small subsets of the sample, are less reliable and tend to be more volatile than for larger aggregated groups (for example, labour costs for the private sector).
In general, short-term changes in the growth rates reported in this bulletin are not usually greater than the level that can be explained by sampling variability. Short-term movements in reported rates should be considered alongside longer-term patterns in the series and corresponding movements in other sources to give a fuller picture.
Nôl i'r tabl cynnwys