Opinion of the Economic and Social Committee on the "Proposal for a Regulation of the European Parliament and of the Council concerning labour cost index"

(2002/C 48/24)

On 13 September 2001 the Council decided to consult the Economic and Social Committee, under Article 262 of the Treaty establishing the European Community, on the above-mentioned proposal.

The Section for Economic and Monetary Union and Economic and Social Cohesion, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 13 November 2001. The rapporteur was Ms Hornung-Draus.

At its 386th plenary session (meeting of 29 November 2001), the Economic and Social Committee adopted the following opinion by 49 votes to two with one abstention.

1. Gist of the Commission document

1.1. For years the lack of a timely and comparable indicator on short term labour cost trends has been considered as a main weakness in labour market statistics. After many investments in a Labour Price Index during the nineties, the Statistical Programme Committee (SPC) decided in 1997 to consider the Labour Price Index as a possible long term solution and to implement a Labour Cost Index (LCI) as an intermediate solution, though without a legal basis.

1.2. The LCI produced and regularly disseminated since then is far from being satisfactory in terms of timeliness, coverage and comparability.

1.3. That is why the Action Plan on Economic and Monetary Union (EMU) statistical requirements (endorsed by the ECOFIN Council on 29 September 2000) included short term labour cost statistics in the package of draft Regulations to be presented to the European Parliament and Council in Spring 2001.

1.4. The Commission has now submitted a proposal for a regulation on the labour cost index. In its explanatory memorandum it says, among other things, that in a zone as large as the EMU, labour costs are generally considered as the main potential source of inflation. A timely labour cost index is thus of utmost importance for the European Central Bank, to monitor inflation in the EMU, and for social partners to use in negotiating wage agreements.

1.5. The proposed regulation will require Member States to provide quarterly data from employers on labour costs, using existing data where possible. Furthermore it is intended that the scheme should include businesses of all sizes and that it should be extended to all industries - including the public sector.

1.6. The discussions with Member States, both at working group level and at the SPC, have led to a simplification of the amount of detail that is required; for example, no breakdown by occupation or full-time/part-time will be necessary. The proposed regulation has been drafted to be consistent with existing legislation on labour costs, earnings and national accounts.

1.7. The methodology to be used for the index and data transmission formats will be defined in detail in the Commission Regulation, together with the criteria for assessing the quality of the LCI from each Member State.

2. Assessment

2.1. The Economic and Social Committee (ESC) welcomes the Commission's proposal. In a globalised world the competitiveness of companies, and therefore of the EU Member States, is determined to a large extent by developments in labour costs. The ESC therefore feels there is an urgent need for reliable, comparable and up-to-date information about labour cost trends in the EU Member States.

2.2. The labour cost index published at present by the Commission does not fulfil requirements, or does not do so sufficiently, since it reflects the variety of methods and definitions used in national statistical schemes. A redesigned index is therefore needed.

2.3. The concept behind the proposal is suitable in principle, since it reflects developments in labour costs to date. The ESC particularly welcomes:

- the access to existing national register data, and

- the application of suitable assessment procedures by the national statistical offices. The ESC encourages national statistical offices to make use of this possibility.

2.4. Nevertheless, the ESC wishes to express its concern and reservations about a number of points in the proposal as it stands. These doubts are based on the following parts of the regulation:

2.4.1. The inclusion of even the smallest enterprises in the survey will produce a conflict between the desire for a higher quality labour cost index and the need to reduce red tape for SMEs. The ESC recommends that the Commission examine the possibilities for a simplified survey procedure, including the use of other suitable sources, or justified exceptions. Account should be taken here of the results of the "pilot studies on the feasibility of collecting complete data from statistical units with less than ten employees", which have to be carried out anyway in accordance with Article 4(1) of Regulation No. 530/1999 (concerning structural statistics on earnings and on labour costs).

2.4.2. The separate recording of labour costs without irregularly paid bonuses and other incentives will place a disproportionately large burden on companies in terms of work and cost. It is to be feared that the extra work and costs involved in recording bonuses (item D.11112 in Annex II of Regulation (EC) No 1726/1999) will have a negative effect on both the topicality and quality of the data as a whole, thus making it less pertinent. The ESC therefore expressly asks that this partial index be waived, or at least only requested annually.

2.4.3. The ESC recognises the need for an up-to-date labour costs index to be available. But it doubts very much whether the Member States can comply with the 70-day time limit laid down, since this is too short for the use of administrative data. The ESC therefore suggests that this period be extended to 90 days for a transitional period of five years, so that the Member States can change their statistical systems over to the new requirements.

2.4.4. The extension of the labour costs index to NACE Rev. sections L, M, N and O will also tend to delay further the drawing-up and publication of the index, since these economic sectors are not yet covered, or are not yet sufficiently covered statistically in some Member States. It would therefore be a good idea first to set up a partial index which did not include NACE Rev. sections L, M, N and O.

Brussels, 29 November 2001.

The President

of the Economic and Social Committee

Göke Frerichs

(1) OJ L 63, 12.3.1999, p. 6.