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"
Date: 2001-11-29
Institutions: European Economic and Social Committee
Subjects: EU statistics, labour force, statistics, wage cost

21.2.2002

EN

Official Journal of the European Communities

C 48/107

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

the scheme should include businesses of all sizes and that it
should be extended to all industries — including the public
sector.

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.

1.6.
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.

The methodology to be used for the index and
1.7.
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.

1.3.
That is why the Action Plan on Economic and Monet-
ary 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.

2. Assessment

index.

The Commission has now submitted a proposal for a
1.4.
regulation on the labour cost
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.

2.1.
The Economic and Social Committee (ESC) welcomes
the Commission’s proposal. In a globalised world the competi-
tiveness 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.

The proposed regulation will require Member States to
1.5.
provide quarterly data from employers on labour costs, using
existing data where possible. Furthermore it is intended that

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.

C 48/108

EN

Official Journal of the European Communities

21.2.2002

2.3.
The concept behind the proposal is suitable in prin-
ciple, 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).

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

Brussels, 29 November 2001.

The separate recording of

2.4.2.
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.

The extension of the labour costs index to NACE
2.4.4.
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.

The President

of the Economic and Social Committee

Göke FRERICHS