Common Position (EC) No 54/2002 of 23 September 2002 adopted by the Council, acting in accordance with the procedure referred to in Article 251 of the Treaty establishing the European Community, with a view to adopting a regulation of the European Parliament and of the Council concerning the labour cost index (Text with EEA relevance)
Date: 2002-09-23
Institutions: Council of the European Union
Subjects: EU statistics, data transmission, drafting of EU law, labour force, labour market, statistics, wage cost

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COMMON POSITION (EC) No 54/2002

adopted by the Council on 23 September 2002

with a view to adopting Regulation 2002/. . ./EC of the European Parliament and of the Council of
. . . concerning the labour cost index

(2002/C 269 E/02)

(Text with EEA relevance)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE
EUROPEAN UNION,

Having regard to the Treaty establishing the European
Community, and in particular Article 285(1) thereof,

Having regard to the proposal from the Commission (1),

Having regard to the opinion of the Economic and Social
Committee (2),

Having regard to the opinion of the European Central Bank (3),

Acting in accordance with the procedure laid down in Article
251 of the Treaty (4),

Whereas:

(1) A range of statistics, of which labour cost indices form an
essential part,
the
inflationary process and the dynamics of the labour market.

for an understanding of

is relevant

(2) The

and

Community,

economic,
employment and monetary authorities, need to have
regular and timely labour cost indices for the purpose of
monitoring changes in labour costs.

particularly

its

(3) The action plan on economic and monetary union stat-
istical requirements, produced by the European Commission
(Eurostat) in close collaboration with the European Central
Bank,
identifies as a priority the development of a legal
basis covering short-term labour cost statistics.

(4) The benefits of collecting, at Community level, complete
data on all segments of the economy should be balanced
against the reporting possibilities and the response burden
on small and medium-sized enterprises (SMEs).

(5) The Regulation is in accordance with the principle of subsi-
diarity as set out in Article 5 of the Treaty. The creation of
common statistical standards for labour cost indices can
only be achieved on the basis of a Community legal act
because only the Commission can coordinate the necessary
information at Community
harmonisation of

statistical

(1) OJ C 304 E, 30.10.2001, p. 184.
(2) OJ C 48, 21.2.2002, p. 107.
(3) OJ C 295, 20.10.2001, p. 5.
(4) Opinion of the European Parliament of 28 February 2002 (not yet
published in the Official Journal), Council Common Position of 23
September 2002 and decision of the European Parliament of . . .
(not yet published in the Official Journal).

level, while the collection of data and compilation of
comparable labour cost indices can be organised by the
Member States.

(6) Council Regulation (EC) No 322/97 of 17 February 1997
on Community statistics (5) provides the general framework
for the production of labour cost indices under this Regu-
lation.

(7) The measures necessary for the implementation of

this
Regulation should be adopted in accordance with Council
Decision 1999/468/EC of 28 June 1999 laying down the
implementing powers
exercise of
procedures
conferred on the Commission (6).

the

for

(8) The Statistical Programme Committee (SPC), established by
Council Decision 89/382/EEC, Euratom (7), has been
consulted in accordance with Article 3 of that Decision,

HAVE ADOPTED THIS REGULATION:

Article 1

Objective

The objective of this Regulation is to establish a common
framework for the production, transmission and evaluation of
comparable labour cost indices in the Community. Member
States shall produce labour cost
indices for the economic
activities defined in Article 4.

Article 2

Definitions

1.
The labour cost index (LCI) is defined as the Laspeyres
index of labour costs per hour worked, chain-linked annually
and based upon a fixed structure of economic activity at NACE
rev.1 section level, where NACE rev.1 is the classification estab-
lished by Council Regulation (EEC) No 3037/90 of 9 October
1990 on the statistical classification of economic activities in
the European Community (8). Further disaggregations of NACE
rev.1 sections, to be included in the fixed structure, shall be
defined in accordance with Article 4(1). The formula to be used
for the calculation of the LCI is defined in the Annex to this
Regulation.

(5) OJ L 52, 22.2.1997, p. 1.
(6) OJ L 184, 17.7.1999, p. 23.
(7) OJ L 181, 28.6.1989, p. 47.
(8) OJ L 293, 24.10.1990, p. 1. Regulation as last amended by
Commission Regulation (EC) No 29/2002 (OJ L 6, 10.1.2002, p. 3).

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The labour costs are the total quarterly costs incurred by
2.
the employer in the employment of labour. The labour cost
items and total staff employed are defined by reference to
Annex II, sections A and D (items D1, D4 and D5 and their
subcomponents, excluding items D2 and D3) of Commission
Regulation (EC) No 1726/1999 of 27 July 1999 implementing
Council Regulation (EC) No 530/1999 concerning structural
statistics on earnings and on labour costs as regards the defi-
nition and transmission of information on labour costs (1).

3.
The hours worked are defined by reference to Council
Regulation (EC) No 2223/96 of 25 June 1996 on the
European system of national and regional accounts in the
Community (2), Annex A, Chapter 11, paragraphs 11.26 to
11.31.

Technical specification of the index, including revisions to
4.
the weighting structure, can be redefined in accordance with
the procedure referred to in Article 12(2).

(a) total labour costs;

(b) wages and salaries, defined by reference to item D.11 in

Annex II to Regulation (EC) No 1726/1999;

(c) employers’ social contributions plus taxes paid by the
received by the employer, as
employer
defined by the sum of items D.12 and D.4 less D.5 in
Annex II to Regulation (EC) No 1726/1999.

subsidies

less

costs,

labour

An index estimating total

2.
excluding
bonuses, where bonuses are defined by D.11112 in Annex II
to Regulation (EC) No 1726/1999, shall be provided broken
down by economic activities, defined in accordance with the
procedure referred to in Article 12(2), and shall be based on
the NACE rev.1 classification, taking into account the feasibility
studies defined in Article 10.

Article 3

Scope

Article 5

Frequency and back data

This Regulation shall apply to all activities defined in

1.
sections C to O of NACE rev.1.

The data for the LCI shall first be compiled for the first
1.
quarter of 2003, and thereafter for each quarter (ending on 31
March, 30 June, 30 September and 31 December of each year).

The inclusion of economic activities defined by NACE
2.
rev.1 sections L, M, N and O in the scope of this Regulation
shall be determined in accordance with the procedure referred
to in Article 12(2), taking into account the feasibility studies
defined in Article 10.

2.
Back data covering the period from the first quarter of
1996 to the fourth quarter of 2002 shall be made available by
the Member States. The back data shall be provided for each of
the NACE rev.1 sections C to K and for the labour cost items
mentioned in Article 4(1).

3.
The LCI shall represent all statistical units as defined in
Council Regulation (EEC) No 696/93 of 15 March 1993 on the
the
statistical units
production system in the Community (3).

the observation and analysis of

for

Article 6

Transmission of results

Article 4

Breakdown of variables

1.
The data referred to in Article 4 shall be supplied in
index form. The weights used to calculate the index, defined
in the Annex to this Regulation, shall be made available for
publication at the same time.

1.
The data shall be broken down by economic activities
defined by NACE rev.1 sections and by further disaggregations,
not beyond the level of NACE rev.1 divisions (two-digit level)
or groupings of divisions, taking account of contributions to
total employment and to labour costs at Community and
levels, defined in accordance with the procedure
national
indices shall be
referred to in Article 12(2). Labour cost
provided separately for
the three labour cost categories
identified below:

(1) OJ L 203, 3.8.1999, p. 28.
(2) OJ L 310, 30.11.1996, p. 1; Regulation as last amended by Regu-
lation (EC) No 359/2002 of the European Parliament and of the
Council (OJ L 58, 28.2.2002, p. 1).

(3) OJ L 76, 30.3.1993, p. 1; Regulation as amended by the 1994 Act

of Accession.

format to be used for the trans-
The appropriate technical
mission of
the results referred to in Article 4, and the
adjustment procedures to be applied to the data shall be
defined in accordance with the procedure referred to in
Article 12(2).

2. Member States shall transmit the data, broken down as
specified in Article 4, to the Commission (Eurostat) within 70
days of the end of the reference period. Metadata, defined as
the explanations needed to interpret the changes in the data
either arising from methodological or technical changes, or due
to changes in the labour market, shall be delivered with the
data.

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The back data referred to in Article 5 shall be transmitted
3.
to the Commission (Eurostat) at the same time as the LCI for
the first quarter of 2003.

The feasibility studies shall be carried out, taking into
2.
account the benefits of collecting the data in relation to the
cost of collection and the burden on business, to assess:

Article 7

Sources

Member States may produce the necessary estimates by using a
combination of different sources specified below by applying
the principle of administrative simplification:

(a) surveys, where statistical units, as defined in Regulation
(EEC) No 696/93, are asked to give timely, accurate and
complete information;

(b) other appropriate sources, including administrative data if
these are appropriate in terms of timeliness and relevance;

(c) appropriate statistical estimation procedures.

Article 8

Quality

1.
The current data and back data transmitted shall satisfy
separate quality criteria to be defined under the procedure
referred to in Article 12(2).

The Member States shall provide annual quality reports to
2.
the Commission, beginning in 2003. The content of
the
reports shall be defined under the procedure referred to in
Article 12(2).

Article 9

Transition periods and derogations

1.
Transition periods relating to the implementation of this
Regulation may be granted under the procedure referred to in
Article 12(2), not extending more than two years from the date
of entry into force of this Regulation.

2.
During the transition periods, derogations from this
Regulation may be accepted by the Commission insofar as
the national statistical systems require major adaptations.

Article 10

Feasibility studies

institute a series of

The Commission shall, in accordance with the procedure
1.
feasibility
referred to in Article 12(2),
studies, to be undertaken by the Member States, in particular
by those which cannot provide the data for NACE rev. 1
sections L, M, N, and O (Article 3(2)) or the breakdown of
the index estimating total
labour costs, excluding bonuses
(Article 4(2)).

(a) how the quarterly labour cost indices defined in Article
4(1) can be obtained for NACE rev. 1 sections L, M, N
and O; and

(b) how the index estimating total

labour costs, excluding

bonuses, defined in Article 4(2) can be obtained.

The Member States undertaking the feasibility studies
3.
shall
to the
submit an interim report on their
Commission no later than 31 December 2004. The partici-
pating Member States shall submit a final report on the feasi-
bility studies to the Commission no later than 31 December
2005.

results

The feasibility studies concerning paragraph 2(a) shall
4.
take into account the results of the pilot studies referred to
in the Annexes to Council Regulation (EC, Euratom) No 58/97
of 20 December 1996 concerning
business
statistics (1).

structural

5. Measures adopted under Article 11(h) pursuant to the
results of the feasibility studies shall respect the principle of
cost-effectiveness, as defined in Article 10 of Regulation (EC)
the burden on
No 322/97,
respondents.

including the minimisation of

6.
The implementation of measures adopted under Article
11(h) pursuant to the results of the feasibility studies shall
make possible the transmission of data for the first quarter
of 2007, provided that the results of the feasibility studies
allow for the cost-effective production of data of sufficient
quality.

Article 11

Implementing measures

The measures for implementing this Regulation,
including
measures to take account of economic and technical changes,
shall be laid down in accordance with the procedure referred to
in Article 12(2). Such measures shall concern in particular:

(a) definition, in accordance with Article 4(1), of the disaggre-

gations to be included in the fixed structure;

(b) technical specification of the index (Article 2);

(c)

inclusion of NACE rev.1 sections L, M, N and O (Article 3);

(d) breakdown of indices by economic activities (Article 4);

(e)

for transmission of results and the adjustment

format
procedures to be applied (Article 6);

(f)

separate quality criteria for current and back data trans-
mitted and contents of quality reports (Article 8);

(1) OJ L 14, 17.1.1997, p. 1. Regulation as amended by Regulation

(EC, Euratom) No 410/98 (OJ L 52, 21.2.1998, p. 1).

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(g) transition period (Article 9);

The period laid down in Article 5(6) of Decision 1999/468/EC
shall be set at three months.

(h) the

establishment of

feasibility studies and decisions

pursuant to their results (Article 10); and

3.

The Committee shall adopt its Rules of Procedure.

(i)

the methodology to be used for chaining the index
(Annex).

Article 13

Reports

Article 12

Procedure

1.
The Commission shall be assisted by the Statistical
Programme Committee instituted by Article 1 of Council
Decision 89/382/EEC, Euratom.

2. Where reference is made to this paragraph, Articles 5 and
7 of Decision 1999/468/EC shall apply, having regard to the
provisions of Article 8 thereof.

The Commission shall submit a report on the implementation
of this Regulation to the European Parliament and the Council
every two years. This report shall evaluate in particular the
quality of the transmitted LCI series data and the quality of
the transmitted back data.

The first report shall be submitted no later than 31 December
of the year following the entry into force of this Regulation. It
will refer only to the actions executed by Member States to
prepare the application of this Regulation.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at . . .

For the European Parliament

The President

For the Council

The President

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ANNEX

Formula to be used for the calculation of the LCI

1. Define:

wt

i = labour costs per hour worked of employees in economic activity i in period t

ht
i = hours worked by employees in economic activity i in period t

Wj

i = wj

i · hj

i = labour costs of employees in economic activity i in annual period j;

2. The basic Laspeyres formula to be used to calculate the LCI for period t with annual base period j is defined as

LCItj ¼

X

i
X

i

ihj
wt

i

ihj
wj

i

X

ðwt

i=wj

iÞwj

ihj

i

X

ðwt

i=wj

iÞWj

i

i

¼

X

Wj
i

i

i

¼

X

Wj
i

i

3. The methodology for chaining the index will be defined in accordance with the procedure referred to in Article

12(2).

4. The weights used to calculate the index and referred to in Article 6(1), are the values of:

Wj
i
X
Wj
i

i

where Wi
index within two years of the period to which they relate.

j, i and j are defined in paragraph 1 of this Annex. These weights should be used for the calculation of the

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STATEMENT OF THE COUNCIL’S REASONS

I. INTRODUCTION

1. On 26 July 2001, the Commission forwarded to the Council a proposal for a regulation of the

European Parliament and of the Council concerning the labour cost index.

2. The above proposal is based on Article 285 of the Treaty according to which the procedure of

co-decision with the European Parliament prescribed in Article 251 of the Treaty applies.

3. The European Parliament approved the Commission proposal without amendment at first reading

on 28 February 2002.

4. The Economic and Social Committee adopted its opinion on 29 November 2001.

5. The European Central Bank adopted its opinion on 11 October 2001.

6. On 23 September 2002, the Council adopted its Common Position pursuant to Article 251 of the

Treaty.

II. OBJECTIVE OF THE PROPOSAL

The purpose of the proposal is to provide an indicator on short term labour cost trends as a key
component in the analysis of the functioning of labour markets. Existing indicators are unsatisfactory in
terms of timeliness, coverage and comparability. Reflecting these considerations, a regulation on
short-term labour cost statistics was included in the action plan for EMU statistics, as endorsed by
the Council on 29 September 2000.

III. ANALYSIS OF THE COMMON POSITION

The Common Position follows the Commission proposal, approved by the European Parliament, with
the following modifications.

A new recital 6 has been added by the Council to recall the general framework established by Council
Regulation (EC) No 322/97 on Community statistics.

Recital 7 and Article 12 replace the management procedure proposed by the Commission with the
regulatory procedure, which the Council feels is more appropriate to the type of measures to be
introduced.

The Council has amended Article 2(1) to define the index in terms of the section level of NACE rev. 1,
to be disaggregated in accordance with Article 4(1). This places the disaggregations to be made in its
most appropriate place, in the Article on the breakdown of variables, rather than in that on definitions.

A new Article 3(2) has been introduced by the Council, providing for the inclusion of NACE rev. 1
sections L to O through the comitology procedure, after the conduct of feasibility studies established by
the new Article 10. This is considered necessary as a number of Member States are not yet able to
provide data on sections L to O, and will need to develop the methodology for doing so before such
data can reliably be incorporated into the index.

Article 4 has been amended by the Council to reflect the difficulty a number of Member States have in
providing data at the level of detail stipulated in the Commission’s proposal. Any disaggregations
beyond the level of NACE rev. 1 sections will be decided by comitology procedure and will not go
beyond the two-digit level of divisions. Disaggregations may also be by groupings of divisions rather
than individual divisions where this provides a sufficient level of detail with a lower burden.

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The provision of data on labour costs excluding bonuses is separated from the provision of data for the
main index, as a new Article 4(2). Given the serious difficulties a number of Member States have with
the provision of this data, it will be provided in the form of an estimated index, with its breakdown to
be decided by comitology procedure. It shall also be the subject of feasibility studies established under
the new Article 10, for the same reasons as apply to sections L to O under Article 3(2).

In Articles 5, 6, and 8 the date of first collection of data has been changed from 2002 to 2003,
reflecting the likely date of entry into force of the Regulation. The period covered by back data has
been adjusted accordingly.

In Article 6 (1), references to ‘data’ and ‘results’ have been clarified by more specific references to data
and results ‘referred to in Article 4’.

The Council has amended the wording of Article 7 to reflect the fact that appropriate estimation
procedures may be used in addition to data collection.

Article 8 has been amended to reflect the fact that different quality criteria should apply for current
data and for back data, for the reasons described in respect of Article 6.

In Article 9, the paragraph in the Commission's proposal specifically referring to transition periods in
respect of NACE rev. 1 sections L to O has been deleted, with the new Article 10 on feasibility studies
laying down the procedure in respect of Member States which have difficulty collecting data for these
areas.

The Council has introduced a new Article 10 setting down the modalities for feasibility studies, in those
Member States which have difficulties, for the production of data on NACE rev. 1 sections L to O and
the breakdown of the estimated index on total labour costs excluding bonuses. Paragraphs 5 and 6 of
this Article specify that in adopting, by comitology procedure, implementing measures subsequent to
the feasibility studies, cost-effectiveness will be a consideration, and that implementing measures should
enable the data for the areas covered by the studies to be collected and incorporated in the index by
2007, at the latest. The Council feels this provides the best means of ensuring that the required areas
are covered as soon as possible, while respecting the need for cost-effectiveness and for high quality
data.

Article 11 has been amended to reflect the extension of decision-making by comitology procedure to a
larger number of elements necessary for the implementation of the regulation.

Article 13 has been amended to reflect the altered timetable for implementation of the regulation, as
well as the need to differentiate between the quality of series data and back data. It has also been
amended to reflect the fact that the first report from the Commission should not report on the quality
of data transmitted by Member States at such an early stage, but rather focus on procedural elements of
their implementation of the Regulation.

IV. CONCLUSION

The Council considers that the modifications introduced in its Common Position are fully in line with
the objectives of the proposed regulation and provide the necessary flexibility of approach to enable
full implementation of the regulation, and the production of a timely, comprehensive and comparable
indicator of short term labour costs as soon as possible.