Regulation (EC) No 450/2003 of the European Parliament and of the Council of 27 February 2003 concerning the labour cost index (Text with EEA relevance)
Date: 2003-02-27
Institutions: Council of the European Union, European Parliament
Subjects: EU statistics, costing, disclosure of information, economic activity, economic indicator, labour force, pay, social-security contribution, wage cost

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(Acts whose publication is obligatory)

REGULATION (EC) No 450/2003 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

of 27 February 2003

concerning the labour cost index

(Text with EEA relevance)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE
EUROPEAN UNION,

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

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

Having regard to the opinion of the European 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)

(2)

(3)

(4)

A range of statistics, of which labour cost indices form
an essential part, is relevant for an understanding of the
inflationary process and the dynamics of
the labour
market.

The Community, and particularly its economic, employ-
ment and monetary authorities, need to have regular and
timely labour cost indices for the purpose of monitoring
changes in labour costs.

The Action Plan on Economic and Monetary Union
statistical
requirements, produced by the European
Commission (Eurostat) in close collaboration with the
European Central Bank, identifies as a priority the devel-
opment of a legal basis covering short-term labour cost
statistics.

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).

(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 (OJ C
293 E, 28.11.2002, p. 20), Council Common Position of 23
September 2002 (OJ C 269 E, 5.11.2002, p. 10) and Decision of
the European Parliament of 18 December 2002 (not yet published
in the Official Journal).

(5)

(6)

(7)

(8)

The Regulation is in accordance with the principle of
subsidiarity 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 Commu-
nity legal act because only the Commission can coordi-
nate the necessary harmonisation of statistical informa-
tion at Community level, while the collection of data
and compilation of comparable labour cost indices can
be organised by the Member States.

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 Regulation.

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 procedures for the exercise of implementing
powers conferred on the Commission (6).

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 activ-
ities defined in Article 4.

(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.

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Article 2

Definitions

Article 4

Breakdown of variables

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
established by Council Regulation (EEC) No 3037/90 of 9
October 1990 on the statistical classification of economic activ-
ities in the European Community (1). 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.

2.
The labour costs are the total quarterly costs incurred by
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 D.1, D.4 and D.5 and their
subcomponents, excluding items D.2 and D.3) 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 defini-
tion and transmission of information on labour costs (2).

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

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

Article 3

Scope

This Regulation shall apply to all activities defined in

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

2.
The inclusion of economic activities defined by NACE
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.

3.
The LCI shall represent all statistical units as defined in
Council Regulation (EEC) No 696/93 of 15 March 1993 on the
statistical units for the observation and analysis of the produc-
tion system in the Community (4).

(1) 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).

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

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

of Accession.

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

(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
employer
received by the employer, as
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

2.
An index estimating total labour costs, excluding bonuses,
where bonuses are defined by D.11112 in Annex II to Regula-
tion (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 5

Frequency and back data

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

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).

Article 6

Transmission of results

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 publica-
tion at the same time.

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

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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.

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

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).

2.
The Member States shall provide annual quality reports to
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.
referred to in Article 12(2),
feasibility
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)).

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

(a) how the quarterly labour cost indices defined in Article
4(1) can be obtained for NACE 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.

3.
The Member States undertaking the feasibility studies
shall submit an interim report on their results to the Commis-
sion no later than 31 December 2004. The participating
Member States shall submit a final report on the feasibility
studies to the Commission no later than 31 December 2005.

4.
The feasibility studies concerning paragraph 2(a) shall
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 structural business statistics (1).

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)
No 322/97,
the burden on
respondents.

including the minimisation of

The implementation of measures adopted under Article
6.
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);

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

(EC, Euratom) No 2056/2002 (OJ L 317, 21.11.2002, p. 1).

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(c) inclusion of NACE Rev.1 sections L, M, N and O (Article

3);

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

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.

(e) format

for transmission of results and the adjustment

procedures to be applied (Article 6);

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

(f) separate quality criteria for current and back data trans-

mitted and contents of quality reports (Article 8);

(g) transition period (Article 9);

(h) the

establishment of

feasibility studies and decisions

pursuant to their results (Article 10); and

(i) the methodology to be used for chaining the index

(Annex).

Article 12

Procedure

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

3.

The Committee shall adopt its rules of procedure.

Article 13

Reports

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 Brussels, 27 February 2003.

For the European Parliament

The President

P. COX

For the Council

The President

M. CHRISOCHOÏDIS

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ANNEX

The formula to be used for the calculation of the LCI

1. Define:

t

wi
hi
t
Wi

j

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

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

= wi

j * hi

j = 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:

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:

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