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Public consultation on proposal to discontinue labour cost index non-wage statistics

In September 2015 we asked users for their views on the need for, and use of, labour cost index non-wage statistics.

Consultation is now closed, but we have republished the information below to outline the topics we asked about.

Before the public consultation, we consulted with LCI key customers (government departments and organisations representing employers and employees) to better understand the value they obtain from the non-wage statistics.

A possible outcome of this consultation is that we may discontinue producing LCI non-wage and all labour costs statistics. We released the LCI non-wage and all labour costs for the June 2015 quarter data on 21 October 2015. If we decide to discontinue the LCI non-wage, the June 2015 quarter data will be the last.

We will continue to publish LCI salary and wage rates indexes every quarter and ensure they remain relevant by reviewing the weights after the 2018 Census.

Consultation result actioned

As a result of the consultation, we decided to stop the LCI non-wage and all labour costs. We are investigating the development of a set of non-wage labour cost indicators based on administrative data sources. The June 2015 quarter data was the last survey-based release. The new indicators are likely to be available from late October 2016.

We will continue to publish the LCI salary and wage rates each quarter. Their relevance will be maintained by reviewing the weights following the 2018 Census.

LCI for all labour costs – an overview

The LCI for all labour costs measures the changes in salary and wages and non-wage labour costs combined. We have produced the statistics every year for the June quarter, while LCI salary and wage rates statistics are produced every quarter.

The LCI for non-wage labour costs measures changes in the following non-wage costs to employers:

  • annual leave and statutory holidays
  • superannuation
  • ACC employer premiums
  • other non-wage costs (medical insurance, motor vehicles available for private use, and low-interest loans).

The relative importance (weight) of non-wage labour costs is 16 percent, and the relative importance of salary and wage rates is 84 percent.

Annual leave and statutory holiday costs account for majority of LCI non-wage costs (ie 74 percent of the LCI non-wage weight). Annual leave and statutory holiday costs tend to move in line with LCI salary and wage rates (particularly now that we have 11 paid statutory holidays each year after Waitangi Day and ANZAC Day were ‘Mondayised’), so all labour costs move similarly to LCI salary and wage rates.

From 1998 to 2014, the annual average change for LCI all labour costs was 2.2 percent; the annual average change for LCI salary and wage rates was also 2.2 percent.
Graph, LCI all labour costs and all salary and wage rates, all sectors combined, base: June 2009 quarter (=1000), June quarter, 1997–2014.

There is no legislative use of the LCI all labour costs. However, there is legislative use of the LCI salary and wage rates. For example, ACC uses the LCI salary and wage rates for adjusting injury prevention, rehabilitation, and compensation payments.

Based on our consultation so far, findings indicate little use for LCI non-wage data by most customers. Customers’ needs are met by other labour market statistics, such as LCI salary and wage rates.

If consultation results show LCI non-wage data is no longer providing value to customers, we will consider stopping publication of LCI non-wage and all labour costs.

We have administrative data that can provide related indicators for non-wage costs, if required. This includes tax data for superannuation costs and fringe benefits. The costs of developing and producing these indicators would likely come from the savings generated from discontinuing the LCI non-wage costs.

See Composition of LCI all labour costs: Assessing the impact of discontinuing non-wage labour costs for more information.

Updated 20 September 2016

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