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Published: 9 December 2020

Private sector cost of an hour worked increased by 0.4 per cent in July to September year-on-year

According to Statistics Finland, private sector labour costs increased by 0.4 per cent in July to September 2020 when compared with the respective period of the year before. Seasonally adjusted labour costs went up by 0.9 per cent in July to September 2020. In the third quarter of 2020, the number of working days was the same as in the corresponding period of 2019.

Year-on-year change in labour costs in the private sector from the corresponding quarter of the previous year

Year-on-year change in labour costs in the private sector from the corresponding quarter of the previous year

In the private sector, labour costs without one-off pay items, such as performance-based bonuses, increased by 0.1 per cent in July to September 2020 compared to the corresponding quarter one year ago. Over the same period, the index of wage and salary earnings for the private sector went up by 1.8 per cent.

In the central government sector, the cost of an hour worked increased by 0.4 per cent in July to September 2020 when compared with the respective period of the year before. The year-on-year change in labour costs without one-off pay items was a 0.3 per cent increase. Seasonally adjusted labour costs went up by 0.8 per cent. Over the same quarter, the index of wage and salary earnings in the central government sector went up by 1.8 per cent.

In the local government sector, the cost of an hour worked increased by 3.6 per cent in July to September 2020 when compared with the respective period of the year before. The year-on-year change in labour costs without one-off pay items was a 1.8 per cent increase. Seasonally adjusted labour costs went up by 3.8 per cent. Over the same period, the index of wage and salary earnings in the local government sector went up by 1.9 per cent.

In the private sector, the rise in costs was mainly due to the fact that number of hours worked decreased more than wages and salaries subject to preliminary withholding tax. A reduction in employer's TyEL contributions, which began on 1 May 2020, restrained the rise in costs in the private sector. In the central and local government sector, the rise in costs was mainly due to the growth in wages and salaries subject to preliminary withholding tax. In the local government sector, the end of cuts in holiday bonuses had a significant effect on the rise in wages and salaries subject to preliminary withholding tax.

Year-on-year change in labour costs according to industry (TOL 2008) and sector, 3rd quarter 2020

Code Industry/Sector Labour costs,
year-on-year change
Labour costs Labour costs,
without one-off pay items
Labour costs, seasonally adjusted
B to S Total, private sector 0,4 0,1 0,9
B to E Manufacturing 0,0 0,0 0,8
F Construction 0,7 0,1 1,2
G to N Business service activities 0,0 -0,1 0,8
J to R Central government 0,4 0,3 0,8
D to S Local government 3,6 1,8 3,8

Changes by industry

The cost per an hour worked went up by 0.7 per cent in construction (F) in July to September 2020 compared with the corresponding period last year. There was no change in the cost of an hour worked in manufacturing industries (B to E) or in business service activities (G to N).

In manufacturing industries in the third quarter of 2020, there was a rise in costs of 0.4 per cent in the metal industry. In the food industry, costs went down by 1.7 per cent, 0.8 per cent in the forest industry and 0.1 per cent in the chemical industry. Among service industries, the biggest rise in costs, 3.0 per cent, was in financial and insurance activities. In wholesale and retail trade, the costs went down by 0.8 per cent.

The seasonally adjusted cost of an hour worked went up by 1.2 per cent in construction (F), 0.8 per cent in manufacturing industries (B to E) and 0.8 per cent in business service activities (G to N) in July to September 2020 compared with the corresponding period last year.

In manufacturing industries, seasonally adjusted cost of an hour worked went up by 1.1 per cent in the metal industry and 0.3 percent in the chemical industry. In the forest industry the seasonally adjusted cost of an hour worked went down by 0.1 per cent and 1.3 per cent in the food industry in the July to September period of 2020 from the same period of the previous year. In business service activities, seasonally adjusted costs rose by 3.6 per cent in financial and insurance activities. In wholesale and retail trade, the seasonally adjusted costs went down by 0.2 per cent.

The Labour Cost Index measures the change in wage and salary costs calculated per hour worked

The Labour Cost Index measures the change in wage and salary costs calculated per hour worked. Hours actually worked refer to the working hours an employee has spent on his/her actual duties. Hours worked include Sunday and overtime work but not paid hours off work, like the hours of annual leaves, national holidays or paid sickness absences.

In the index, hours worked or the structure of personnel have not been standardised. The cost of an hour worked is calculated directly as the ratio of industry-specific wages and salaries subject to preliminary withholding tax and social insurance contributions to the hours worked for each quarter. The change in average labour costs is affected by changes in regular earnings, performance-based bonuses and other one-off pay components, social insurance contributions, as well as changes in the number of hours worked and the structure of the labour force.

Starting from the first quarter of 2019, the wages and salaries sum of the labour cost index is based on the Incomes Register. The wages and salaries sum are used to raise the labour costs reported by the data providers to the industry level.


Source: Wages, Salaries and Labour Costs, Statistics Finland

Inquiries: Pekka Haapala 029 551 3460, Tanja Jumisko 029 551 3695, Katri Lepikkö 029 551 3233, Tuomas Lahti 029 551 3299, tvkindeksi@stat.fi

Head of Department in charge: Hannele Orjala

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Updated 9.12.2020

Referencing instructions:

Official Statistics of Finland (OSF): Labour cost index [e-publication].
ISSN=1798-3746. 3rd quarter 2020. Helsinki: Statistics Finland [referred: 8.2.2023].
Access method: http://www.stat.fi/til/tvki/2020/03/tvki_2020_03_2020-12-09_tie_001_en.html