Average wages and registered number of employees - Methodology
Average Wage and Registered Number of Employees
The average gross monthly wage is the share of wages, excluding other personnel costs, per one employee of the registered number of employees per month. Wages include basic wages and salaries, payments additional to wage or salary, bonuses, compensation for wages and salaries, bonuses for standby duty, and other wage or salary components charged to be paid to employees in a given period. The wages do not include compensation of wages or salaries for temporary incapacity for work due to disease or injury and quarantine paid by the employer.
They are gross wages, i.e. before premiums for public health insurance and social security, income tax advances of natural persons, and other statutory deductions or other deductions, as agreed with the employee, are deduced.
The average nominal wage increase/decrease expresses by how much percent the wage increased/decreased in the given period compared to the same period of the previous year.
The average real wage increase/decrease expresses by how much percent the ratio of the average nominal wage index and the consumer price index in the same period increased/decreased.
The registered number of employees includes persons with employment, service, or membership relation (where the membership also includes an employment contract) to the employer (hereinafter as the “employment relation”).
The average registered number of employees (headcount), quarterly is calculated as an arithmetic average of (appropriate three) monthly average registered numbers of employees, which are calculated as a sum of daily numbers of employees subdivided by the number of calendar days of the month. The average registered number of FTE employees is determined from the average registered number of employees (headcount) by means of the recalculation of their hours of employment contracts to the full-time employment contract hours as determined by the employer.
The data on the number of employees and on the average monthly gross wages exclude persons performing public office (as, for instance, deputies, senators, full-time councillors at all levels of public administration), judges, women on maternity leave, persons on parental leave (unless they have employment contracts at the same time), apprentices, persons working for companies under contracts of work carried out outside their employment contracts), and employees of businesses not statistically measured.
Since the first quarter of 2009 there have been changes made to the labour and wage statistics in the survey methodology and presentation of results.
The most important changes to the methodology are the following:
- Data are processed and published according to the new Classification of Economic Activities (CZ-NACE), which is the national version of the Statistical Classification of Economic Activities in the European Community, Rev. 2 (NACE, Rev. 2) and replaced the formerly used Industrial Classification of Economic Activities (OKEČ), which was the Czech version of the Statistical Classification of Economic Activities, Rev. 1.1 (NACE, Rev. 1.1);
- New methods for the estimation of non-response were applied and additional estimates for the non-measured portion of the population, based on administrative data sources, were newly deployed;
- Data on the number of employees and average wages are given as calculated to FTE employees, not as formerly to headcount employees, for the whole national economy; and
The time series of data from the processing of quarterly statistical questionnaires was recalculated back from 2000.
The average gross monthly wage for the whole national economy includes data for all employees. It is given for the FTE employee numbers and therefore is takes into account the hours of employment contracts of the employees.
Median Wage
The median wage is the value of the wage of the employee in the middle of the wage distribution. This means that one half of wages is lower and the second half is higher than the median wage. On the contrary to the average wage, which is calculated on the basis of reports of the business reporting system, the median wage must be derived from data of a sample survey by means of a statistical-mathematical model, because business reports contain merely aggregated data for the whole business, institution, or organisation.
Data are preliminary. More precise data for the previous period are always available after the current quarter data have been processed.
Two Data Sources – Multiple Views of the Same Field of Statistics
Every quarter the Czech Statistical Office releases information on the development in average wages, which is based on data from the business reporting system. This provides reliable data on average wages in the national economy, which can be sorted by enterprise aspect, for example, by (principal) economic activity, by region, and by size group. Yet it is not able to provide any breakdown in a finer detail.
Besides, there are data from structure of earnings survey (SES), objective of which is to provide as much as possible detailed information on wages of respective employees applying a number of various breakdowns, namely by occupation, and also provides a view of the wage distribution that means how wages are distributed among employees.
The results of the statistics of the SES have been produced by the Czech Statistical Office in cooperation with the Ministry of Labour and Social Affairs (MoLSA) since 1996. The survey measures wages of respective employees and overall wage volumes at the level of business or organisations. This way, components of gross earnings and also important personal data on the employees are determined as sex, education, and age, for instance. The gross wages, in the statistics of the SES include all wages for work including bonuses and other salaries, furthermore, all compensations of wage for hours not worked (vacations, holidays, obstacles to work, etc.) and bonuses for standby duty for the whole year. The average wage of the employee in the given year is calculated by relating to their hours paid, that means the number of months for which they actually received the wage or wage compensation and the time of diseases or other unpaid time of absence at work in the given year. The calculated average gross monthly wage (CZK) this way gives the most precise information on comparable wage levels of various occupations (jobs) when the numbers of hours worked are precisely determined. This way calculated average wage is however not, and may not be, identical with the average wage measured from the business reporting system to the Czech Statistical Office, in which the total volume of wages, excluding other personnel costs, is related to the registered number of employees of the business, which however includes also employees on sick leave or having unpaid absence at work shorter than four weeks. Other differences of the wage level compared to other statistical sources may arise, besides effects of unpaid absences and different basic sample of the survey, from the fact that results of the SES do not include employees with weekly hours worked shorter than 30 hours. Results of the SES statistics, because they are partly an output from the sample survey, suffer from the sample error. Moreover, it is a fact that some of the reporting units addressed did not provided the data required and that some of the records had to be eliminated from the processing for their error rate and thus a minute distortion could occur. Finally, it is necessary to realise that the results are as of such quality as is the quality of the background databases of businesses and organisations, which the statistics employ, and this concerns, first of all, the detailed classification of occupations or educational attainment of the employees.
Frequently Asked Questions
How many persons actually earn the average wage for their work?
Every time the Czech Statistical Office publishes the data on the average wages many citizens shake their head in mistrust, even may get angry, because they have found their earnings below average and their friends and acquaintances also earn less. It is evidence of wrong understanding what the average wage gives information on. This is the same as a teacher at school at the end of the school year must decide which mark she will write down on the school report and she makes an arithmetic average. She sums all marks and divides them by the number thereof. It may easily happen that the average of a pupil is spoiled by a single bad mark. The pupil may get angry because they have majority of marks better yet the average mark is the only one. The Czech Statistical Office calculates the average wage in a very similar way, the volume of wages is subdivided by the number of employees. And here it is also happen that the wages of a small group of employees earning very high salaries actually spoils the average that means they substantially increase the average wage compared to wages of majority of employees.
The average wage is not the indicator which should give information on majority of employees the same way as the average mark says nothing on majority of marks of the pupil over the school year. The average wage shall give information on the overall wage level and is used namely in time comparisons, as for the comparison to the previous period, or in international comparison when converted to the same currency, using either the exchange rate or the purchasing power parity. Complaining that my wage is below the national average wage is therefore inappropriate. It is better to search for more detailed statistics, which give information on the wage levels on respective groups.
Overall, the aforementioned question may be answered that there is nobody working for the average wage because it is a number calculated to multiple decimal places. More interesting data is that the employees paid under the average wage are always of a higher number, almost two thirds, than that of paid above the average wage. You may ask how it is possible. It has been already mentioned that the average wage is pulled up by people earning high salaries. Their number is not high yet the amount of their earnings shifts the total value of the indicator to a higher level.
A small example to see this as follows:
Lets image a factory, in which there are 46 workers earning CZK 20 000 and a factory manager with the salary of CZK 200 000. The volume of accounted wages in this hypothetical business is then 49 x 20 000 + 200 000 = 1 180 000. If it is subdivided by the number of all employees, workers plus the manager, that is fifty, we get the average wage, which is CZK 23 600 then. If the employees learn later how high the average wage in the business is, 98% of them will grumble that they earn less than the average. And the same principle works at the level of the whole economy. The national average wages are, moreover, affected by differences among occupations, educational attainment, age, sex, regions, and alike.
However, the indicator of the average wage is of very high importance yet it is merely one of the many. It is the way that several various indicators altogether may give a precise image. Therefore it is also important to observe the Czech Statistical Office publications on wages, which provide exactly such an image. They are based on the structural survey of wages of respective employees and apply slightly different methodology of the gross monthly wage calculation so its results do not coincide with commonly published results from the business reporting to the Czech Statistical Office. Besides the average wage the Czech Statistical Office also publishes the median wage, which shows the wage of the employee in the middle of the wage distribution, that means in the point which splits the number of employees into two identical shares and thus better determines the wage level in a given group of employees.
How is it with women discrimination in terms of their wages?
Some people say women are discriminated the way they are remunerated less than men and then, as a supportive argument, they use the comparison of the average wages in men and those in women according to the structure of earnings survey which is a sample survey. This is however, not a relevant argument. Discrimination is the when a woman earns a lower pay than a man for the same work at the same job yet this is a thing the arithmetic average may give us no information on! In general women work at different jobs than men, have different qualifications, differ in educational programmes, and, on average, also have a lower number of hours worked. Namely a lower number of overtime hours which are remunerated by a higher charge. All these things, of course, affect the wage, which women earn for their work.
Moreover, as it has already been said the average wage is not the indicator describing the wage of the average employee, especially because the average value is set higher drawn by very high salaries. These are salaries namely of top managers of large companies and it is necessary to mention these are males by majority. Therefore the average wage in males is set higher than the wage of an ordinary employee than the average wage in females. So it is better to use other indicators, as, for instance, the median wage, in order to get more actual comparison. The wage of the middle employee is not affected by extreme wages and shows the wage of the ordinary human, not a somehow calculated figure.
Females occupy other jobs than males and it hold for many profiles as, for example, sorted by economic activity the differences are very significant. Females form a majority in human health and social work activities, education, financial and insurance activities, and in public administration and defence; compulsory social security. On the contrary, in construction and mining and quarrying there are females at very low numbers. Then to compare wages in males and in females is rather uneasy. And it is not all! Wages in males and in females also grow at different paces with age, in females at a slower one. As the most probably cause of a wage decline in middle age in females is a disruption of the carrier in majority of females due to maternity and paternity leaves.
Therefore it is clear that answering the question if and how females are discriminated in wages cannot be and done solely on the basis of several statistical figures. In fact this holds probably just to individual cases. The facts, that it is harder for females, in general, to get better paid positions and also they have to deal with a larger proportion of housework, are apparently more essential. Well, but these are facts the wage statistics may not bring a direct reflection of.