1144.0 - Directory of Mining Statistics, 2002  
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 13/12/2006   
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Contents >> Mining - Employment >> Wage Cost Index

Wage Cost Index

Assistant Director
Labour Price Index
Australian Bureau of Statistics
GPO Box K881

Telephone: Perth 08 9360 5151
Facsimile: Perth 08 9360 5954
Email: client.services@abs.gov.au
Web site: <www.abs.gov.au>

Since the early 1990s there has been a move away from an award-based centralised wage fixing environment in Australia in favour of agreements at the enterprise, workplace and individual employee levels. The Wage Cost Index (WCI) was developed as a more reliable indicator of changes in the underlying price of labour in this environment than other earnings series such as the Award Rates of Pay Indexes and the Survey of Average Weekly Earnings. The first issue of Wage Cost Index, Australia (cat. no. 6345.0) was published for the December quarter 1997.

The Wage Cost Index (WCI) measures changes in wage and salary costs for employee jobs unaffected by changes in the quality and quantity of work performed. 'Quality' in the WCI relates only to the inherent productivity of employees, and this is dependent on a range of personal attributes including age, experience, qualifications, skill level, motivation and fitness.

The WCI is an integrated set of quarterly indexes which measure changes in wage and salary costs for employee jobs. Index numbers for the WCI are compiled from hourly wage and salary costs for a representative sample of employee jobs within a sample of employing organisations. Approximately 4,400 private and public sector employers are selected in the sample, from which approximately 20,000 matched jobs are priced each quarter.

Information for the WCI is collected each quarter by mail questionnaires from employers included in the sample. In the first quarter that they participate in the survey, employers provide information for the sample of jobs they have selected, including job descriptions and wage and salary payments. In subsequent quarters they are asked to provide updated wage and salary information about the same jobs, using tailored forms containing the preprinted job descriptions previously provided.

There are four sets of quarterly Laspeyres (i.e. base-period weighted) indexes compiled:

  • ordinary time hourly rates of pay - excluding bonuses;
  • ordinary time hourly rates of pay - including bonuses;
  • total hourly rates of pay - excluding bonuses; and
  • total hourly rates of pay - including bonuses.

The four component sets of indexes together comprise the WCI.

The indexes that exclude bonuses are 'pure' price indexes (i.e. they aim to measure changes over time in the wage and salary cost of a representative 'basket' of jobs, unaffected by changes in the quality (defined as inherent productivity of employees) or the quantity of work performed). This is referred to as 'pricing to constant quality'. By following a 'basket' of jobs over time, and by maintaining a fixed weighting pattern, these indexes will be unaffected by, for example, shifts in the distribution of employees across occupations and industries, and between full-time and part-time jobs. Thus, unlike other Australian Bureau of Statistics' earnings measures such as the quarterly Average Weekly Earnings series, the WCI will not measure changes in average (per employee) wage payments.

The indexes that include bonuses reflect the changes in wage and salary rates shown in the pure price indexes (described above), as well as changes in bonus payments; hence they tend to be more volatile than the pure price indexes.

The WCI is the first stage in the development of the Labour Cost Index (LCI). The LCI will measure the combined effect of changes in wages costs and selected non-wage costs.

The target population of employers for the WCI is all employing organisations in Australia (private and public sector) except:

  • enterprises primarily engaged in agriculture, forestry or fishing;
  • private households employing staff; and
  • overseas embassies, consulates, etc.

All employees jobs in the target population of employers are in scope of the WCI except the following:
  • Australian permanent defence force jobs;
  • 'non-maintainable' jobs (i.e. jobs that are expected to be occupied for less than six months of the year); and
  • jobs for which wages and salaries are not determined by the Australian labour market, e.g. working proprietors of small incorporated enterprises; most employees of Community Development Employment Programs; and jobs where the remuneration is set in a foreign country.

As such, full-time and part-time, permanent and casual, and managerial and non-managerial jobs are in scope of the WCI. Costs incurred by employers for work undertaken by self-employed persons such as consultants and subcontractors are out of scope of the WCI, as they do not relate to employee jobs. Workers paid commission without a retainer are also excluded.

Main data detail
For each of the four component indexes of the WCI, separate indexes are compiled for various combinations of state and territory, sector (private/public), broad industry including mining and broad occupation groups.

Geographic coverage
Australia, states and territories.

Frequency of data availability

Reference period
The last pay period ending on or before the third Friday of the middle month of the quarter.

Historical data
Data are available from the December quarter 1997.

Products and services

  • Special data services available on request.

Example of information available

Index numbers(a)
Percentage changes from previous quarter

March 2001
June 2001
September 2001
December 2001
March 2002

(a) Base of index: September quarter 1997 = 100.0.

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