According to the report on the implementation of Regulation concerning the Labour Cost Index (LCI) (COM(2011) 102 final), the overall degree of compliance with the LCI Regulation has continued to increase since the previous report in 2008. The report reveals that most Member States are now compliant and have continued to channel resources into implementing actions to achieve more comparable and timely index series.

The report presented by the Commission to the European Parliament and the Council on the implementation of Regulation 450/2003 concerning the Labour Cost Index (LCI), points out that the overall quality of data has clearly raised and thus increased the usefulness of the data. The timeliness of data delivery has improved, and the number of Member States with accuracy problems has decreased.

The Commission highlights that in recent years, the European Statistical Office (Eurostat) has regularly urged Member States to step up their improvement efforts. Nevertheless, the Commission will be monitoring the remaining non-compliance and quality issues regularly through the data delivered and other national documentation. Where the desired or planned improvements are not advancing appropriately, the relevant national authorities will be approached, and the Commission will take the necessary action to enforce compliance.

Evolution of data for elaborating Labour Cost Index (LCI)

According to the report by the Commission, substantial progress has been made since the last report adopted in 2008. The new NACE Rev.2 classification was implemented as requested in the first transmission in June 2009, which required a lot of resources in Member States. Besides, timeliness has improved considerably and only two Member States (Belgium and Ireland) are still facing some difficulties in complying with the legal transmission dates. There have been major revisions to past data, but this was unavoidable given the introduction of the new NACE Rev.2 classification and the changes introduced in the collection systems in certain Member States.

In general, the availability and the quality of the LCI has been improved. A number of Member States introduced changes in their data collection systems to remove any remaining divergences from the quality standards and concepts laid down in Regulation.

Receiving the LCI from all Member States means Eurostat can compile the European Union aggregates and make sufficiently accurate comparisons of the development of hourly labour costs between the Member States. There are, however, a number of issues which still require further efforts from certain Member States in order to complete the harmonisation process.

Importance of the Labour Cost Index (LCI)

When analysing short- and medium-term economic development, labour costs per hour worked are important. The Commission and the European Central Bank rely on an index of labour costs per hour worked to assess possible inflationary pressure due to developments in the labour market. It is, indeed, one of the Principal European Economic Indicators (PEEI).

The index needs to be calculated promptly, for each Member State, for the whole EU and for the Euro area. The labour cost index is also important for the social partners in wage negotiations and for the Commission itself in monitoring short-term developments in labour costs.