Indicator 8.5.1 Average hourly earnings of employees, by sex, age, occupation and persons with disabilities

Indicator 8.5.1: Average hourly earnings of employees, by sex, age, occupation and persons with disabilities

Target 8.5: By 2030, achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value

International Labour Organization (ILO)

Definition:

This indicator provides information on the mean hourly earnings from paid employment of employees by sex, occupation, age, and disability status.

Concepts:

Earnings refer to the gross remuneration in cash or in kind paid to employees, as a rule at regular intervals, for time worked or work done together with remuneration for time not worked, such as annual vacation, other type of paid leave or holidays. Earnings exclude employers’ contributions in respect of their employees paid to social security and pension schemes and also the benefits received by employees under these schemes. Earnings also exclude severance and termination pay.

For international comparability purposes, statistics of earnings used relate to employees’ gross remuneration, i.e. the total before any deductions are made by the employer in respect of taxes, contributions of employees to social security and pension schemes, life insurance premiums, union dues and other obligations of employees. As stated in the indicator title, data on earnings should be presented on the basis of the arithmetic average of the hourly earnings of all employees.

Current local currency

There are a variety of possible sources of data on employees’ earnings.

Establishment surveys are usually the most reliable source, given the high accuracy of earnings figures derived from them (the information typically comes from the payroll, so is precise). However, the scope of these statistics is limited to the coverage of the establishment survey in question (usually excluding small establishments, agricultural establishments and/or informal sector establishments).

Household surveys (and especially labour force surveys) can provide earnings statistics covering all economic activities, and all establishment types and sizes, but the quality of the data is highly dependent on the accuracy of respondents’ answers.

Data on earnings could also be derived from a variety of administrative records.

At the national level, the agency responsible for producing data on earnings is usually the national statistical office.

The variety of possible sources for statistics on earnings greatly hinders international comparability, as each type of source has its own coverage, scope, and characteristics. It would not be fully accurate to compare, for example, hourly earnings from a labour force survey for one country with hourly earnings from an establishment survey for another. The use of non-standard definitions and the heterogeneity of operational criteria applied further hamper cross-country comparisons.

Computation Method:

The method of calculation used to obtain the average hourly earnings of employees depends on the source of data used and the type of information it provides. For instance, where there is information available on each worker’s hourly earnings and hours worked, the average is a weighted average calculated by summing up the product of each worker’s hourly earnings times the hours worked and dividing it by the total number of hours worked by all workers. In other words:

$Average\mathrm{\ }hourly\mathrm{\ }earnings=\mathrm{\ }\frac{\sum \left(hourly\mathrm{\ }earnings\mathrm{\ }of\mathrm{\ }each\mathrm{\ }employee\mathrm{\ }x\mathrm{\ }hours\mathrm{\ }worked\mathrm{\ }by\mathrm{\ }each\mathrm{\ }employee\right)}{Total\mathrm{\ }number\mathrm{\ }of\mathrm{\ }hours\mathrm{\ }worked\mathrm{\ }by\mathrm{\ }all\mathrm{\ }employees}$

Statistics on average hourly earnings by sex can be used to calculate the gender pay gap, as follows:

$Gender\mathrm{\ }pay\mathrm{\ }gap=\frac{\left(Average\mathrm{\ }hourly\mathrm{\ }earning{s}_{men}\right)\mathrm{\ }-\mathrm{\ }\left(Average\mathrm{\ }hourly\mathrm{\ }earning{s}_{women}\right)}{\left(Average\mathrm{\ }hourly\mathrm{\ }earning{s}_{men}\right)}\mathrm{\ }\times 100$

2024-08-02

International Labour Organization (ILO)

1.1.1, 5.5.2, 8.2.1, 10.4.1