Companies reduced labor costs by 0.1% in 2020
Companies spent 0.1% less on labor costs in 2020 than in the previous year. Despite this, this is good news when compared to previous quarters. During the period in which the health crisis began, labor costs plummeted to 8.3%. The ERTEs and the exemptions in business prices set by royal decree to cushion the impact on the economy were the main causes of this decline.
The labor cost is a magnitude that is made up of the wages and contributions that companies disburse for each of their workers. It takes into account, in addition to salary, remuneration in kind, that is, maternity, health or accident insurance, among others. As for the contributions paid by each employee, there is the contribution for retirement and unemployment. Severance payments or allowances (travel expenses) are also considered in this section.
During the last quarter of 2020 of the total cost per worker and month, 2,061.32 euros corresponded to salary and 634.57 euros, to mandatory Social Security contributions. In this sense, wages fell by 0.7% compared to 2019. To give it a little more perspective, the variation rate between the last four months of 2018 and that of 2019 in terms of the increase in wage spending was 1 , 76%, according to the data provided by the INE.
What do labor costs measure?
Effective working time decreased 5%
Another of the criteria that influence this statistic on labor cost is working time. The INE considers the agreed average weekly working day as the weighted result of the sum of the full-time, part-time, overtime, vacation, and medical leave hours… The resulting average is 34.5 hours per week. However, the actual working hours are less. From the sum of the agreed hours, those that are not productive for the company are subtracted. In addition to the above, neither effective hours nor holidays, paid leave, union hours are considered. To which is added the time in ERTE, which this year has been significantly increased. Of each week 1.5 hours correspond to time in ERTE. Thus the accounts, the result of effective hours is 27.9 hours.
Taking these calculations into account, the cost per effective hour worked has increased by 5.1% due to the fact that the effective hours of work have decreased by 5%.
Activities considered essential have maintained labor costs
Logically, not all activities have suffered in the same way from the health crisis and the measures implemented to try to contain the spread of the virus. The extractive industries, specifically, the supply of energy was the activity that increased their labor costs the most during 2020 with an increase of 12.4% compared to the previous year. This activity is traditionally the best paid. It was followed by financial activities that increased by 5.8% or the Public Administration, which increased its labor costs by 1.9%.
In general, according to the INE, those activities considered essential have hardly seen variations in terms of labor costs.
However, once again the hospitality industry has been the sector most affected by this health crisis. Labor costs decreased 36.2% compared to the previous year. It is also common for the hospitality industry to offer the smallest data in terms of what companies spend for the workforce. Expenditure on salaries has been reduced by 3.6%. Artistic activities have also been, although with less incidence, with a reduction of 7.8%.
In addition to this quarterly survey, the INE prepares the Annual Labor Cost Survey to see the behavior of this concept from a one-year perspective. In addition, it also draws up the Harmonized Labor Cost Index (ICLA) whose purpose is to be able to compare the labor cost per hour worked for the entire European Union.