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Average hourly compensation cost is a measure intended to represent employers¡¦ expenditure on the benefits granted to their employees as compensation for an hour of labour. These benefits accrue to employees, either directly ƒ{ in the form of total gross earnings ƒ{ or indirectly ƒ{ in terms of employers¡¦ contributions to compulsory, contractual and private social security schemes, pension plans, casualty or life insurance schemes and benefit plans in respect of their employees.

Compensation cost is a measure closely related to labour cost, although it does not entirely correspond to the ILO definition of total labour cost contained in the 1966 ILO resolution concerning statistics of labour cost, adopted by the 11th International Conference of Labour Statisticians (ICLS) in that it does not include all items of labour costs.

In particular, the costs of recruitment, employee training, and plant facilities and services, such as cafeterias, medical clinics and welfare services, are not included.

It is estimated that the labour costs not included in hourly compensation costs account for some 4 to 5 per cent of total labour costs for those economies for which information is presented in the ILO KILM. This measure is also closely related to the ¡§compensation of employees¡¨ measure used in the system of national accounts, which can be considered a proxy to total labour costs.

Source Publication:
Key Indicators of the Labour Market (KILM): 2001-2002, International Labour Organisation, Geneva, 2002, page 601
International Labour Organization. 2011. Key Indicators of the Labour Market (KILM). website

Cross References:
Average hourly compensation cost
Compensation of employees – SNA
Labour cost – ILO


Statistical Theme: Labour statistics

Created on Friday, August 9, 2002

Last updated on Friday, April 12, 2013