| Labour Cost Survey — A
Glossary |
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Production workers |
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Production workers (also often
referred to as factory workers or blue-collar workers) are engaged
in activities directly or closely related to the production
processes of manufacturing industries.
Production-related activities include:
fabrication, assembly, material handling, warehousing and shipping,
and maintenance and repair.
The skills needed for such activities
(or services) are acquired mainly while working;
no formal qualifications or educational levels are generally
required. |
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Worker's gross
earnings |
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A worker’s gross earnings include all
payments made to him for time worked as well as for time not
worked (such as annual vacation and public holidays). |
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Based on this definition, estimates of
a worker's gross earnings shall include the following items: |
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overtime pay, bonuses etc., and |
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payments made to the worker during
absences due to sickness (except for payments covered by
insurance schemes). |
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Moreover, estimates of gross earnings shall
be based on the full remuneration package, that is, before any deductions are made
by the employer for: |
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the worker's income tax payments, and |
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his own contribution
to pension schemes. |
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Worker's non-pay
benefits |
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Examples of worker’s non-pay benefits:
subsidized housing, transportation, food & drink, work clothes etc. |
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Employer's mandatory
contributions |
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The employer's mandatory contributions
comprise social security payments and labour or payroll taxes (if
applicable). |
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The employer's social security
payments refer to legally required insurance programs and benefit
plans (covering health and other insurances, sick leave, family
allowances etc). |
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Working and
non-working time |
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The number of hours actually
worked by full-time production workers during a normal
working week is estimated as follows: |
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Hours
actually
worked |
= |
Ordinary
(agreed)
working
hours |
+ |
Hours
of work
overtime |
– |
Hours
of sick
leave (or
similar) |
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Besides sick leave, the time not worked consists
mainly of paid vacations and public holidays. |
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Total hourly labour cost |
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Based on the collected data, the
total hourly cost of employing production workers is
calculated as follows: |
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Total hourly
labour cost |
= |
| 12 x [Cost1
+ Cost2 + Cost3] |
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| Time1
x [52 – (Time2 / 5) – (Time3
/ 7)] |
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| Where: |
Cost1 |
= |
Production worker's monthly gross earnings. |
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Cost2 |
= |
Value of production worker's non-pay
benefits (per month). |
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Cost3 |
= |
Employer's mandatory
contributions (per month). |
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Time1 |
= |
Number of hours actually worked by full-time
production workers during a normal working week. |
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Time2 |
= |
Number of working days of annual paid vacation
normally taken by full-time production workers. |
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Time3 |
= |
Number of calender days of public
holidays per year (to be obtained from public sources). |
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About us |
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Global Production Research Inc. is
boutique research firm, focusing on the supply capacity and
competitiveness of emerging economies in manufacturing
industries.
Our Global Production Scoreboard
—
a publicly
available resource
— is a set of indicators designed to support the benchmarking of such countries as
locations of production. Here, «labour cost» is a key benchmarking indicator.
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