Note to readers

Labour productivity, hourly compensation and unit labour cost

Third quarter 2003

This chapter on labour productivity estimates is based on the revised data from the labour statistics consistent with the System of National Accounts disseminated in The Daily of December 4. In light of these revisions, the detailed data on productivity and other related variables were revised back to 1998.

In addition, the estimates of hours worked for the third quarter used in the productivity calculations were adjusted to take into account the hours lost during the power outage in Ontario. The results of specific questions included in the September Labour Force Survey, published in The Daily of October 30, were used to determine the net impact on hours worked, that is hours lost minus overtime hours. In the business sector, the net loss was estimated at 13.9 million hours.

Quarterly measures of labour productivity and related variables appear for the first time today in detail, reflecting 15 industries of the business sector. The statistical series for these industries started as of the first quarter of 1997. These detailed industry data are available in a new CANSIM table (table 383-0012 ).

In this release, the use of the term “productivity” refers to labour productivity. Calculations of the productivity growth rate and its related variables are based on index numbers rounded to one decimal place.

Labour productivity is the ratio of output to labour input (hours worked). Quarterly estimates of productivity are derived from a Fisher chained index of GDP, or of value added, in the business sector. Economic performance as measured by labour productivity must be interpreted carefully, since these estimates reflect changes in other inputs in addition to the growth in productive efficiency.

Labour compensation includes all payments in cash or in kind made by domestic producers to persons as remuneration for work. This includes salaries and supplementary labour income of paid workers, plus the imputed labour income of self-employed workers.

Unit labour cost is the labour cost per unit of output. It is calculated as the ratio of labour compensation to real value added. It is also the equivalent of the ratio of labour compensation per hour worked to labour productivity. The unit labour cost will increase when hourly compensation rises faster than labour productivity.