Labour accounts in Iran, Australia and Denmark

2.1Employment account

The construction of the employment account is shown in Table 1. First, some ten tables on employment from a variety of sources were compiled and reviewed (A-tables). Two among them were retained (B-tables): table, X1, from the input-output tables of national accounts and table, X2, from the labour force survey [11]. According to the input-output table, there were 25’372’000 persons employed in the reference year, while according to the labour force survey, the number of employed persons was 20’510’000. The breakdowns by broad branch of economic activity also show considerable differences, particularly, in agriculture and industry.

The differences were reconciled to the extent possible in the next step of labour accounting to produce the reconciled tables (C-tables): U1 the reconciled table based on the input-output table, U2 the reconciled tables based on the labour force survey, and U the end result. The main elements of reconciliation were:

Coverage adjustments

Adjustments for differences in definitions

Adjustment for reference periods

Adjustments for duplications

For example, to account for the difference of about 8 million between agriculture employment according to the input-output tables (12’506’000) and according to the labour force survey (3’810’000), it is necessary to quantify the various sources of discrepancies. One source of discrepancy is the statistical treatment of simultaneous agriculture activities. According to the results of the 2014 agricultural census, each agricultural holder is, on average, engaged in about 1.91 agriculture activities. In the input-output tables, these activities are treated separately and therefore the total employment figure is inflated by a factor of 1.91. For comparison with the labour force survey data, the figure should therefore be adjusted by an inverse factor, 1/1.91 = 0.52.

Another source of discrepancy is multiple job-holding. In Iran, about 20 percent of agriculture workers are engaged in non-agriculture jobs during the off-season. Therefore, coefficients of 0.8 and 0.2 are applied for employment in main and second jobs, respectively.

Still another source of discrepancy concerns the differences in the measurement of employment based on a reference week in the labour force survey and based on the calendar year in the input-output tables. According to the results of the labour force survey, the average duration of employment in main job in the agricultural sector is about 11.4 months per year. Dividing this number by 12, the adjustment factor of 0.952 is obtained for converting the year-long employment figure of the input-output tables to the week-long employment figure of the labour force survey. For the second and subsequent jobs, it is assumed that they occur on average about one season per year, and therefore the adjustment factor of 0.25 is used for conversion. The various adjustments are shown in the left panel of Table 2. The slight differences with the corresponding numbers in Table 1 are due to rounding to ‘000 persons.

The adjustments made on the labour force survey data shown in the right panel of the table were as follows:

Similar adjustments were made on the demand side and supply side of employment in the other broad branches of economic activity (Industry and Services). The results, as shown in Table 1, indicate that total employment based on the reconciled input-output tables has been reduced from 25’372’00 to 22’285’000 and total employment based on the labour force survey has been increased from 20’510’000 to 21’919’000. The difference between the two sources, i.e., the balancing item, has thus been narrowed from 4’862’000 to 366’000, or in percentage terms from about 21.2 percent to less than 1.7 percent. The last column shows the data for the final employment account (D-tables). It corresponds to reconciled data from the labour force survey (U2) because it was the source with the minimum amount of adjustments in the overall reconciliation process, |U2- X|2= 1’409’000 versus |U1- X|1= 3’087’000.

2.2Working time account

The working time account of Iran has been calculated on the basis of the reconciliation of estimates of the total volume of employment derived from data on weekly hours actually worked of the labour force survey on the supply side and data on normal weekly hours of work obtained from the commerce and services survey on the demand side. This survey covers establishments in the five specific branches of economic activity: (1) wholesale and retail trade, repair of motor vehicles and motorcycles; (2) accommodation and food services activities; (3) professional, scientific and technical activities; (4) arts, entertainment and recreation; and (5) other service activities (excluding transportation and storage; information and communication; financial and insurance activities; real estate activities; administrative and support service activities; public administration and defence; education; and human health and social work activities). The data from the two sources were first reconciled for the commerce and services sector and then the reconciled data were generalized to total employment.

The main elements of reconciliation included the following type of adjustments:

Adjustments for reconciliation of coverage and definitions

Adjustments for reference periods

Adjustment for multiple job-holding

These adjustments for the working time account were made in line with those made for the employment account where corresponding data on hours of work were available. Below a description is given of the generalization to total employment.

The generalization to total employment involved two steps. The first step concerned coverage. The number of workers covered by the commerce and services survey was 4’584’258, about one-fifth of total employment according to employment account (22’285’000). The corresponding number according to the labour force survey was 4’125’305, also close to one-fifth of total LFS employment (21’919’000). The ratio of 1/5 was therefore used to expand the total number of hours worked obtained from the reconciled working time account of the five branches of economic activity to that of all branches of economic activity.

The second step concerned adjustment for the reference year. The working time information on the five branches of economic activity are obtained from the commerce and services survey in 2014, while the reference year of the working time account is 2011. The adjustment was made by applying the growth rate of employment from 2011 to 2014 according to the labour force survey estimates for the corresponding five branches of economic activity, calculated to be r = 0.16. Thus, to obtain the total working time for 2011 (U1 or U2), the relation (U1 or U2) = (X1 or X2)/(1+ r) was used in Table 3 above.

The principal results are shown in Table 3. The last two lines of the table show the conversion of the working time accounts into average weekly hours worked per employed person using the relationship,

According to these results, the average number of hours worked per employed person in the year 1390 (20 March 2011–19 March 2012) was 48.1 hours per week. Due to the fragmented nature of the underlying data sources, it was not possible to break down the working time account into the broad branches of economic activity (Agriculture, Industry and Services).

2.3Income from employment account

The income from employment account of Iran is obtained from the sum of two income components: income from paid employment and income from self-employment. The accounts are calculated by reconciliation of data from two major sources: compensation of employees obtained from the input-output tables of the national accounts on the demand side and the household income and expenditure survey data on the supply side [12]. The data from the two sources were reconciled taking into account of a series of elements including:

Adjustment for coverage differences

Adjustments for negative values of income from self-employment

Adjustment for under reporting of income from employment

Adjustment for under coverage in certain branches of economic activity, in particular in construction.

The adjustments for coverage differences in the income from employment account was made in line with those made for the employment account where corresponding data on income from employment were available. Below descriptions are given of the other adjustment.

The survey data were adjusted for negative values of income from self-employment. In the household income and expenditure survey, for certain persons the reported income from self-employment in agriculture or non-agriculture jobs may be negative. This may happen, for example, because a farmer may have purchased a number of livestock in one year, but had little or no income from animal husbandry in that year. Or a self-employed person may have purchased a building for workplace and had little or no income from his or her activity that year. In the household income and expenditure survey, the incomes of these persons are reported as negative (annual income minus cost of purchase of livestock or building). While in the input-output tables, the purchase of livestock or the purchase of a building is considered as investment and no negative incomes are included in that database. In order to adjust this difference, the negative incomes in the household income and expenditure survey were simply set to zero for comparison with the input-output totals.

The other adjustment concerned the under-reporting of income. The adjustment was made on the basis of the results of a special study on under-reporting of income in the household income and expenditure survey of the Statistical Centre of Iran [13]. This study found the income of households were under-reported, on average, by about 27 percent among rural households and about 25 percent among urban households. These values were used for inflating the survey estimates of income from employment as part of the reconciliation with the corresponding data from the input-output tables.

Finally, income from employment in the construction underwent a special treatment. The Statistics Centre of Iran does not conduct separate establishment surveys on the construction sector, and there are no accurate administrative data in this sector. Thus, the value-added data in the construction sector from the input-output tables are generally not regarded as sufficiently accurate. For this reason, the income from employment in construction obtained from the household income and expenditure survey was directly inserted in the income from employment account.

Table 4 shows the main elements of the construction of the income from employment account. According to the input-output table of the national accounts, total income from employment generated 1’737’970’000 million Rials during the reference year. The corresponding estimate from the household income and expenditure survey was 1’263’916’000 million Rials. The breakdown by broad branch of economic activity shows still larger discrepancies, particularly, in agriculture and services. After adjustments for the differences in coverage and other elements of underreporting, total income from employment based on the reconciled input-output tables is now increased to 2’010’138’000 million Rials and total income from employment based on household income and expenditure survey is increased to 1’955’568’000 million Rials. The unaccounted balance between the two sources has thus been reduced from 474’054’000 million Rials to 54’570’000 million Rials, or in percentage terms from about 23.6% to less than 2.7%. The income account (U) column of the table shows the final account value of income from employment which corresponds the reconciled estimate from the input-output tables (U2) because the reconciliation involved the minimum amount of adjustments.

The results show that the total annual income from employment generated by the economy was 2’010’138 billion Rials in 1390 (20 March 2011–19 March 2012), representing 132 billion Euros, or 149 billion USD, at the currency exchange rates (1000 Rials = 0.06556 Euros = 0.07405 USD). The average monthly income from employment per employed person was 7’642’000 Rials (501.0 Euros, 565.9 USD). The average monthly income from employment per employed person was least in agriculture (398.7 Euros, 450.3 USD) and highest in services (609.2 Euros, 688.1 USD). It is also instructive to note that the share of agriculture in total annual income from employment was 17 percent while the corresponding share of total employment in agriculture was 22 percent. Similarly, the share of industry in total annual income from employment was 26 percent while the corresponding share of total employment in industry was 31 percent. Finally, the share of services in total annual income from employment was 57 percent while the corresponding share of total employment in services was 47 percent.

3.1Australia

The Australian Labour Account is based on an extensive framework, incorporating four distinct quadrants: Jobs, Persons, Labour Volume and Labour Payments [14]. Household surveys are the primary source of data on the supply of labour, supplemented by data from related government administrative records. Surveys of businesses, government and not-for-profit institutions and relevant administrative data sets are the main sources of information on labour demand. The resulting labour account consists of 11 sets of tables sub-divided into 19 industry divisions, with quarterly data covering the period from September 2010 to September 2018.

One of the features of the Australian labour account is the series of identity relationships built within and between the four quadrants of the account. In the “jobs” quadrant, there are two basic identity relationships:

In the “persons” quadrant, three identity relationships are specified:

The term “underemployed” refers to time-related underemployment defined by the 19th ICLS “Resolution concerning statistics of work, employment and labour underutilization” [7]. The concept of “underutilized persons” does not cover the potential labour force defined by the 19th ICLS Resolution [7]. The potential labour force refers to “unavailable jobseekers” and “available potential jobseekers” including the “discouraged jobseekers”. In the analysis of labour supply and demand, one may compare total jobs and total labour force, and, correspondingly, job vacancies and underutilized persons. Also, in principle, the number of main jobs in the Jobs quadrants should be equal to the number of employed persons in the persons quadrant.

The “volume” quadrant specifies four identity relationships:

Hours paid for may be regarded as labour hours from the point of view of the employer or the demand side of the labour market. By contrast, hours actually worked may be regarded as labour hours from the point of view of the worker or the supply side of the labour market. In principle, hours paid for applies both to a paid-employment job and to a self-employment job paid on the basis of time units. For a self-employment job (formal or informal) paid on the basis of time units, hours paid for is equivalent to hours actually worked. The calculation of identity relationship 3 requires data not only on number of unemployed and time-related underemployed persons but also on the number of hours sought. While international guidelines exist on the measurement of volume of time-related underemployment [9, para.10], corresponding guidelines on the measurement of volume of unemployment or composite measure of volume of unemployment and time-related underemployment do not exist.

Finally, the “payments” quadrant specifies four other identity relationships concerning labour cost and employment-related income:

Labour cost may be regarded as wages from the point of view of the employer or the demand side of the labour market. By contrast, labour income or employment-related income may be regarded as earnings from the point of view of the worker or the supply side of the labour market. Labour income refers to employment-related income [10]. The data on weekly hours actually worked for Australia are obtained directly from the labour accounts and compared with the corresponding data from the labour force survey. In the case of labour income, the average income per labour account employed person during the quarter is divided by three to obtain the monthly income from employment. The corresponding survey data are obtained from the Survey of Average Weekly Earnings (AWE) for employees at main job, May 2018, adjusted to monthly figure by the factor 52/12 [15].

3.2Denmark

The Denmark Labour Market Account [16] is a remarkable system of account providing data on the population’s labour market status in terms of full-time persons, covering a given period of time or a given point-in-time (2008–2016), broken down by sex, age group, region, ancestry and 24 socio-economic statuses such as persons in ordinary employment, persons in subsidized employment, unemployed and other persons receiving public benefits, persons enrolled in education, children and youth not enrolled in education and other people outside the labour force [16]. The data are published annually but collected continuously. The primary data are register-based obtained from a range of sources, including the e-income register, central business register, income statistics, statistics on persons receiving social benefits and the central population register. Under the Danish Labour Market Accounts (LMA) system, data are processed in four major stages:

The labour market accounts of Denmark do not provide data on working time and income from employment. Statistics Denmark however maintains an annual and quarterly Working Time Accounts [17], in which the statistics include data on employment, number of jobs, hours worked and compensation of employees by sex, industry, sector, socioeconomic status (self-employed, assisting spouse or employee). The accounts are constructed on the basis of existing statistical data adapted and adjusted to achieve coherence with the Working Time Accounts (WTA) concepts and definitions. The primary data source is the Labour Market Accounts and the results deliver labour market data to the business short-term statistics (STS) and the system of national accounts (SNA/ESA) [18].

Employment refers to the average number of persons who every day during the reference period have been paid either as self-employed, assisting spouse or employee in primary job. Included in the count are:

Generally excluded from the count are unpaid family workers.

Jobs refers to the average number of jobs both in primary employment of persons employed and any sideline jobs by the person. Included in the count are:

Excluded from the count are:

Hours worked or hours actually worked is measured in essentially four steps:

Due to lack of detailed information, unpaid overtime hours worked and criminal hours of work are excluded from the estimation of hours worked in the Working Time Accounts, although such estimates are contained in the National Accounts.

Compensation of employees in the Working Time Accounts includes compensation of employees in cash or in kind which the employer pays to an employee for work performed over a period. It includes;

It excludes:

3.3Comparisons

The labour account estimation of total employment in Iran is compared with those of Australia and Denmark in Table 5. The labour force survey is used as benchmark for comparing the labour account estimates. The first numeric column gives the Australian results. It indicates that there were 13’649’000 employed persons in Australia in June 2018, an estimate 8.0 percent higher than the corresponding labour force survey estimate. The difference is mainly due to additions of defence personnel, non-residents employed in Australia, and child workers, and adjustments for secondary employment and residents employed overseas [14, Appendix 4, cat. no. 6150.0].

The next column gives the results for Denmark. It shows that employment in terms of full-time persons was 2’164’000 in 2016, considerably lower than the LFS estimate of 2’748’000 employed persons. The difference is mainly due to the fact that the labour market account employment refers to full-time persons, defined as work of 37 hours per week, and that a person can at maximum contribute 37 hours in the labour market account. The documentation states that “the total number of full-time persons in the labour account corresponds to the average Danish population.”

The last line of the table gives the percentage difference between the labour force survey estimate and labour account estimate of employment for each country. It measures the gap between the two estimates and the extent of adjustment needed on the labour force estimate to reach the labour account estimate. One may thus interpret the figure as reflecting the degree of complexity of the employment account of the country. In this sense, Iran has the least complex employment account, followed by Australia and Denmark with the most complex employment account.

Similar results on working time and remuneration are shown in Table 6 above. As mentioned earlier, data on working time and compensation of employees in Denmark are obtained from a separate system of accounts called Working Time Accounts, linked to the national accounts. The results for 2016 extracted from table ATR118 of statistics Denmark are reproduced below:

The annual figure on hours worked is converted to average weekly hours actually worked as in Table 6 above. For the labour force survey, the weekly hours actually worked are obtained from the Denmark Statistics series AKU410A. Data on income from employment for Denmark are not reported in Table 6 because the available data from the Working Time Accounts concern compensation of employees which excludes income from self-employment.

The last lines in top and bottom panels of Table 6 give the percentage difference between the labour accounts estimate and the survey estimate for each of the reported country. It can be observed that the percentage difference for the Iran data is smaller in absolute terms than the corresponding percentage difference for Australia except for the working time account. As suggested earlier, this means that a lower amount of adjustments was involved in the construction of the accounts of Iran relative to those of Denmark in the case of the working time account and of Australia in the case of the income from employment account. It is also instructive to note while in both Australia and Denmark, the weekly hours actually worked calculated from the accounting system is lower than the corresponding figure from the labour force survey, the reverse is true in the case of the Iran.

The main weaknesses of the Iran labour accounts as presently produced are the limited coverage of hours of data in establishment surveys on the demand side, and the absence of data on non-resident employed persons working in resident economic units in household surveys on the supply side. There are many other challenges which the very process of labour accounting have uncovered and must be confronted in the future. For this purpose, the production of labour accounts has been put in the agenda of the Statistical Center of Iran and a team has been formed to undertake the required tasks.