TECHNICAL NOTES

The international comparisons of hourly compensation costs in manufacturing
are prepared to assess differences in employer labor costs among countries.
BLS compensation data permit more meaningful comparisons of employer labor
costs than data based solely on average earnings. Definitions of average
earnings differ considerably by country and do not include many items of
labor cost that frequently make up a large portion of total cost. BLS
compensation data include nearly all labor costs incurred by employers. 

Below is a summary of the concepts used in this release. For more
detailed information, see www.bls.gov/ilc/#compensation.

Definitions. Compensation costs include (1) direct pay (all payments made
directly to the worker, before payroll deductions of any kind) (2) social
insurance expenditures (employer payments to secure entitlement to social
benefits for employees) and (3) labor-related taxes (net of subsidies). 

The data relate to all employees in manufacturing, including part-time and
temporary workers. The self-employed, unpaid family workers, contract
workers, and workers in private households are excluded.

Compensation Costs

Pay for Time Worked
* Basic wages
* Piece rate
* Overtime premiums
* Shift, holiday, or night work premiums
* Cost-of-living adjustments
* Bonuses and premiums paid each pay period

Directly-Paid Benefits
* Pay for time not worked (vacations, holidays, and other leave, except sick leave)
* Seasonal and irregular bonuses
* Payments in kind
* Allowances for family events, commuting, etc.
* Payments to employees’ savings funds

Employer Social Insurance Expenditures and Labor-related Taxes
* Retirement and disability pensions
* Health insurance
* Income guarantee insurance 
* Pay for sick leave
* Life and accident insurance
* Occupational injury and illness compensation 
* Unemployment insurance
* Severance pay 
* Other social insurance expenditures
* Taxes (net of subsidies) on payrolls or employment


Methodology. In general, total compensation for each economy is calculated
by adjusting earnings series to include items of direct pay, social
insurance, and labor-related taxes and subsidies not included in earnings.
For economies for which earnings data are not available on a per hour worked
basis, BLS makes adjustments in order to approximate compensation per hour
worked. Compensation costs are converted to U.S. dollars using the average
daily exchange rate for the reference year.

Earnings statistics are typically obtained from establishment surveys. Data
on the other components of compensation are typically obtained from periodic
labor cost surveys, censuses of manufacturers, employer confederations,
and other sources.

For the United States, the results and methods used differ somewhat from
those used for other BLS series on U.S. compensation costs. 

The statistics are adjusted, where possible, to account for major differences
in worker coverage, differences in industrial classification systems, and
changes over time in survey coverage. More information on exceptions to these
methods, as well as data sources used, can be found in "Country Notes and Data
Sources" located at www.bls.gov/ilc/#compensation. 

Additional data. Detailed time series tables of compensation costs in U.S.
dollars, national currencies, and annual indexes for 1996-2010 are available
at www.bls.gov/web/ichcc.supp.toc.htm.

The compensation measures in this news release are based on statistics
available to BLS as of October 2011. These measures may be subsequently
revised as data are collected to update compensation measures for
sub-manufacturing industries. Data for sub-manufacturing industries are
available at www.bls.gov/ilc/flshcaeindnaics.htm.