Recent years have seen growing concerns about rising inequalities of income within countries. Weaker productivity growth in some economic sectors and small and medium enterprises (SME) in the post-crisis period has exacerbated longstanding productivity gaps within many countries, with consequential impacts on measures of inequality.
OECD Compendium of Productivity Indicators 2018
OECD Compendium of Productivity Indicators
Productivity and wage gaps across main economic sectors and firms
Key findings
Compensation received by employees differs significantly across economic sectors. In trade, transport and food and accommodation services, a sector where SMEs account for a significant share of the enterprise population and value added, the average compensation per employee is generally lower than the total economy average compensation. However, in information and communication services and, in particular, in finance and insurance activities, the average compensation received by an employee is on average 50% and 70% higher than the total economy average compensation.
Wage differentials across firms typically align with labour productivity differentials. Large firms in the manufacturing sector are on average more productive and tend to pay higher wages than SMEs. In Germany, for example, large firms paid a wage premium of over 50% of the wage of medium-size firms and over double the wage paid by smaller and micro enterprises. Large differentials are also observed in Austria, Belgium and the Netherlands, while they are significantly smaller in some other countries, such as in Czech Republic, Finland and Slovenia.
Definition
Compensation of employees is made up of two components: wages and salaries, and social contributions payable by employers. Wages and salaries are payable in cash or in kind and include the values of any social contributions, income taxes, etc., payable by the employee even if they are actually withheld by the employer and paid on behalf of the employee. The value of social contributions payable by employers include actual social contributions payable by employers to social security schemes or to private funded social insurance schemes and imputed social contributions to unfunded schemes. Compensation of employees is not payable in respect of unpaid work undertaken voluntarily, including work done by members of a household within an unincorporated enterprise owned by the same household. Any income generated through these activities is recorded as mixed income in the national accounts, which also includes income earned by the self-employed. Compensation per employee statistics by firm size in national currency are converted to US dollars using purchasing power parities (PPPs) for actual individual consumption and as such reflect average labour compensation per employee from a worker/consumer’s perspective. Labour productivity by firm size is measured as gross value added in current prices per person employed.
Information on data for Israel: http://dx.doi.org/10.1787/888932315602.
Comparability
Value added data by firm size refer to value added at factor costs in European countries and value added at basic prices for other countries. Estimates of value added and employment presented by size class are based on the OECD Structural and Demographic Business Statistics (database) and will not usually align with estimates produced according to the System of National Accounts. The latter includes a number of adjustments to reflect businesses and activities that may not be measured in structural business statistics, such as the inclusion of very small units that may be below operational thresholds used in structural business statistics or those made to reflect the non-observed economy.
Comparability across firm size classes, industries and countries, may be affected by differences in the shares of part-time employment. Measures of compensation of employees or labour productivity per hour worked can overcome cross-country differences in part-time employment but these data are only available for a limited number of countries when broken down by firm size class. As such the indicators presented in Figure 5.15 and Figure 5.16 are based on headcounts and not hours worked and so some care is needed in interpretation.
Sources and further reading
OECD National Accounts Statistics (database), http://dx.doi.org/10.1787/na-data-en.
OECD Structural and Demographic Business Statistics (SDBS) (database), www.oecd.org/std/industry-services.
OECD (2017), Entrepreneurship at a Glance 2017, OECD Publishing, Paris. http://dx.doi.org/10.1787/entrepreneur_aag-2017-en.
OECD (2017), OECD Compendium of Productivity Indicators 2017, OECD Publishing, Paris, http://dx.doi.org/10.1787/pdtvy-2017-en.
Figure 5.9. Compensation per employee, manufacturing
Figure 5.10. Compensation per employee, construction
Figure 5.11. Compensation per employee, trade, transport, accommodation and food services
Figure 5.12. Compensation per employee, information and communication services
Figure 5.13. Compensation per employee, finance and insurance
Figure 5.14. Compensation per employee, professional, scientific and administrative services
Figure 5.15. Average compensation per employee by firm size, manufacturing
Figure 5.16. Labour productivity and compensation per employee by enterprise size, manufacturing
