3.4 Provincial, territorial, industrial and sectoral estimation methods and data sources
3.39 Two geographic measures of wages and salaries and supplementary labour income are published. The first is by province and territory of employment, or place of work, which is used in the calculation of provincial income- based gross domestic product. The second is by province and territory of residence, which is used in the calculation of personal disposable income and saving.
Wages and salaries
Province or territory of employment
3.40 Provincial and territorial estimates of wages and salaries are derived using the province of employment code (Box 29) on the T4 slip.1 The province of employment code reflects the province or territory where the work actually takes place. Employers are required to issue T4 slips identifying the province or territory in which the employee is currently working when the employee reports to an establishment within that province or territory.2 If an employee is transferred from one province or territory to another over the course of the year, multiple T4 slips will be issued to the employee.
Province or territory of residence
3.41 The distribution of labour income3 on a province of residence basis is primarily estimated by applying the geographical shares of employment income obtained from the province of residence code of the T1 Personal Master File to the national total of labour income. The T1 Personal Master File4 includes all individual income tax returns required by law to be completed by Canadian residents. Employment income as reported on the federal income tax return (line 101) is used to calculate the provincial and territorial shares of employment income on a province of residence basis.
3.42 The calculation of wages and salaries by industry involves a number of different steps. First, all T4 slips5 issued by an employer are aggregated under the employer's business number.6 This information is then linked to Statistics Canada's Business Register7 which provides the industrial activities8 of over two million businesses operating in Canada. The aggregated income of all T4 slips issued by individual businesses is then distributed among the specific industries under which the business operates using the number of employees in each unique industry. This initial matrix of wages and salaries by province and territory and by industry9 is the starting point for the annual industry estimates. Throughout this chapter this process will be referred to as the T4 allocation process.
3.43 Industry estimates for public sector organizations, such as hospitals, elementary and secondary schools, colleges, universities, and residential care facilities are supplied by various Statistics Canada divisions. Federal, provincial and municipal government estimates are obtained from public accounts data and taxation statistics.
3.44 For the benchmarked years, reconciliation of wages and salaries by industry with the Industry Accounts Division (IAD)10 is conducted for business, government and personal sectors. The result is a final matrix of wages and salaries by industry at the two-digit NAICS level, calculated using a combination of administrative and survey data sources.
3.45 Wages and salaries paid by business sector organizations comprise all privately controlled or owned enterprises together with government business enterprises, all of whose primary motivation is profit making. Using a wide range of survey and T4 data sources, the business sector estimates by industry are derived in conjunction with Industry Accounts Division for the benchmark years.11 The third-year business sector estimates are derived using T4 levels and trend estimates applied to benchmark levels. For the benchmark and third-year estimates (t-4, t-3, and t-2), the top down approach requires that control totals are first established by province and territory, and then by sector. Estimates of the government and personal sector by industry are then removed leaving a control total for the business sector.
3.46 Due to the size of the business sector, and the various sources used, minor adjustments to industries are often necessary to balance the business sector to provincial and territorial control totals.
3.47 Wages and salaries paid by the government sector include all wages and salaries paid by federal, provincial, and municipal governments, as well as public hospitals, municipal school boards, colleges, universities and residential care facilities. All government units are identified and classified by Public Institutions Division, using specific classification criteria. The government sector estimates are produced by industry from a number of sources, including public accounts, budgetary estimates, information obtained from detailed expenditure files received directly from provincial and territorial governments, T4 data, and data obtained from other Statistics Canada subject matter divisions.
3.48 Wages and salaries paid by personal sector organizations include organizations serving households that provide services free of charge or at less than economically significant prices. These organizations include child and family social services, charitable organizations, non-profit organizations serving households, labour unions, political organizations, social advocacy groups, civic and fraternal societies, and religious organizations. The universe of personal sector organizations is principally derived from charitable organizations reporting on the Registered Charity Information Return, and non-profit organizations reporting on the Non-Profit Organization (NPO) Information Return.12 Considerable effort is made to remove entities classified to the government sector and the business sector, by using a selection of business numbers and industry classifications. The remaining organizations are then linked to the T4 file to obtain wages and salaries. Personal sector organizations which do not report on the charities or non-profit files but are providing similar services to households are added to the personal sector by using select industry codes that represent homogeneous groups, such as religious organizations, and civic and fraternal organizations. Private elementary and secondary schools, which include private fee schools and religious-based schools, are also included in this sector.
Supplementary labour income
Registered pension plans
3.49 Provincial and territorial estimates of employers' contributions to registered pension plans are based on plan membership. Employers' contributions by industry are derived using employees' contributions to registered pension plans captured on T4 slips, and allocated by industry using the T4 allocation process as described in section 3.42. Sector estimates are derived using both administrative and survey data.
Canada and Quebec pension plans
3.50 Provincial and territorial estimates of employers' contributions are derived using the employees' contributions to the Canada and Quebec pension plans using the province of employment found on the T4 slip. Similarly, employers' contributions by industry are derived using employees' contributions to the Canada and Quebec pension plans, captured on T4 slips and allocated by industry using the T4 allocation process as described in paragraph 3.42. Sector estimates are derived using both administrative and survey data.
3.51 Provincial and territorial estimates of employers' contributions are derived using the employees' contributions to employment insurance using the province of employment found on the T4 slip. Similarly, employers' contributions by industry are derived using employees' contributions to employment insurance, captured on T4 slips and allocated by industry using the T4 allocation process described in paragraph 3.42. Sector estimates are derived using both administrative and survey data.
3.52 Provincial and territorial estimates are derived from premium revenues received by workers compensation boards. The amount that employers contribute to workers' compensation varies by province and territory, depending on assessment rates by industry, applied to gross payrolls. The industry estimates are derived from a historical set of industry by province and territory ratios.13 Sector estimates are derived using both administrative and survey data.
3.53 Provincial and territorial estimates of employers' contributions to welfare are derived from the Canadian Health and Life Insurance Association,14 Alberta and British Columbia government health plan premiums, and premium revenue received by non-profit health insurance organizations. The industry estimates are derived from a historical set of industry by province and territory ratios. Sector estimates are derived using both administrative and survey data.
3.54 Provincial and territorial estimates are derived using the province of employment on the T4 slip to obtain the employees' last place of work. Retirement allowances are allocated by industry using Statistics Canada's Business Register, as well as the distribution of wages and salaries by industry from the T4 allocation process as described in paragraph 3.42. Sector estimates are derived using administrative and survey data.
- 3.3 The quarterly and monthly estimates of labour income
- 3 Wages, salaries and supplementary labour income
1. The use of the province of employment code (Box 29) on the T4 slip was first published with the 1981-1991 historical revision of the Provincial Economic Accounts in April 1993. Prior to 1981, there was only one regional distribution of wages and salaries that was constructed by industry using annual censuses and monthly sample surveys from Statistics Canada, data from the Public Accounts, as well as administrative data obtained from Revenue Canada (now the Canada Revenue Agency).
2. A typical example would be federal government employees living in Gatineau, Quebec but working in Ottawa, Ontario. These employees would have T4 slips showing Ontario as the province of employment.
10. Own-account construction derived by the Industry Accounts Division is added back to each industry to reconcile with the Income and Expenditure Accounts Division's labour income estimates. The Industry Accounts Division excludes own-account estimates from all industries and combines own-account and regular construction activity together to form the construction industry.
11. The Industry Accounts Division produces detailed industry estimates for about 300 industry groups (roughly corresponding to four-digit NAICS), whereas the Income and Expenditures Accounts Division produces industry estimates at aggregate industry levels (two-digit NAICS).
13. These historical ratios by industry and by province and territory were based on Labour Costs in Canada, catalogue no. 72-618, which later became Employee Compensation in Canada, catalogue no. 72-619, which in turn was discontinued in the early 1980s.
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