This article presents a traditional shift-share decomposition to identify contributions of three effects on the rise in the hourly wage cost in Belgium: changes in the industry composition of total hours worked (composition effect), changes in the structure of employment in terms of categories of workers (employment structure effect), and increases in the hourly wage cost of these individual categories (wage effect).
The decomposition effects are calculated for the years 2000-2010 with industry-level data (A38) from the national accounts published in October 2014 according to the ESA2010 and with EUKLEMS data for 18 categories of workers according to three criteria (gender, age and skill-level). In the results, the wage effect largely dominates with a contribution of 87% to the economy-wide hourly wage cost increase. The composition effect turns out slightly negative (-3%) due to the respective reduction and increase in the relative importance of the manufacturing sector and the non-market services sector in total hours worked. Finally, the contribution of the employment structure amounts to 16% of the economy-wide rise in the hourly wage cost. This effect is closely related to the rise in the average skills and age of employees.