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Table 10 IMD components and their changes over time

From: Composite indicators of labour market regulations in a comparative perspective

Year of the report

2001–2008

2009–2011

2012

Number of countries

49–55

57–59

59

LM indicators

Govt. Efficiency Factor

➢ Business Framework/Legislation Subfactor

o Sub-subfactors:

(2.4.11) Labour Regulations

(2.4.12) Unemployment Legislation

(2.4.13) Immigration Laws

Govt. Efficiency Factor

➢ Business Legislation Subfactor

o Sub-subfactors:

(2.4.17) Labour Regulations

(2.4.18) Unemployment Legislation

(2.4.19) Immigration Laws

(2.4.20) Firing Costs/Redundancy Cost

(2.4.21) Labour market flexibility

Govt. Efficiency Factor

➢ Business Legislation Subfactor

o Sub-subfactors:

(2.4.17) Labour Regulations

(2.4.18) Unemployment Legislation

(2.4.19) Immigration Laws

(2.4.20) Redundancy Cost

  1. Numbers in brackets next to components’ names reflect the structure of the index and match the numbering of the IMD data tables
  2. Variables definitions
  3. Labour Regulations: survey question: “Labour regulations (hiring and firing practices, minimum wages etc.) … 1 = are not flexible enough, 6 = are flexible enough”
  4. Unemployment Legislation: survey question: “Unemployment Legislation … 1 = does not provide any incentives to look for work, 6 = provides an incentive to look for work”
  5. Immigration Laws: survey question: “Immigration Laws… 1 = prevent your company from employing foreign labour, 6 = do not prevent your company from employing foreign labour”
  6. Firing/Redundancy Costs: measures the cost of advance notice requirements, severance payments, and penalties due to a terminated worker, expressed in weekly wages. Source: The World Bank, Doing Business 2009. This indicator is reported as Redundancy Cost from 2010 onwards. In 2009–2010, reference is made to the worker profile with 20 years of tenure. From 2011 onwards, reference is made to the worker’s profile with 1, 5, and 10 years of tenure
  7. Labour market flexibility: The Rigidity of Employment is the average of three subindices: a Difficulty of Hiring index, a Rigidity of Hours index, and a Difficulty of Firing index. Subindices have several components, all taking a value between 0 and 100, with higher values indicating more rigid regulation. Source: World Bank, Doing Business 2009
  8. All IMD data are reported in terms of standardized values, using the standard deviation method conversion. This allows measuring the relative difference between the economies’ performances. For each variable, a standardized value is computed by subtracting the average value of all sampled economies from the economy’s original value and then dividing the result by the standard deviation. For more information, see IMD reports
  9. Source: IMD 2013
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