Chapter 8 - Price collection

8.1 This chapter describes the data collection processes in use for the WPI.

8.2 Information for the WPI is collected using quarterly mail-out, mail-back questionnaires.

8.3 When a business is first selected in the survey, detailed pricing specifications are collected for each of the randomly selected jobs. These specifications (job position number, title, tasks, grade, location, etc.) enable the same jobs to be identified in subsequent quarters. Employers providing data for the WPI have the option of reporting either the ordinary time hourly rate of pay or the annual salary for each selected job. Where an annual salary is reported, information about the usual or standard weekly hours for the job is used to convert it into an hourly rate of pay. Other information relating to the jobs is also collected including: 

• details about pay changes during the reference quarter
• details about pay change mechanisms (e.g. Fair Work Australia or Modern award, collective agreement or salary review)
• details of overtime provisions
• details of any bonuses, commissions or incentive payments paid during the reference quarter
• any additional information about jobs that have unusual pay or working arrangements.

This additional information assists in understanding the nature of pay changes as they occur and to ensure that only pure price changes are reflected in the index.

8.4 When a job is paid by piece rates, i.e. paid a set amount per unit produced, an hourly rate is determined after consultation with the business contact about the rate per piece and the average number of pieces per hour. The average hourly rate is calculated when the job is first selected and it becomes part of the pricing specifications for the job and is priced from quarter to quarter. In subsequent quarters, any changes to the piece rate are collected, so that the percentage change is calculated and applied to the previous quarter's hourly rate.

8.5 The ABS takes a number of steps to ensure that data from the same jobs are collected each quarter, and that any changes in price for the job between quarters relate to pure price change. Where necessary, ABS survey staff contact businesses by telephone and seek clarification from the data provider on information supplied on the form. This contact with businesses enables survey staff to determine whether the change in price was due to factors other than market forces, such as a change in the pricing specification, changes in the characteristics of the job occupant, or a new occupant being in the job.

8.6 Sometimes it is not possible to collect data for all of the selected jobs. Some jobs may be temporarily vacant or the required information is simply not provided by the employer (although this is rare). There are a few options available to deal with temporarily missing observations. These include:

• repeating the previous period's price of the item
• imputing a movement for the item based on the price movement for all other items in the sample
• using the price movement from another price sample.

8.7 The procedure most commonly used in the WPI is to impute a movement for the missing job based on the price movements of the other jobs in the sample. The implicit assumption behind this procedure is that if it had been possible to collect the price of this job, its price would have changed in line with similar jobs. In most cases, this is a reasonable assumption and will provide an acceptable outcome for the index. However, this method is inappropriate when a job has no close substitutes. In these cases, a more appropriate method of imputation is to repeat the previous price.

8.8 Rigorous quality assurance processes are applied to the WPI data. These procedures are in place to ensure that the price change data supplied by businesses are accurate, and that the index numbers that are produced reflect changes in the real world. More detail on the types of price changes that are subject to these processes are provided in Chapter 9.

8.9 A transaction price is the value placed on an item (agreed upon by seller and buyer) at the point of transaction. In the case of the WPI, transaction prices are the actual wage and salary payments made to the job occupants in the survey reference period rather than nominal or list rates (e.g. award or book rates) for the job concerned.