Economic Analysis and Statistics  Canadian Industry Statistics  Canadian Economy  Goods  Manufacturing

Salaries and Wages
Leather and Allied Product Manufacturing
(NAICS 316)

This chapter reviews trends in employment, salaries and wages for Canada's Leather and Allied Product Manufacturing (NAICS 316) subsector between 1994 and 2003.

The data is obtained from Statistics Canada's Annual Survey of Manufactures (ASM) and covers incorporated establishments with employees primarily engaged in manufacturing and with sales of manufactured goods equal to or greater than $30,000, herein, referred to as principal establishments. Thus, unless otherwise stated, it would exclude non-employers, unincorporated establishments as well as establishments where manufacturing activity is minimal.

Because of major conceptual and methodological changes to the Annual Survey of Manufactures made in the year 2000, the reader should exercise caution when interpreting data and subsequent rates of change between the years 1999 and 2000. The magnitude of the effect from these changes on the statistics from the Annual Survey of Manufactures will differ between industries.

It should be noted that, starting in 2000, the Annual Survey of Manufactures no longer collects data on Head Offices. This will affect the following variables:

• the number of administration employees;
• the total number of employees;
• the wages paid to administration employees;
• the total wages paid to all employees;
• the cost of materials and supplies and goods for resale;
• total revenues (i.e. the value of shipments and other revenues);
• total value-added.

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Position in NAICS Hierarchy

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Salaries and Wages

This chapter analyses the cost of labour measured by the total dollar amount paid to workers by principal establishments over the course of a calendar year. A comparison with other operating costs (i.e. materials, supplies, fuel and electricity) is offered in the section on manufacturing costs.

Salaries and wages paid to employees are gross amounts before deductions for income tax and employee contributions to various benefit plans. Vacation and overtime pay are included, but not expenses associated with contract workers, employment agencies or casual labour. Employer contributions to employee benefit plans are also excluded.

Wages and Salaries Paid by Type of Employee Principal Establishments** 1994-2003 Leather and Allied Product Manufacturing (NAICS 316)
Type of Employee	Value in $millions		% of Total 2003	CAGR* 1994-2003	% Change 2002-2003
	1994	2003
Production	218.9	151.7	70.2%	-4.0%	-8.6%
Administrative	79.5	64.4	29.8%	-2.3%	-4.7%
Total	298.4	216.1	100%	-3.5%	-7.5%
Notes: Totals may not add up perfectly due to rounding * Compound annual growth rate ** Incorporated establishments with employees, primarily engaged in manufacturing and with sales of manufactured goods equal or greater than $30,000

In the Leather and Allied Product Manufacturing subsector, wages and salaries paid to employees have decreased from $298.4 million in 1994 to $216.1 million in 2003, or at a compound annual growth rate (CAGR) of -3.5%. Between 2002 and 2003, they decreased by -7.5%.

In comparison, for the Manufacturing sector, wages and salaries paid out increased by 3.9% per year since 1994 and increased by 2.6% over the course of 2002-2003.

Changes in wages and salaries depend, for the most part, on the relative fortunes of particular industries as some become more significant to the Canadian economy and others decline in significance. This may be due to changes in comparative advantage with other countries, shifts in consumer tastes or alterations in the cost or availability of supplies, to name a few factors.

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Salaries and Wages by Type of Employee

When broken down by type of employee, in the Leather and Allied Product Manufacturing subsector, production worker wages decreased from $218.9 million in 1994 to $151.7 million in 2003 or at an average of -4.0% per annum; and between 2002 and 2003 they decreased by -8.6%.

The wages and salaries of administrative workers, on the other hand, declined from $79.5 million to $64.4 million over the 1994-2003 period yielding a compound annual growth rate of -2.3%. Between 2002 and 2003, these wages and salaries decreased by -4.7%.

Total Wages Paid
By Employment Type
Principal Establishments
1994-2003
Leather and Allied Product Manufacturing
(NAICS 316)

In comparison, when looking at the Manufacturing sector over the years since 1994 wages and salaries for production workers increased by at an average of 4.1% per year, whereas those paid to administrative workers rose by 3.4 %.

Remuneration packages will fluctuate in response to changes in production. However, remuneration for production and administrative workers may not increase at the same rate as establishments within an industry will react in various ways to the dynamics of the marketplace. The share of wages and salaries paid to production workers can be compared to their percentage of the total work force. It would not be surprising to find that it is greater since a large proportion of administrative employees are managers and professionals.

Comparison of Employment and Wages
Production vs Administrative Employees - Share of Total
Principal Establishments
2003
Leather and Allied Product Manufacturing
(NAICS 316)

SHARE OF TOTAL EMPLOYMENT

SHARE OF TOTAL WAGES PAID

For the Leather and Allied Product Manufacturing subsector in 2003, the 17.8% of employees that were administrative workers received 29.8% of all the salaries and wages paid out by establishments to their workforce.

By comparison, in the case of the Manufacturing sector in 2003, the 22.4% of employees that were administrative workers received 30.2% of all the salaries and wages paid out by establishments to their workforce.

Changes in these ratios over time could results from one or more of the following factors.

• First, the number of production workers in relation to the total may have decreased for a number of reasons, e.g. increased reliance on contract employees.
• Second, the composition of the non-production cohort may have been transformed. The non-production workers include managers, administrators and professions such as engineers and computer and research scientists. As modern industries become more knowledge intensive it is possible that this component of the work force may have grown in significance.
• Lastly, starting in 2000, the Annual Survey of Manufactures no longer collects data on Head Offices, which may result in lower employment and wages statistics for non-production workers.

Both the workforce and the remuneration paid to employees are dependent on the revenues of the industry. While it is not possible or even practical to adjust too quickly to changes in revenue, over the longer term such adjustments will inevitably occur. In the shorter term, if shipments go down, one may not see an immediate drop in the wage component of operating costs. They may remain stable or even rise a little. Likewise, if shipments go up dramatically one would not expect to see an immediate commensurate increase in wages.

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Average Salaries

Average annual salaries for both production and administrative workers can be calculated by dividing the total wages paid by the number of employees.

Average Annual Salaries by Type of Employee Principal Establishments** 1994-2003 Leather and Allied Product Manufacturing Subsector (NAICS 316)
Type of Employee	Value in $		CAGR* 1994-2003	% Change 2002-2003
	1994	2003
Production	19,773	20,725	0.5%	2.6%
Administrative	39,221	40,632	0.4%	5.6%
Total	22,782	24,266	0.7%	3.7%
Notes: Totals will not add up as these are averages *Compound annual growth rate ** Incorporated establishments with employees, primarily engaged in manufacturing and with sales of manufactured goods equal or greater than $30,000

The average annual salaries for employees of the Leather and Allied Product Manufacturing subsector rose from $22,782 in 1994 to $24,266 in 2003, or at 0.7% per annum. There was an increase of 3.7% over the 2002-2003 period.

Average Annual Salaries
By Employment Type
Principal Establishments
1994-2003
Leather and Allied Product Manufacturing
(NAICS 316)

The average annual salaries for production workers in the Leather and Allied Product Manufacturing subsector grew by 0.5% over the 1994-2003 time period, and increased by 2.6% in the course of the latest year. In the case of administrative employees, the average annual salaries increased by 0.4% between 1994 and 2003 and increased by 5.6% between 2002 and 2003.

The table below illustrates how these changes compare to those in the Manufacturing sector as a whole.

Average Annual Salaries by Type of Employee Principal Establishments** Comparison to Manufacturing Sector Leather and Allied Product Manufacturing (NAICS 316)
Type of Employee	Leather and Allied Product Manufacturing		All Manufacturing
	Value in $	CAGR*	Value in $	CAGR*
	2003	1994-2003	2003	1994-2003
Production	20,725	0.5%	38,839	1.8%
Administrative	40,632	0.4%	58,233	2.2%
Total	24,266	0.7%	43,186	1.8%
Notes: Totals will not add up as these are averages *Compound annual growth rate ** Incorporated establishments with employees, primarily engaged in manufacturing and with sales of manufactured goods equal or greater than $30,000

In 2003, workers in the Leather and Allied Product Manufacturing subsector were paid $24,266 on average. This compares to the average of $43,186 for the Manufacturing Sector as a whole.