Isolated Posts Allowance Indexes (Living Cost Differential Indexes) (LCD)

Detailed information for this survey

The purpose of this survey is to collect data used to calculate spatial price indexes that determine the Living Cost Differential allowance level payable, under the Isolated Posts and Government Housing Directive (IPGHD), to Canadian government employees serving at "isolated" locations in Canada.

Data release - The data from this survey are not released by Statistics Canada. They are used by Treasury Board, and published on the National Joint Council (NJC) website (www.njc-cnm.gc.ca).

• Questionnaire(s) and reporting guide(s)
• Description
• Data sources and methodology
• Data accuracy
• Documentation

Description

The Government Allowance and Spatial Indexes Section, Statistics Canada, is responsible for the computation and recommendation of indexes of comparative retail prices and living costs to the National Joint Council (NJC), to support the operation of the Isolated Posts and Government Housing Directive (IPGHD). The IPGHD applies to Canadian government employees, serving at approximately 300 locations in Canada that have been designated as 'isolated' under this Directive. The IPGHD is published on the NJC web site.

A Living Cost Differential index is, at a given point in time, the expression of the relationship which exists between the prices for a specific range of products (goods and services) at a particular isolated post, compared to the price of the same range of products in one of seven Canadian "point of comparison" cities (Vancouver, Edmonton, Saskatoon, Winnipeg, Toronto, Montreal or St-John's) as established by the NJC. The price level at the point of comparison is always expressed as 100; thus an isolated post index of 130.0 and 134.9 indicates that for the range of products compared, we estimate price levels at the isolated post to be between 30 and 34.9 percent higher than those at the point of comparison city for that isolated post.

The range of products included in the comparison is limited to the categories outlined in the IPGHD as set out by the NJC Working Committee on Isolated Posts. The indexes include price comparisons for consumer expenditure products from 9 categories including:
- food consumed at home,
- food away from home (restaurants),
- household supplies and services (including communications),
- personal care supplies and services,
- non-prescription pharmaceutical products,
- public transportation,
- private vehicle operation and maintenance (including snowmobile and/or boat operation),
- tobacco and alcoholic beverages,
- audio/video supplies and reading material.
Prices are collected for some 250 products. Price comparisons for individual items are averaged to reflect their relative importance in the point of comparison.

Several important components of the typical family budget such as shelter, furniture, clothing and vehicle purchase costs are not included in the measurements. Furthermore even in the case of those groups which are included, it is sometimes necessary to introduce adjustments at locations where certain items may not be available.

Data from all individual Consumer Information Schedules (CIS) is combined to create average post purchasing patterns and to establish ratios of local purchases to 'imported' goods. Freight, packing, handling and other charges (if applicable) are added to the supplier's base price to establish the final 'landed cost' to the employee in the case of 'imported' items.

Once established, each isolated post index is reviewed at three to four year intervals and remains in effect, unchanged between review periods. Depending on circumstances, some locations may be reviewed more or less frequently than others.

Collection period: September to March

Subjects

• Prices and price indexes

Data sources and methodology

Target population

The target population for the Consumer Information Schedule questionnaire is all federal government personnel and agents posted to isolated locations within Canada. The basket of products includes only those categories of goods and services as agreed upon by the Canadian government and its employee associations.

The target population for the Pricing Schedule for Retail Price and Living Cost Surveys at Remote Locations is all retail outlets at isolated posts and specified supply sources. Retail outlets in the base city are chosen based on outlets collected in the CPI and the likelihood to find prices for products that match those collected in the isolated post and supply source outlets.

The target population for the Living Cost Differential Survey's, Consumer Information Schedule questionnaire is all federal government personnel and agents posted to isolated locations within Canada. The basket of products includes only categories of goods and services as agreed upon by the National Joint Council (NJC) comprised of the Canadian government and its employee associations.

The target population for the Living Cost Differential Survey's Pricing Schedule for Retail Price and Living Cost Surveys at Remote Locations questionnaire is all retail outlets at isolated posts and specified supply sources. Retail outlets in the base city are chosen based on outlets collected in the CPI and the likelihood to find prices for products that match those collected in the isolated post and supply source outlets.

Instrument design

Questionnaires were developed by the Isolated Posts Unit of Consumer Prices Division based on the basket of products specified by the National Joint Council's Isolated Posts and Government Housing Committee. Questionnaires are subject to annual revision when new product weights, reflecting typical family expenditure patterns, are introduced. New products can be added or specifications for product categories modified. . Individual specifications may be revised annually to capture changes to product models or formats.

Visits to isolated locations is undertaken annually by employees from the Isolated Posts Unit. The purpose of these visits is to explain the survey methodology and to gain first-hand knowledge of conditions for federal employees living and working in isolated communities. On-site discussion of the Consumer Information Schedule questionnaire and the price collection schedules ensures that these questionnaires are relevant and elicits compliance, providing the data required to produce Living Cost Differential Indexes.

Frame
Contacts for each federal department at the isolated post are provided by a departmental contact in the Ottawa head office. The contacts at the post are responsible for identifying respondents in their office and distributing questionnaires.

Outlets in each isolated post are identified based on whether the previous survey iteration indicated more than 10% of local purchases were made there or, if a new outlet opens and post employees indicate they shop there.

Outlets in the base city are a sub-sample of the CPI food outlet sample with one outlet per banner and the likelihood of pricing products at the base city outlet that match those in isolated post and supply source outlets.

Sampling

This is a sample survey with a cross-sectional design.

Federal employees at isolated posts.

Retailers located in isolated posts, supply sources, and point of comparison (base) cities.

The target population is all federal employees at isolated locations where at least one employee works fulltime from January to December. If the employee(s) are seasonal, a judgmental sample is derived for the group on the basis of geographical locations within the region.

The sample of retail outlets is also a judgmental sample of local retailers frequented by post personnel. Some 250 price specifications are collected from the universe of retail items covering the specific basket of products (goods and services) included in the survey. Some important criteria and considerations for designing a basket of products include:
1. The product should be available at all locations. Individual copies of the same pricing survey questionnaire is used to collect prices for the listed products at each post. Product availability may be a constraint in establishing baskets for north/south price comparisons because of the wide variation in location accessibility, community size, climate and products.
2. The product should be one commonly purchased by Canadian families and have some significance in their expenditure patterns. The item should be easy to identify and be amenable to reasonably precise description.

Products are neither included nor excluded on the basis of any moral or social judgments (e.g., alcohol and tobacco). They are included because they represent significant elements of reported average household expenditures.

Data sources

Responding to this survey is voluntary.

Data are collected directly from survey respondents and derived from other Statistics Canada surveys.

Both the CIS and Pricing Schedule are paper questionnaires. The CIS questionnaire is e-mailed to the contacts for each department at the post. The Pricing Schedule is e-mailed to contacts in posts not scheduled to be visited by a Statistics Canada interviewer. Survey interviewers, carry out collection in stores for selected posts, supply sources and the base city, using printed copies of the pricing schedule.

Data is captured manually LCD Data Capture and Index Calculation Database System.

Initial contact is made by sending a census letter to head office departmental contacts.

Follow-ups with respondents are made by phone and email.

Administrative:
- Telephone rates
- Postal rates
- Cable and satellite rates
- Home insurance rates
- Airline passenger and freight rates
- Automobile insurance and registration rates
- Shipping and freight rates
- Magazine and newspaper subscription rates
- Beer, liquor and wine (provincial prices)

Derived:
LCD weights from SHS expenditures

View the Questionnaire(s) and reporting guide(s).

Error detection

All collected data is subject to initial review for completeness. Direct follow up through the post contact is undertaken by e-mail or telephone to obtain missing or delinquent portions of the survey when submitted in an incomplete fashion or to resolve inconsistent responses.

All captured data is subjected to verification to ensure accuracy of input. The data are subjected to outlier review that are identified using both automated and manual procedures.

Detailed analysis is carried out to produce product category aggregates. Additional analysis is done to compare regional Post Indexes and the final survey results are compared to the last surveys.

Imputation

Imputation procedures by proxy of a similar product are employed when exact comparison is not possible. Proxy prices from nearby locations are used for missing prices. Conversion factors are also employed when exact size comparison is not possible.

Estimation

Estimation is carried out in five main calculation steps:
1. Weighted average prices for point of comparison (base city);
2. Weighted average prices for the post;
3. Local relatives and indexes
4. Import relatives and indexes
5. Combined indexes


A weighted average base price is calculated for the post's associated point of comparison (base) city. The retail outlet's market share for the base city determines the weight in average base price calculation.

The post prices are weighted by the relative importance of each retail outlet or product source for the post. The relative importance is derived from the Consumer Information Schedule (CIS) which asks the employee to indicate the percentage of each listed product group they normally purchase locally, and the percentage they normally obtain from outside locations (sum to 100%).

Each weighted average post price is compared to the point of comparison's weighted average price, expressed as a ratio. For example a ratio of 2.0 for a particular item would indicate that the post price from that source is twice that of the point of comparison price.

The price ratios are then assigned a weight, or relative importance, based on expenditure data from the Survey of Household Spending (SHS) and the results are aggregated to produce the index for that post.

The weights for the Living Cost Differential basket of products is derived from the most recent data from the Survey of Household Spending (SHS) (SDDS ID 3508). Special tabulations of expenditures are provided for a subset of SHS respondents: Canadian families of 2 or more in large southern metropolitan centres. The price differentials (ratios) between the isolated post and the point of comparison are weighted based on the SHS reported expenditures for product in the point of comparison.

Quality evaluation

All captured data is subject to manual check to ensure accuracy of input. Details for priced products are validated to ensure the same quantities or container sizes and, as far as possible, identical brands were priced in the post as in the point of comparison city.

The data are subjected to outlier review using both automated and manual procedures. Detailed analysis is carried out to produce product category aggregates. Additional analysis is carried out to confirm the validity of any differences between the previous Living Cost Differential Index and the results of the survey.

Disclosure control

Statistics Canada is prohibited by law from releasing any information it collects that could identify any person, business, or organization, unless consent has been given by the respondent or as permitted by the Statistics Act. Various confidentiality rules are applied to all data that are released or published to prevent the publication or disclosure of any information deemed confidential. If necessary, data are suppressed to prevent direct or residual disclosure of identifiable data.

In order to prevent any data disclosure, confidentiality analysis is done using the Statistics Canada Generalized Disclosure Control System (G-Confid). G-Confid is used for primary suppression (direct disclosure) as well as for secondary suppression (residual disclosure). Direct disclosure occurs when the value in a tabulation cell is composed of or dominated by few enterprises while residual disclosure occurs when confidential information can be derived indirectly by piecing together information from different sources or data series.

Data accuracy

So as not to mislead users and to avoid implying a degree of accuracy that cannot be achieved when creating estimates comparing prices in isolated communities and large metropolitan centers, the post indexes calculated by Statistics Canada are classified according to where the index falls within a 5 point index range.

Documentation

• Computation of Living Cost Differential Allowances Indexes
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