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1. The labour cost index (LCI) is defined as the Laspeyres index of labour costs per hour worked, chain linked annually and based upon a fixed structure of economic activity at NACE Rev. 2 ◄ section level, where NACE Rev. 2 ◄ is the classification established by Council Regulation (EEC) No 3037/90 of 9 October 1990 on the statistical classification of economic activities in the European Community (). Further disaggregations of NACE Rev. 2 ◄ sections, to be included in the fixed structure, shall be defined in accordance with Article 4(1). The formula to be used for the calculation of the LCI is defined in the Annex to this Regulation.

2. The labour costs are the total quarterly costs incurred by the employer in the employment of labour. The labour cost items and total staff employed are defined by reference to Annex II, Sections A and D (items D.1, D.4 and D.5 and their subcomponents, excluding items D.2 and D.3) of Commission Regulation (EC) No 1726/1999 of 27 July 1999 implementing Council Regulation (EC) No 530/1999 concerning structural statistics on earnings and on labour costs as regards the definition and transmission of information on labour costs ().

3. The hours worked are defined by reference to Council Regulation (EC) No 2223/96 of 25 June 1996 on the European system of national and regional accounts in the Community (), Annex A, Chapter 11, paragraphs 11.26 to 11.31.

4. The Commission may take measures to redefine the technical specification of the index and revise the weighting structure. Those measures, designed to amend non-essential elements of this Regulation, inter alia, by supplementing it, shall be adopted in accordance with the regulatory procedure with scrutiny referred to in Article 12(3).