Intermediate Consumption - Workers' Consumption

Workers' Consumption

Some goods and services bought by enterprises do not enter directly into production of output itself, but are consumed by workers (e.g. work clothing, accommodation, meals, transport, washrooms, medical check-ups).

In such cases it is necessary to distinguish whether items are intermediate consumption or, alternatively, a remuneration "in kind" to employees (for example, fringe benefits such as company cars and meal tickets for private use).

In general, when items are used by employees in their own time and at their own discretion for their own use, they are regarded as remuneration in kind, not intermediate consumption. In that case, they are part of the aggregate compensation of employees, and included in gross value added. But if employees have to use them specifically to do their work, they are included in intermediate consumption, and excluded from value-added.