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News : EU Economy Last Updated: Mar 27, 2013 - 7:37 AM


Labour costs in Germany 32% higher than EU average in 2012
By Finfacts Team
Mar 27, 2013 - 7:22 AM

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German private sector employers incurred an average wage cost (including social security) of  €31.00 per hour worked in 2012. Destatis, the federal statistics office says that the labour cost level in Germany thus ranked eighth in the EU. Employers of the German private sector paid 32% more per hour worked than the EU average, but 11% less than, for example, France. Sweden recorded the highest labour costs per hour worked with €41.90 and Bulgaria the lowest with €3.70. The Irish rate was €27.40 and low private sector pension coverage saves Irish employers costs that are borne by employers in other developed countries.

As regards manufacturing, which is particularly subject to international competition, the price of one hour worked in Germany amounted to an average €35.20  in 2012. Here, Germany ranked fifth among the EU countries. The price of one hour worked in German industry was by 47% higher than on an EU average, but 3% lower than in France.

In each year of the period from 2001 to 2010, the labour cost growth in the German private sector was below the EU average. In 2011 and 2012, this long-term trend reversed. The increase in labour costs in Germany was larger than in the EU. This is also shown by a comparison with France. From 2001 to 2010, the labour cost growth in France (just under +35%) was more than twice that in Germany (+16%). In 2011 and 2012, the increase in Germany (+5.9%) was slightly higher than in France (+5.4%).

Labour costs are composed of gross earnings and non-wage costs. In 2012, employers in the German private sector paid an additional €27  of non-wage costs per €100  of gross earnings.

This means that non-wage costs in Germany were below the EU average of €32 . Among the EU countries, Germany ranked in the middle (16th).

The highest non-wage costs per 100  of wages were paid in Sweden (51 ) and France (€50 ), the lowest in Malta (€10 ).

The main component of non-wage costs is the employers’ social contributions, that is, especially the employers’ statutory social security contributions, expenditure on employee pension schemes and expenditure on continued pay in case of sickness.

The non-wage cost per €100 of wages in Ireland was €18. This reflects poor or no pension coverage in the Irish private sector while politicians can get 50% of salary as a pension after 20 years of service. Denmark's social security costs (Ireland's PRSI) are part of its income tax system.

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Labour costs per hour worked in 2012, in euros
 Status of calculations: 4th quarter of 2012

European Union Member States
(in a descending order by the labour cost level in the private sector)
Private sector Manufacturing
EUR Change on 2011 
in %
2
EUR Rank

1Values have been estimated on the basis of the first three quarters of 2012.

2 The rates of change are calendar adjusted and have been calculated in the relevant national currency.

Source: own calculations on the basis of Eurostat data of 20 March 2013

European Union ( EU 27) 23.50 2.1 24.00
Euro currency area 28.20 2.0 30.10
Sweden 41.90 3.5 43.80 1
Belgium 40.40 2.9 41.90 2
Denmark 39.50 1.5 37.90 3
France 34.90 1.9 36.30 4
Luxembourg 34.40 2.2 30.10 9
Netherlands 31.30 0.7 33.70 7
Finland 31.10 4.1 33.80 6
Germany 31.00 2.8 35.20 5
Austria 30.50 4.4 32.30 8
Ireland 27.40 1.9 28.90 10
Italy 27.20 1.7 26.90 11
United Kingdom 21.90 1.8 22.70 12
Spain 20.90 1.1 22.50 13
Cyprus 16.70 1.2 13.40 16
Greece1 15.50 – 6.8 14.70 14
Slovenia 14.50 0.6 14.10 15
Portugal1 12.30 2.7 10.50 18
Malta 12.00 1.0 12.00 17
Czech Republic 10.70 2.8 10.20 19
Slovakia 8.60 2.1 8.50 20
Estonia 8.60 6.4 8.10 21
Hungary 7.90 5.9 7.70 22
Poland 7.20 3.1 6.60 23
Latvia 6.20 4.0 5.60 24
Lithuania 5.80 4.9 5.50 25
Romania 4.50 6.2 3.80 26
Bulgaria 3.70 6.4 2.90 27

Non-wage costs in relation to gross earnings
in the private sector in 2012

European Union Member States

Employers paid an additional 
x euros of non-wage costs 
per 100 euros of gross earnings
EUR

1Values for 2012 have been estimated on the basis of the first three quarters of 2012.

Source: own calculations on the basis of Eurostat data of 20 March 2013

European Union ( EU 27) 32
Euro currency area 36
Sweden 51
France 50
Belgium 47
Lithuania 41
Italy 40
Czech Republic 37
Estonia 37
Spain 37
Austria 37
Slovakia 36
Hungary 35
Netherlands 30
Romania 30
Greece 291
Finland 28
Germany 27
Latvia 26
Portugal 261
Cyprus 21
Poland 20
Bulgaria 18
Ireland 18
United Kingdom 17
Slovenia 16
Luxembourg 16
Denmark

 

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