EU Labor Cost Comparison Germany Becoming More Competitive
German labor remains expensive, but an European Union-wide comparison shows Germany is getting more competitive because its labor costs grew by just one percent in 2007 -- the smallest percentage increase of all EU members.
A Siemens employee measuring a steam turbine.
Average labor costs per hour worked in Germany stood at 29.10 ($46.5), significantly less than in Denmark and Sweden with 35 and 33.40 respectively. Not surprisingly, Eastern European countries are far down the table, with Bulgaria at the bottom with 2.10 per hour.
However, Germany's labor costs are higher in the manufacturing sector at 33 per hour, the fourth highest in the European Union.
Even though differences in labor costs across the EU remain high, the gap is gradually narrowing, the statistics office said. "In member states with a level of more than 20, the labor costs in the private sector increased by less than five percent. Where the level was less than 10, growth amounted to between 10 and 30 percent," the office said.
|Country||euros||Change in percent|
|European Union average||22.80||3.4|
* for every hour worked in 2007 Source: German Federal Statistical Office
Recent growth in industrial employment in Germany was partly due to weak labor cost growth, he added.
Non-Wage Labor Costs
|Country||Non-Wage Labor Costs*|
*per 100 Euro gross wages, Source: Federal Statistics Office
When it comes to non-wage labor costs -- the statutory social insurance contributions paid by businesses on behalf of their staff -- Germany is well down the table, ranking 14th with 32 per 100 gross wages. France and Sweden lead the table with 50 each.
Economists say high pay deals reached in recent months could push up labor costs by around two percent in 2008, but Germany will still gain competitiveness because costs are rising faster in other EU states.