Hourly labour costs in the euro area1 (EA16) rose by 2.2% in the year up to the fourth quarter of 2009, compared with 3.0% for the previous quarter2. In the EU271, the annual rise was 2.4% up to the fourth quarter of 2009, compared with 2.9% for the previous quarter2.

The two main components of labour costs are wages & salaries and non-wage costs. In the euro area, wages & salaries per hour worked grew by 2.0% in the year up to the fourth quarter of 2009, and the non-wage component by 2.7%, compared with 2.8% and 3.5% respectively for the third quarter of 2009. In the EU27, hourly wages & salaries rose by 2.2% and the non-wage component by 3.0% in the year up to the fourth quarter of 2009, compared with 2.8% and 3.5% respectively for the previous quarter.

The breakdown by economic activity shows that in the euro area hourly labour costs rose by 1.4% in industry, 3.7% in construction and 2.4% in services in the year up to the fourth quarter of 2009. In the EU27, labour costs per hour grew by 1.9% in industry, 3.1% in construction and 2.5% in services.

These figures are published by Eurostat, the statistical office of the European Union.

Member States

Among the Member States for which data are available for the fourth quarter of 2009, the highest annual decreases in hourly labour costs were observed in Lithuania (-10.8%), Estonia (-5.8%), Latvia (-5.6%) andSlovenia
(-3.6%). The highest annual increases were registered in Bulgaria (+11.3%), Austria (+6.5%), Poland (+5.7%), the Czech Republic (+5.4%) and Romania (+5.2%).

* Not working day adjusted

• The euro area (EA16) consists of Belgium, Germany, Ireland, Greece, Spain, France, Italy, Cyprus, Luxembourg, Malta, the Netherlands, Austria, Portugal, Slovenia, Slovakia and Finland.

The EU27 includes Belgium (BE), Bulgaria (BG), the Czech Republic (CZ), Denmark (DK), Germany (DE), Estonia (EE), Ireland (IE), Greece (EL), Spain (ES), France (FR), Italy (IT), Cyprus (CY), Latvia (LV), Lithuania (LT), Luxembourg (LU), Hungary (HU), Malta (MT), the Netherlands (NL), Austria (AT), Poland (PL), Portugal (PT), Romania (RO), Slovenia (SI), Slovakia (SK), Finland (FI), Sweden (SE) and the United Kingdom (UK).

• Data for the third quarter 2009 have been revised, compared to those issued in News Release 181/2009 of 15 December 2009, from +3.2% to +3.0% for the euro area and from +3.1% to +2.9% for the EU27.

Labour Cost Index

The Labour Cost Index is a short-term indicator showing the development of hourly labour costs incurred by employers. It is calculated dividing the labour cost by the number of hours worked, therefore the development of both variables, labour costs and hours worked, affect the evolution of the index. The quarterly changes in hourly employers’ costs are measured for the total labour costs and the main components, namely wages and salaries on one hand, and labour costs other than wages and salaries (non-wage costs) on the other hand.

Total Labour Costs (TOT) cover wage and non-wage costs less subsidies. It does not include vocational training costs or other expenditures such as recruitment costs, spending on working clothes, etc.

Wage and salary costs (WAG) include direct remunerations, bonuses, and allowances paid by an employer in cash or in kind to an employee in return for work done, payments to employees saving schemes, payments for days not worked and remunerations in kind such as food, drink, fuel, company cars, etc.

Labour costs other than wages and salaries (OTH - non-wage costs) include the employers’ social contributions plus employment taxes regarded as labour costs less subsidies intended to refund part or all of the employer’s cost of direct remuneration.

The labour cost index covers the following economic activities:

- Industry (NACE Rev. 2 sectors B to E); B Mining and quarrying, C Manufacturing, D Electricity, gas, steam and air conditioning supply, E Water supply; sewerage, waste management and remediation activities.

- Construction (NACE Rev. 2 sector F).

- Services (NACE Rev. 2 sectors G to N); G Wholesale and retail trade, repair of motor vehicles and motorcycles, H Transportation and storage, I Accommodation and food service activities, J Information and communication, K Financial and insurance activities, L Real estate activities, M Professional, scientific and technical activities, N Administrative and support service activities.

Data in the tables are shown as percentage changes compared to the same quarter a year earlier. To eliminate the effects of varying numbers of working days in the same quarters of different years (Easter and other moving holidays) these changes are presented in working day adjusted form. Indices are based on Regulation (EC) No 450/2003 of the European Parliament and of the Council concerning the European Union Labour Cost Index.

The data should not be considered as final as indices transmitted by Member States may be revised at a later date, in which case aggregates are recalculated.

Additional NACE Rev.2 economic activities, index levels and quarterly changes are available on the Eurostat internet site.

Other information

Ireland: Irregular bonuses are not included in the measurement of labour costs.

Hungary: The source data relates to private enterprises employing at least 5 persons and government organizations of all size classes.

Sweden: Irregular bonuses are not included in the measurement of labour costs. Data cover only the private sector.

Eurostat