Labour cost structural statistics - changes

Data from January 2015, most recent data: Further Eurostat information, Main tables and Database. Planned article update: November 2018.

This article is based on the two latest vintages of the 4-yearly Labour cost survey (LCS), with reference years 2008 and 2012, highlighting changes in hours worked and hourly labour costs between the two reference years. For 2012 levels article see: Labour cost structural statistics - levels.

In 2012, the mean hourly labour cost in the European Union (EU) was EUR 24.1 per hour worked, 11 % more than in 2008 (EUR 21.7). On average, EU employees worked 2 % less hours in 2012 than in 2008, with significant differences across countries. Large decreases of more than 15 % were recorded for Latvia, Spain, Portugal, Ireland and Lithuania, while other countries recorded an increase (Belgium, Luxembourg, Germany, Greece, Sweden, Cyprus and the United Kingdom).

Despite the drop in hours worked, the number of employees in the EU remained stable from 2008, while it increased by 2 % in the euro area (EA).

Figure 1: Change in hours worked and hourly labour cost - Source: Eurostat - LCS 2008, 2012 (lc_n08cost_r2), (lc_n08num2_r2), (lc_n12cost_r2) and (lc_n12num2_r2)
Figure 2: Change in number of hours worked broken down by change in number of employees and changes in number of hours worked per employee - Source: Eurostat - LCS 2008, 2012 (lc_n08num1_r2), (lc_n08num2_r2), (lc_n12num1_r2) and (lc_n12num2_r2)
Table 1: Change in hours worked by economic sector - Source: Eurostat - LCS 2008, 2012 (lc_n08num1_r2) and (lc_n12num1_r2)
Table 2: Change in number of hours worked by country and size classes - Source: Eurostat - LCS 2008, 2012 (lc_n08num1_r2) and (lc_n12num1_r2)
Map 1: Change in number of hours worked by country and NUTS I region - Source: Eurostat - LCS 2008, 2012 (lc_r08num1_r2) and (lc_r12num1_r2)
Figure 3: Change in hourly labour costs in EUR and exchange rate movements, contributions of wage / non-wage costs to changes expressed in national currencies - Source: Eurostat - LCS 2008, 2012 (lc_n08cost_r2) and (lc_n12cost_r2)
Table 3: Change in hourly labour costs by country and selection of industries - Source: Eurostat - LCS 2008, 2012 (lc_n08cost_r2) and (lc_n12cost_r2)
Map 2: Change in hourly labour costs in EUR by country and NUTS I regions - Source: Eurostat - LCS 2008, 2012 (lc_r08cost_r2) and (lc_r12cost_r2)

Main statistical findings

Overview

Changes in labour cost can be split into changes in the volume of labour input (number of hours worked, number of employees) and prices (hourly labour costs) (Figure 1).

In terms of labour input, the total number of hours worked decreased by 2 % in the EU and 1 % in the euro area, with large differences across countries. While several Member States had a drop of 15 % or more (Latvia, Spain, Portugal, Ireland and Lithuania), some recorded an increase (Belgium, Luxembourg, Germany, Greece, Sweden, Cyprus and the United Kingdom). As regards prices, the average hourly labour cost of EU-28 employees was EUR 24.1 per hour worked in 2012 against EUR 21.8 in 2008 (+11 %). In the EA-18, costs were EUR 28.9 in 2012 against EUR 26.1 in 2008 (+12 %).

The countries with the highest increases in labour cost between 2008 and 2012 were Bulgaria (+34 %) and Slovakia (+21 %). Both countries registered a drop of 14 % in the total number of hours worked over the same period. A similar scenario was observed in another 17 EU countries, which also registered an increase in hourly labour cost and a decrease in hours worked. The biggest drop in hours worked was recorded in Latvia (-24 %). Hungary and Romania were the only EU countries which registered a drop in the hours worked as well as a drop in the hourly labour cost.

Change in number of employees and hours worked

The total hours worked recorded in 2012 were 2 % lower in the EU-28 and 1 % lower in the euro area than in 2008. Over this period, total hours worked decreased in 21 countries and increased in seven. The biggest drops were observed in Latvia (-24 %), Spain (-19 %), Portugal (-18 %), Ireland (-17 %) and Lithuania (-16 %). Increases were recorded in Belgium (+20 %), Luxembourg (+13 %), Germany (+12 %), Greece (+9 %), Sweden (+5 %), Cyprus (+4 %) and the United Kingdom (+3 %) (Figure 2).

Changes in total hours worked are the combined effect of changes in the number of employees and in the average number of hours worked per employee. Compared with 2008, the number of employees in 2012 remained stable in the EU and increased by 2 % in the euro area. Over the same period, the average number of hours worked per employee went down by 2 % in the EU and by 3 % in the euro area.

Changes in the number of hours worked and the number of employees may be sizeably impacted by methodological differences between LCS 2008 and 2012. In the case of Belgium, Germany, Luxembourg, Portugal and Slovakia a difference of more than 10 percentage points with national accounts is observed.

In the 21 countries where the total hours worked went down, the drop was mainly due to a reduction in the number of employees, with the exception of France, Italy and the Netherlands where the reduction in the number of hours worked per employee played a larger role. In the seven countries where total hours worked went up, the rise was driven by an increase in the number of employees, except for Cyprus where the average number of hours worked provided the largest contribution. Between 2008 and 2012, the number of employees and the average number of hours worked per employee moved in the same direction for most countries, except for eight, where the change in the number of employees always prevailed over the change in hours worked per employee.

Change in hours worked by selection of industries

Looking at the change in the hours worked by employees within the individual sectors of the economy (Table 1), the "Construction" industry recorded the biggest drop for the EU as a whole (-20 %), with much contrast across countries: -69 % for Ireland and -62 % for Spain, against +32 % for Malta, +17 % for Belgium and +15 % for Germany.

At the opposite extreme, "Human health and social work activities" registered a growth of 14 % in the hours worked between 2008 and 2012 for the EU. The highest increases were observed in Belgium (+42 %) and Luxembourg (+38 %) and the largest falls in Cyprus (-52 %) and Austria (-19 %).

Change in hours worked by enterprise size class

In the EU, the largest drop in hours worked concerned enterprises employing between 500 and 999 employees (-6 %), followed by enterprises employing between 10 and 49 employees (-5 %) (Table 2). The largest decrease for the former was recorded in Portugal (-30 %). Within the same size class, seven EU countries had an increase in hours worked, with the highest recorded in Belgium (+31 %) and Malta (+28 %) while no change was observed in Lithuania. Within enterprises employing between 10 and 49 employees, the largest decrease was observed in Latvia (-33 %), followed by Spain and Slovakia (both -30 %), while Poland recorded the largest increase (+76 %).

Conversely, enterprises in the EU employing between 250 and 499 employees recorded no change in the hours worked by employees. At country level, 12 EU countries registered an increase, the biggest increases observed in Malta (+40 %), Greece (+38 %) and Belgium (+33 %) whereas 16 countries recorded a decrease, the largest observed in Croatia (-55 %) and Spain (-21 %).

Change in hours worked by European regions

The evolution in the number of hours worked by region between 2008 and 2012 was quite diverse. Northern Ireland (UKN) registered the largest increase in hours worked (+52 %), while the 'Sur' region in Spain (ES6) recorded the biggest drop (Map 1).

Change in hourly labour cost in euros and national currencies

Compared with 2008, the hourly labour cost in euros recorded in 2012 was 11 % higher in the EU-28 and 12 % in the euro area. It increased in all EU Member States except Hungary and Greece (-6 %) and Romania (-1 %), with the largest rises recorded in Bulgaria (+34 %) and Slovakia (+21 %) (Figure 3).

For non-euro area countries, exchange rate movements impacted hourly labour cost in euros downwards for Romania (-17 %), Poland (-16 %), Hungary (-13 %), Croatia (-4 %), the United Kingdom (-2 %) and the Czech Republic (-1 %) and upwards for Sweden (+10 %) and Latvia (+1 %).

The wage component made the largest contribution to changes in the hourly labour cost expressed in national currencies. For the EU as a whole and the euro area, the wage component contributed to 8 percentage points (pp). The highest contributions to growth in wages were recorded in Bulgaria (+31 pp) and Poland (+18 pp) and the lowest in Greece (-8 pp), Cyprus (-1 pp) and Lithuania (0 pp).

The non-wage component, i.e. mainly social contributions paid by the employer, contributed 3 pp to the total increase of hourly labour cost for the EU and 4 pp for the euro area. The contributions of the non-wage component ranged from –3 pp in Hungary and -1 pp in Malta to +5 pp for Belgium and Poland, and +6 pp for Slovakia.

Change in hourly labour costs by economic sector

Looking at the different sectors of the EU economy, the "Construction" sector recorded the highest increase (+15 %) in hourly labour cost between 2008 and 2012 (Table 3). Changes varied across countries, from +47 % in Bulgaria, +21 % in Slovakia and +20 % in Portugal to -17 % in Lithuania, -12 % in Greece and -3 % in both Latvia and the United Kingdom. The overall highest increase in the hourly labour cost (50 %) was recorded in Belgium within the "Education" sector while, for the same economic sector, Greece (-24 %) and Cyprus (-23 %) recorded the largest drops.

Change in hourly labour costs by European regions

At regional level, the Bulgarian regions: Yugozapadna i Yuzhna Tsentralna Bulgaria (+31 %) and Severna i Yugoiztochna Bulgaria (+30 %), the Polish Region: Centralny (+25 %), and the Romanian regions: Macroregiunea Tre (+22 %) and Macroregiunea Unu (+21 %) recorded the highest increases in hourly labour cost over the period 2008-2012, while East Midlands (+3 %) and Wales (+2 %) in the United Kingdom registered the lowest increases.

As Map 2 shows, the highest increases in hourly labour cost over this period were registered in several Eastern European regions.

Data sources and availability

The Labour cost survey (LCS) provides details on the level and structure of labour cost data, hours worked and hours paid for employees in the European Union (EU).

Employees include all persons employed at the observation unit and with an employment contract (permanent or not), except family workers; home workers; occasional workers; persons wholly remunerated by way of fees or commission; board of Director Members; directors/managers paid by way of profit share or by fee; self-employed persons. Data do not cover apprentices except in the case of Bulgaria, Latvia, Croatia, Slovenia and Serbia where they represent a low share of the total labour force (less than 1 %).

If not otherwise stated, data refer to full-time and part-time employees working in enterprises employing 10 employees or more, in all economic sectors except: agriculture, forestry and fishing (NACE Rev. 2 Section A) and public administration and defence; compulsory social security (NACE Rev. 2 Section O). The transmission of LCS data for NACE section O is not mandatory and the corresponding data are available for 23 Member States only. Hence, EU/EA aggregated data for NACE Rev. 2 section O is only an approximation for the EU/EA based on data of 23 Member States.

Hours worked are defined as the periods of time employees spent on direct and ancillary activities to produce goods and services, including normal periods of work, paid and unpaid overtime and time spent on preparation, maintaining, repairing, cleaning and writing reports associated to main work. They exclude periods of vacation and other public holidays, sick leave and other type of absence which employees are paid for. The average hours worked per calendar week are calculated as the total number of hours worked by a full time employee during the year divided by the decimal number of all weeks in that year (i.e. 52.29 ) including vacation/holidays and other periods (e.g. sick leave) where the employee is not available for producing goods and services. This number should not be confused with the standard number of hours worked during a working week which is generally higher. Changes in the number of hours worked / number of employees may be sizeably impacted by methodological differences between LCS 2008 and 2012.

Aggregated data for France refers to NACE Rev. 2 B to S excluding O (same as for other countries) as well as excluding section P, since data for this economic sector was not available for reference year 2008.

Context

Labour costs refer to the total expenditure borne by employers in order to employ staff. They cover wage and non-wage costs less subsidies. They do include vocational training costs or other expenditures such as recruitment costs, spending on working clothes, etc.

In 2012, the average labour cost across EU business with 10 employees or more in the whole economy except public administration and defence; compulsory social security (i.e. NACE Rev.2 Sections B to S excluding O) amounted to EUR 24.2 per hour worked.

See also

Further Eurostat information

Publications

Main tables

Database

Dedicated section

Methodology / Metadata

Other information

  • Regulation 530/1999 of 9 March 1999 concerning structural statistics on earnings and on labour costs
  • Regulation 1737/2005 of 21 October 2005 amending Regulation (EC) No 1726/1999 as regards the definition and transmission of information on labour costs (Text with EEA relevance)
  • Regulation Regulation 698/2006 of 5 May 2006 implementing Council Regulation (EC) No 530/1999 as regards quality evaluation of structural statistics on labour costs and earnings (Text with EEA relevance)
  • Regulation 1893/2006 of 20 December 2006 establishing the statistical classification of economic activities NACE Revision 2 and amending Council Regulation (EEC) No 3037/90 as well as certain EC Regulations on specific statistical domains (Text with EEA relevance)
  • Regulation 973/2007 of 20 August 2007 amending certain EC Regulations on specific statistical domains implementing the statistical classification of economic activities NACE Revision 2