Statistics Explained

Archive:Labour cost at regional level

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Data from March 2008, most recent data: Further Eurostat information, Main tables and Database.
Graph 1: Regional divergences of hourly labour costs, 2004 EUR per hour The graph shows the region with the lowest and the region with the highest hourly labour cost by economic activity

The labour cost survey is one of the cornerstones of the existing system of major European structural surveys in the business sector. Eurostat has been collecting, processing and publishing regional labour-cost data by economic activity for more than 20 years.

Main statistical findings

Map 1: Hourly labour cost (excluding apprentices), by NUTS 1 regions, 2004 Euro, per employee in full-time units in industry and services (NACE Rev. 1.1 C to K)
Map 2: Average hours actually worked, by NUTS 1 regions, 2004 Yearly average per person in full-time unit in industry and services (NACE Rev. 1.1 C to K)
Map 3: Share of employers’ actual social contributions (excluding apprentices) in total labour cost, by NUTS 1 regions, 2004 Percentage, in industry and services (NACE Rev. 1.1 C to K)

Hourly labour costs

Map 1 clearly shows the substantial regional differences in the level of labour costs per hour worked in manufacturing and market services. A north–south gradient and an east–west divide are relatively clear to see. With EUR 37.29 per hour, the region of Île-de-France has the highest average labour costs in the EU. This is 23 times as high as the average in Bulgaria, which has the lowest labour costs at EUR 1.61 per hour. The figures for the 10 regions with the highest average labour costs are as follows [1]: EUR 37.29 per hour for Île-de-France (FR), EUR 32.99 per hour for Région de Bruxelles-Capitale/Brussels Hoofstedelijk Gewest (BE), EUR 32.93 per hour for London (UK), EUR 32.06 per hour for Hessen (DE), EUR 31.77 per hour for Hamburg (DE), EUR 31.14 per hour for Denmark, EUR 31.08 per hour for Sweden, EUR 30.80 per hour for Baden- Württemberg (DE), EUR 30.04 per hour for the Grand-Duchy of Luxembourg and EUR 29.76 per hour for Région Wallonne (BE).

The lowest average labour costs, on the other hand, are found in the following 10 regions or countries, which are without exception in the newer Member States: Bulgaria, Romania, Latvia, Lithuania, Wschodni (PL), Północno-Zachodni (PL), Północny (PL), Slovakia, Półudniowo- Zachodni (PL) and Estonia. Here average labour costs are less than EUR 4.50 per hour.

Graph 1 allows a more differentiated view of regional labour costs by economic activity. This shows, for example, separate figures for the energy sector or for specialist service companies in the financial sector with relatively high labour costs, and for economic activities such as wholesale and retail trade or hotels and restaurants, which are known to have relatively low costs. The database offers further data on labour costs in an even more detailed breakdown of economic activities.

Hours actually worked

Map 2 shows a regional comparison of the average hours actually worked per year in manufacturing industry and market services in the EU-27. In 2004 the average number of hours actually worked per employee (in full-time equivalents) was more than 1 875 in all regions of the United Kingdom and in Malta. The average hours worked per employee are lowest, at 1 650 or less, in all regions of France, in the three Belgian regions (Région Wallonne, Vlaams Gewest, Région de Bruxelles-Capitale/Brussels Hoofdstedelijk Gewest), in the Greek regions of Nisia Aigaiou and Kriti, in Finland and Denmark (where only national data are available) and in Baden-Württemberg in Germany. In this comparison the particular national legislative arrangements and habits concerning working time, which can also vary from one sector of activity to another (hotels and restaurants, transport, construction), must naturally not be forgotten. The average time worked is also affected by the prevailing economic situation (full order books on the one hand, or shorttime working and plant closures on the other). In connection with the labour-cost survey the regional database offers users additional information on working time, such as the number of employees and the corresponding total number of hours actually worked and paid, broken down by full-time and part-time workers and in full-time equivalents. Here too the data are available at the level of the two-digit NACE divisions.

Structure of labour costs

Map 3 gives an idea of the share of employers’ actual social contributions in labour costs in industry and services in the various regions in 2004. This comparison too must be seen against the background of the particular national legislative arrangements and social-security models.

The 10 regions with the highest proportions include the two regions Vlaams Gewest (30.4 %) and Région Wallonne (29.7 %) in Belgium, Sweden (29.3 %) and the Hungarian region of Dunántúl (27.9 %), followed by two regions in Italy (Nord- Ovest with 27.1 % and Nord-Est with 26.9 %) and finally the four French regions of Sud-Ouest (26.7 %), Nord — Pas-de-Calais (26.7 %), Est (26.6 %) and Centre-Est (26.5 %).

Among the 10 regions with the lowest shares of employers’ actual social contributions in labour costs across the EU we find, besides four Polish regions, mainly the smaller Member States of the EU. The share of employers’ actual social contributions in labour costs is thus lowest in Malta (6.2 %), Denmark (10.0 %), Slovenia (12.4 %), Ireland (12.8 %) and the Grand-Duchy of Luxembourg (13.1 %), followed by the region of Centralny in Poland (14.0 %), Cyprus (14.2 %), the capital region of London in the United Kingdom (14.8 %) and finally three Polish regions (Północny with 14.9 %, Półudniowy with 14.9 % and Północno- Zachodni with 15.0 %).

It is also worth mentioning that Norway (6.0 %), Croatia (13.0 %) and Iceland (13.4 %) likewise fall within this lower band.

Anyone who wants to look more closely into the regional structure of labour costs will find information in the database on the following labourcost components: wages and salaries (total), wages and salaries (excluding apprentices), direct remuneration, bonuses and allowances (excluding apprentices), payments to employees’ saving schemes, payments for days not worked (excluding apprentices), wages and salaries in kind (excluding apprentices), gross wages and salaries of apprentices, employers’ social contributions (total), the abovementioned employers’ actual social contributions (excluding apprentices), employers’ imputed social contributions (excluding apprentices) and employers’ social contributions for apprentices. The shares in labour costs of vocational training costs (excluding apprentices), other expenditure and employment-related taxes and subsidies can also be found in the database.

Conclusion

The examples given above are intended merely to provide a few fragmentary glimpses of the area covered by the EU labour cost survey and therefore by no means exhaust the possibilities of data analysis by EU region in this field. In any case we hope they will encourage readers to explore Eurostat’s website in search of further interesting discoveries.

Data sources and availability

The source for information on regional labour costs down to NUTS level 1 is the EU Labour cost survey. This survey is conducted every four years in the Member States of the European Union on the basis of Council Regulation (EC) 530/1999 and Commission Regulation (EC) 1737/2005.

The survey’s population comprises all businesses with 10 or more employees. Although in 2004 the scope of the survey was extended for the first time to the sectors M (Education), N (Health and social work) and O (Other community, social and personal service activities), we have confined ourselves here to sectors C to K, i.e. manufacturing and ‘market’ services, in the Statistical Classification of Economic Activities in the European Community (NACE Rev. 1.1).

The purpose of the survey is to measure the level and the structure of labour costs.

In the labour cost survey detailed information is sought for the calculation of the various components of labour costs. Besides wage components (e.g. direct remuneration, bonuses and allowances, payments to employees’ saving schemes, payments for days not worked, wages and salaries in kind) these also include a multitude of social security contributions payable by the employer (statutory, under collective agreements, contractual or voluntary), together with employers’ ‘imputed’ social contributions (e.g. guaranteed remuneration in the event of sickness or payments to employees leaving the business). Costs of vocational training and taxes and subsidies relating to the employment of staff are also recorded.

At the same time questions are asked on the number of full-time jobs and the number of hours worked and paid.

It should also be noted that for Bulgaria, Romania, Finland and Sweden data on labour costs were available only at national level. The same goes for a number of smaller Member States, where the NUTS 1 level corresponds to the whole country: Cyprus, the Czech Republic, Denmark, Estonia, Ireland, Latvia, Lithuania, Luxembourg, Malta, Slovakia and Slovenia. For France’s overseas departments no labour-cost data are supplied.

Data for Iceland, Norway and Croatia (where the statistical region at Level 1 also corresponds to the whole country) are only partially available.

Definitions

Labour costs Labour costs are the total expenditure borne by employers for the purpose of employing staff. This definition adopted by the Community closely follows the international definition laid down by the International Conference of Labour Statisticians (Geneva, 1966). These costs include compensation of employees (comprising wages and salaries in cash and in kind, and employers’ social security contributions), vocational training costs, other expenditure (such as recruitment costs and expenditure on working clothes) and employment taxes regarded as labour costs minus any subsidies received. The costs for persons employed by temporary employment agencies are to be included in the sector of the agency which employs them (NACE Rev. 1.1, 74.50), not that of the business for which they actually work.

Besides average labour costs per hour worked, Eurostat also publishes average monthly labour costs and average annual labour costs. The figures are given for full-time workers, part-time workers and apprentices, and in full-time equivalents.

Average labour costs per hour are equal to total labour costs divided by the number of hours worked in the sector concerned.

Hours worked The number of hours actually worked is defined as the sum of all periods spent on direct and ancillary activities to produce goods and services. The average number of hours worked corresponds to the number of hours the person normally works. This includes all hours worked including overtime, regardless of whether they were paid or not. It excludes the travel time between home and the place of work, and the main meal breaks (normally taken at midday).

Full-time equivalents The total number of employees comprises full-time workers, part-time workers and apprentices. Part-time workers have been converted to full-time equivalents on the basis of the hours worked. In the observations presented here, apprentices have been disregarded.

Employers’ actual social contributions (excluding apprentices)

These consist of payments made by employers for the benefit of their employees to insurers (social security funds and other privately funded schemes such as occupational pension schemes). These payments are in the form of statutory, collectively agreed, contractual or voluntary contributions in respect of insurance against social risks or needs. Employers’ actual social contributions are attributed to the period during which the work is done.

Context

Labour costs are a major part of the production costs for goods and services and correspond to the costs borne by the employer for employing staff. Although the costs of labour as a factor of production are not alone decisive for a business’s choice of site, in terms of competition their importance alongside criteria such as productivity, availability of well-qualified specialist staff, tax conditions and the provision of infrastructure should not be underestimated. It is also important to know whether the regions whose level of labour costs is under consideration are home to predominantly knowledge-intensive, capital-intensive or labour-intensive industries.

In 2004 average labour costs across the EU-27 in businesses with 10 or more employees in manufacturing and market services (i.e. NACE sections C to K) amounted to EUR 20.58 per hour worked. There are considerable differences between the regions of Europe, however, with regard to the level and structure of labour costs.

Further Eurostat information

Publications

Main tables

Labour cost index
Total wages and salaries
Social security paid by employer
Other labour costs
Hourly labour costs
Monthly labour costs
Regional labour market statistics

Database

Labour cost index
Labour costs annual data
Labour cost surveys
Regional labour costs statistics

Dedicated section

See also

Notes

  1. ↑ Labour-cost data for BG, RO, FI and SE are at present available only at national level.
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