Labour cost structural statistics
From Statistics Explained
- Data from June 2011, most recent data: Further Eurostat information, Main tables and Database.
This article analyses the results of the quadrennial Labour cost survey (LCS) of 2008 that provides details on the level and structure of labour cost data, hours worked and hours paid in the European Union (EU). Labour cost is an important part of the production cost for goods and services and corresponds to the costs borne by the employer for employing staff. It includes compensation of employees (wages and salaries and employers' social contributions), vocational training costs, and other expenditures such as recruitment costs, taxes minus subsidies received related to employing labour.
Main statistical findings
Average hourly labour cost
The average hourly labour cost in EU-27 was 21.78 EUR per hour worked in 2008
In 2008, the average hourly labour cost (excluding apprentices) in the EU-27 was 21.78 EUR per hour worked in industry, construction and services (except public administration and defence; compulsory social security). The highest hourly labour cost was recorded in Denmark (34.98 EUR) followed by Belgium (32.97 EUR) and Sweden (31.64 EUR).
The lowest hourly labour cost was registered in Bulgaria (2.56 EUR) followed by Romania (4.20 EUR) and Lithuania (5.87 EUR). The euro area (EA-16) average hourly labour cost was marked at 26.22 EUR per hour worked (Figure 1).
Labour cost and enterprise size
Hourly labour cost (EU-27): 6.7 EUR more for big enterprises
In the EU-27 in 2008, the lowest hourly labour cost (18.17 EUR) was registered on average for enterprises employing between 10 and 49 employees whereas the highest hourly labour cost (24.82 EUR) was found in big enterprises employing more than 1 000 employees (Table 1). Similarly, the EA-16 average was the lowest (20.72 EUR) for enterprises with 10 to 49 employees and the highest (30.27 EUR) for enterprises occupying more than 1 000 employees.
For enterprises employing more than 1 000 employees, the highest labour cost per hour worked (38.81 EUR) was registered in Luxembourg followed by Belgium (36.74 EUR), Ireland (35.97 EUR) and Germany (35.11 EUR). Outside the EU-27, the highest amount was identified in Norway (43.56 EUR) for enterprises employing more than 1 000 employees. For enterprises employing between 500 and 999 employees, Denmark registered the highest labour cost (37.85 EUR) as well as for enterprises with a workforce between 250 and 499 employees (37.53 EUR). For all size classes, Bulgaria registered the lowest hourly labour costs, with the lowest cost of 1.90 EUR for enterprises employing 10 to 49 employees. Romania was the country with the second lowest hourly labour costs for all size classes.
When comparing labour cost between small enterprises (10 to 49 employees) and big enterprises (1 000 employees and more) the gap in hourly labour cost between both size classes was 37% higher (6.7 EUR more per hour worked) for the latter on EU-27 average. The highest gaps were registered in Cyprus (138%), Bulgaria (116%) and Romania (112%) and the lowest in Denmark (2%) and Sweden (8%). Italy is the only EU member State where labour cost in small enterprises was on average slightly higher (by 1%) than in the bigger enterprises.
Labour cost and earnings
Earnings make up more than two thirds of total labour cost
The major amount of employers' labour cost is by all means the compensation of employees that consists of wages and salaries (D11) and compulsory and voluntary social contributions paid by the employer (D12). In the EU-27, the three countries where the part of wages and salaries in total labour costs were lowest were France (66.86%), Sweden (67.07%) and Hungary (70.54%) in 2008.
On average in the EU-27, the share of social contribution paid by the employer (D12) was about 22%; however, high disparities were noted among the countries. The highest share of social security contributions paid by the employer was registered in Sweden (29.73%), Belgium (28.34%) and France (28.29%). In two EU-countries a share of below 10% of social security contributions was registered in Denmark (7.50%) and Malta (8.26%) followed by Norway with the lowest share of 6.32%. This comparison must also be seen against the background of the particular national legislative arrangements and social-security models. Within the EU-27, France, the Netherlands and Hungary accounted the highest share of Vocational training costs (D2) in total labour cost with 2.12%, 1.30% and 1.09% respectively (Table 2).
In 2008, Other expenditure (D3) exceeded slightly the 2 % mark in the Netherlands (2.19%) and in Hungary (2.03%). France and Austria were the countries with the highest part in employment related Taxes paid by the employer (D4) with 2.75% and 2.09% of the total labour cost respectively. The countries with the highest share of Subsidies received (D5) for employing labour were Denmark (1.78%) and Belgium (1.62%).
Annual average number of hours worked
An average of 1 750 hours worked per year in the EU-27
In 2008, in the EU-27, the average number of hours worked by a full-time employee was 1 749 hours per year. The United Kingdom was the country in which full-time employees, on a yearly average, worked the most number of hours (2 126 hours), followed by Romania (1 852 hours) and Malta (1 840 hours). On the other side the lowest average number of hours worked yearly by full-time employees (below 1 600 hours) was registered in Ireland (1 492 hours), Belgium (1 541 hours), France (1 583 hours) and Denmark (1 588 hours) - Figure 2.
In the EU-27, taking also into account the part-time employees' working time (903 hours in average per year), the annual average hours worked per employee in full-time equivalents was 1 746 hours. When comparing hours worked (1 746) to hours paid (1 985) per employee in full-time equivalent, the 239 hours more for the latter is due to paid vacation leave and sick leave.
The United Kingdom was the only country where the average annual number of hours paid was less (by 55 hours) than the average number of hours worked for full-time employees due to some cases of unpaid overtime work. Table 3 shows in detail the average annual number of hours worked and hours paid.
Impact of apprentices on hourly labour costs
The LCS also provides data on apprentices, that when included may influence the average labour cost. However, not all countries, where apprentices exist, were able to collect the required information. In addition, legislative situation related to apprenticeship varies largely by country. As shown in table 4, the labour cost of countries with a relative high share of apprentices (in particular Germany with 5%, Austria with 4.5% and Slovakia with 3.5%) was influenced by a slight drop. Table 4 gives further information about hourly labour costs excluding but also including apprentices, the differences between the two and the share of apprentices in the employed workforce. The impact of apprentices on labour cost (on average 1.00 EUR less per hour worked) was highest in Germany, 27.91 EUR including apprentices compared to 28.91 EUR excluding apprentices.
Evolution of hourly labour cost
An increase of nearly 6% in hourly labour cost for the EU-27 compared to 2004
Compared to 2004, for the business economy (here 2008; NACE Rev. 2 sections B to N and 2004; NACE Rev.1.1 sections C to K), the hourly labour cost (excluding apprentices) in the EU-27 increased by 5.9% in 2008. The highest increase in hourly labour cost were registered in Romania (+117%) and Latvia (+115%). On the other hand, only the United Kingdom registered a drop in the hourly labour cost, which went down by 1.9% from 21.62 EUR in 2004 to 21.22 EUR per hour worked in 2008. It should be noted that this drop is due to the relationship between the Euro and the Pound Sterling (United Kingdom's national currency).Table 5 highlights these comparisons into further detail.
Comparing data for the different economic activities (here for both 2004 and 2008 the classification used is NACE Rev. 1.1 sections C to K - Figure 3), the hourly labour cost increased in the majority of the economic sectors. The lowest increase of 1.19 EUR per hour worked was registered in NACE section F (Construction) and the highest increase of 5.20 EUR per hour worked in NACE section C (Mining and quarrying). On the other hand, a decrease of 1.29 EUR per hour occurred in NACE section H (Hotels and restaurants) and a slight decrease of 0.03 EUR per hour in NACE section K (Real estate, renting and business activities).
Public administration and smaller enterprises
Some countries were also able to provide data for NACE Rev. 2 section O (Public administration and defence; compulsory social security) and for enterprises with a workforce of less than 10 employees (Table 6).
Data sources and availability
The Labour cost survey (LCS) is carried out every four years according to the European Commission Regulation (EC) No 530/1999. The most recent data available is the LCS 2008 data and next reference year is 2012. The data is collected by the national statistical offices and is sent to Eurostat. It is available to the public approximately 2 years after the end of the reference period.
The aggregated data for LCS 2008 refers to NACE Rev. 2 sections B to S excluding O and for enterprises with at least ten employees.
For France data for NACE Rev. 2 section P (Education) is partially available. For Iceland only LCS 2008 data for NACE Rev. 2 sections C, E, F, G, H, J, K, O, P, Q, R is available.
Eurostat publishes online LCS results for the reference years 1996, 2000, 2004 and 2008. As far as data are available and confidentiality rules permit, all variables are broken down by enterprise size category, economic activity and region (where applicable). The enterprise size categories are: 1 to 9, 10 to 49, 50 to 249, 250 to 499, 500 to 999, and 1 000 or more employees. The economic activities NACE Rev. 2 sections B to S are classified according to the Statistical classification of economic activities in the European Community. The inclusion of section O (Public administration and defence; compulsory social security) and/or enterprises employing less than ten employees is optional. Labour costs are quoted in hourly, monthly and yearly rates for full-time equivalents. Information on number of hours worked and hours paid is also available and aggregated separately for full-time employees, part-time employees and, if available, for apprentices.
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 labour costs are not the sole deciding factor for a business’s location choice, they play an essential role.
It is also important to know whether the economy whose level of labour costs is under consideration are home to predominantly knowledge-intensive, capital-intensive or labour-intensive industries.
In 2008, average labour costs across the EU in businesses with 10 or more employees in manufacturing and market services (i.e. NACE Rev.2 sections B to O, excluding N) amounted to EUR 21.78 per hour worked. There are considerable differences between the countries of Europe, however, with regard to the level and structure of labour costs.
Further Eurostat information
- Eurostat regional yearbook 2008, Chapter 8: Labour costs
- Eurostat regional yearbook 2010, Chapter 3: Labour market - Structure of earnings survey
- Labour costs
- Main tables
- Labour costs (t_lc)
- Labour cost index (teilm100)
- Total wages and salaries (tps00113)
- Social security paid by employer (tps00114)
- Other labour costs (tps00115)
- Hourly labour costs (tps00173)
- Monthly labour costs (tps00174)
- Labour costs (t_lc)
- Main tables
- Labour costs
- Data base
- Labour cost surveys (lcs)
- Labour costs survey 2008 - Nace Rev. 2 (lcs2008_r2)
- Labour cost, wages and salaries, direct remuneration - Nace Rev. 2 (Source LCS 2008) (lc_n08cost_r2)
- Structure of labour cost as % of total cost - Nace Rev. 2 (Source LCS 2008) (lc_n08struc_r2)
- Number of employees, hours actually worked and paid - Nace Rev. 2 (Source LCS 2008) (lc_n08num1_r2)
- Number of hours actually worked and paid per employee - Nace Rev. 2 (Source LCS 2008) (lc_n08num2_r2)
- Number of statistical units - Nace Rev. 2 (Source LCS 2008) (lc_n08stu_r2)
- Hours actually worked compared to hours paid - Nace Rev. 2 (Source LCS 2008) (lc_n08hour_r2)
- Labour cost, wages and salaries, direct remuneration - Regional data - Nace Rev. 2 (Source LCS 2008) (lc_r08cost_r2)
- Structure of labour cost as % of total cost - Regional data - Nace Rev. 2 (Source LCS 2008) (lc_r08struc_r2)
- Number of employees, hours actually worked and paid - Regional data - Nace Rev. 2 (Source LCS 2008) (lc_r08num1_r2)
- Number of hours actually worked and paid per employee - Regional data - Nace Rev. 2 (Source LCS 2008) lc_r08num2_r2)
- Number of statistical units - Regional data - Nace Rev. 2 (Source LCS 2008) (lc_r08stu_r2)
- Labour costs survey 2008 - Nace Rev. 1.1 (lcs2008_r1)
- Labour cost, wages and salaries, direct remuneration - Nace Rev. 1.1 (Source LCS 2008) (lc_n08cost_r1)
- Structure of labour cost as % of total cost - Nace Rev. 1.1 (Source LCS 2008) (lc_n08struc_r1)
- Number of employees, hours actually worked and paid - Nace Rev. 1.1 (Source LCS 2008) (lc_n08num1_r1)
- Number of hours actually worked and paid per employee - Nace Rev. 1.1 (Source LCS 2008) (lc_n08num2_r1)
- Number of statistical units - Nace Rev. 1.1 (Source LCS 2008) (lc_n08stu_r1)
- Hours actually worked compared to hours paid - Nace Rev. 1.1 (Source LCS 2008) (lc_n08hour_r1)
- Labour costs survey 2008 - Nace Rev. 2 (lcs2008_r2)
- Labour market (including Labour Force Survey),see: Labour costs
Methodology / Metadata
- Labour cost surveys (ESMS metadata file - lcs_esms)
- Labour market (including Labour Force Survey, Methodology), see: Labour costs
- Countries' LCS 2008 Quality Reports
Source data for tables and figures on this page (MS Excel)
- Regulation 530/1999 of 09 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 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
- BLS – Bureau of Labor Statistics (Washington) - Overview of BLS Statistics on Pay and Benefits
- ILO – International Labour Organization (Geneva) – Statistics and databases - Standards and guidelines.