Internet address: http://stats.bls.gov/flshome.htm USDL: 98-38 Technical information: (202) 606-5654 For Release: 10:00 A.M. EST Media contact: (202) 606-5902 Monday, February 9, 1998 INTERNATIONAL COMPARISONS OF HOURLY COMPENSATION COSTS FOR PRODUCTION WORKERS IN MANUFACTURING UPDATED DATA FOR 1996 Data from new labor cost surveys for Japan and European Union countries have been incorporated on a preliminary basis into the international comparisons series of hourly compensation costs for production workers in manufacturing by the Bureau of Labor Statistics, U.S. Department of Labor. The series also include more current earnings and additional compensation data for those and other countries. Also, 1996 data are now available for four additional countries. With the exception of France and Finland, the position of each country and country group relative to the United States is similar to that presented in the June 27, 1997 News Release (USDL: 97-213). For the 28 foreign economies studied, the trade-weighted average hourly compensation costs for production workers in manufacturing were about 90 percent of the United States cost level in 1996. Between 1995 and 1996, costs in Canada rose slightly to 94 percent of the U.S. costs, while Mexico's costs declined to 8 percent of U.S. costs. Labor costs in Europe and Japan remained above U.S. costs, but costs in Japan fell below the average cost level in Europe for the first time since 1992. The Asian newly industrialized economies (NIEs) experienced a relative rise in compensation costs to 39 percent of U.S. costs. (See charts 1 and 2.) Chart 1. Hourly compensation costs in U.S. dollars for production workers in manufacturing, 1975-96 PRINTED COPY CONTAINS CHART AT THIS POINT. BOX: A NOTE ON THE MEASURES The hourly compensation measures in this news release are based on statistics available to BLS as of November 1997. They are prepared specifically for international comparisons of employer labor costs in manufacturing. The methods used, as well as the results, differ somewhat from those for other BLS series on U.S. compensation costs. Total compensation costs include pay for time worked, other direct pay (including holiday and vacation pay, bonuses, other direct payments, and the cost of pay in kind), employer expenditures for legally required insurance programs and contractual and private benefit plans, and, for some countries, other labor taxes. Labor cost measures: The compensation measures are computed in national currency units and are converted into U.S. dollars at prevailing commercial market currency exchange rates. They are appropriate measures for comparing levels of employer labor costs, but they do not indicate relative living standards of workers or the purchasing power of their incomes. Prices of goods and services vary greatly among countries, and commercial market exchange rates do not reliably indicate relative differences in prices. Data limitations: Because hourly compensation is partly estimated, these statistics should not be considered as precise measures of comparative compensation costs. Data are subject to revision in the next update. The comparative level figures are averages for all manufacturing industries and are not necessarily representative of all component industries. For further information regarding definitions, sources, and computation methods and a description of the trade-weighted measures and economic groups, see the Technical Notes. END OF BOX (A NOTE ON THE MEASURES) 1996 compensation costs In the United States, hourly compensation costs for manufacturing production workers increased 3 percent from 1995 to $17.70 in 1996. In U.S. dollars, Canada's compensation costs rose 3.9 percent to $16.66, and Mexico's declined 0.7 percent to $1.50. (See tables A and 2.) Trade-weighted measures of hourly compensation costs in U.S. dollars for Europe increased slightly (1.2 percent) to $22.37, whereas the trade-weighted average of the Asian NIEs rose 6.9 percent to $6.87. Overall, the trade-weighted average for the 28 countries studied remained relatively unchanged. Changes over time in relative compensation cost levels in U.S. dollars are affected by the differences in underlying national wage and benefit trends measured in national currencies, as well as frequent and sometimes sharp changes in relative values of currency exchange rates. A country's compensation costs expressed in U.S. dollars are calculated by dividing compensation costs in national currency by the exchange rate (expressed as national currency units per U.S. dollar). Measured in national currency terms, only Japan and eight European countries experienced a slower rate of increase in compensation costs from the previous year than the United States. The 1995-1996 change for Canada in national currency units was slightly above the United States level at 3.2 percent, while Mexico's 18.1 percent increase in hourly compensation costs was the highest of all countries studied. The trade-weighted average of wage and benefit increases in Europe, on a national currency basis, was 3.3 percent from 1995 to 1996, also slightly above the U.S rate of increase. Among the Asian NIEs, the trade-weighted average compensation cost increase was 9.4 percent. The trade-weighted average increase for all 28 foreign economies was 5.4 percent. The U.S. dollar's strength relative to other nations' currencies offset increases in hourly compensation costs measured in national currencies and led to declines or smaller increases in hourly compensation costs measured in U.S. dollars. Thus, hourly compensation costs in Japan declined by 12.4 percent in 1996 when measured in U.S. dollars. The 18.1 percent increase in Mexican hourly compensation costs on a national currency basis was more than offset by Mexico's currency depreciation, so that hourly compensation measured in U.S. dollars declined slightly. In contrast, Canada's slight currency appreciation boosted its hourly compensation growth rate to almost 4 percent on a U.S. dollar basis. Owing to declines in the average trade-weighted currency values, hourly compensation cost increases in 1996 in Europe, the Asian NIEs, and the composite of all 28 foreign economies studied were lower when measured in U.S. dollars than when measured on a national currency basis. Chart 2. Indexes of hourly compensation costs in U.S. dollars for production workers in manufacturing, 1996 (U.S. = 100) PRINTED COPY CONTAINS CHART AT THIS POINT. Table A. Percent change, 1995-96 Hourly compensation costs, in national currency and in U.S. dollars, for production workers in manufacturing and exchange rates (U.S. dollars per national currency unit) Country National Exchange U.S. or area currency rates dollar United States 3.0 - 3.0 Canada 3.2 .7 3.9 Mexico 18.1 -15.6 -.7 Australia 4.9 5.7 10.9 Hong Kong 6.5 .0 6.6 Israel 13.9 -8.4 4.3 Japan 1.4 -13.6 -12.4 Korea 15.8 -4.1 11.1 New Zealand 4.1 4.8 9.1 Singapore 12.9 .5 13.5 Sri Lanka 8.3 -7.3 .0 Taiwan 3.8 -3.5 .2 Austria 3.3 -4.8 -1.7 Belgium 2.1 -4.8 -2.9 Denmark 4.2 -3.5 .6 Finland 2.5 -4.8 -2.4 France 2.2 -2.5 -.4 Germany 1 3.7 -4.9 -1.3 Greece 9.2 -3.7 5.0 Ireland 2.4 -.2 2.1 Italy 2.4 5.6 8.2 Luxembourg 1.5 -4.8 -3.4 Netherlands 1.3 -4.9 -3.7 Norway 4.7 -1.9 2.7 Portugal 7.0 -2.9 3.9 Spain 6.1 -1.7 4.4 Sweden 6.6 6.5 13.5 Switzerland 1.2 -4.4 -3.3 United Kingdom 4.5 -1.1 3.4 Trade-weighted measures All 28 foreign economies 5.4 -4.9 .1 OECD 2 5.1 -5.3 -.6 less Mexico, Korea 3 2.8 -4.0 -1.3 Europe 3.3 -2.1 1.2 European Union 3.4 -2.0 1.4 Asian NIEs 9.4 -2.3 6.9 1 Germany refers to the former West Germany. 2 OECD refers to the Organization for Economic Cooperation and Development. 3 Mexico joined the OECD in 1994 and Korea joined in 1996. Long-term trends in comparative compensation costs From 1975 to 1996, hourly compensation costs measured in national currency increased more rapidly in almost all of the foreign economies than in the United States. In only three countries - Japan, the Netherlands, and Switzerland - were average annual percent changes in hourly compensation costs below the U.S. rate of 5 percent. (See table 5.) Mexico and Korea were two of five countries whose hourly compensation costs increased at annual rates of more than 15 percent. Canada's hourly compensation costs increased 6.5 percent. The trade-weighted average increase in compensation costs in national currency for Europe was 7.6 percent. The trade-weighted measure for the Asian NIEs rose 13.4 percent. When compensation costs in national currency are converted to U.S. dollars, Canada's hourly compensation costs rose 5 percent annually - remaining essentially unchanged relative to the United States over the whole 21-year period - as the 1.4 percent average annual decline in Canada's exchange rate partially offset the underlying cost increase. However, the fluctuating exchange rates affected Canada's relative costs in U.S. dollars over shorter time periods. This is also true for most other countries covered. (See tables 1, 3, and 7.) In the case of Mexico, the declines in currency value more than offset the increases in compensation costs in pesos. Mexico's costs were 23 percent of U.S. costs in 1975, but fell to 8 percent of the U.S. level by 1996. In contrast, while Japan had one of the smallest annual average increases in hourly compensation costs over the 21-year period measured on a national currency basis, it also had the largest increase in relative currency value among the economies studied. Japan's compensation costs rose during the period from 47 percent of the U.S. cost level in 1975 to 118 percent of the U.S. cost level in 1996. For Europe, trade-weighted average compensation costs in U.S. dollars increased at virtually the same rate as the average compensation costs in national currencies. Comparing 1975 and 1996 levels with those of the United States, the composite measure for Europe was 80 percent in 1975 and 126 percent of the United States level in 1996. For the Asian NIEs, trade-weighted labor costs in manufacturing in U.S. dollars increased at the same rate as in national currency over the whole period. From 1975 to 1996, the Asian NIEs' cost levels rose from 8 percent of the U.S. level to 39 percent. For a composite of all of the foreign economies studied, hourly compensation costs rose from 60 percent of U.S. costs in 1975 to 91 percent in 1996. Recent exchange rates Between 1996 (annual average) and mid-December 1997, the currencies of all but two of the 28 foreign economies declined in value relative to the U.S. dollar. The largest decline was about 50 percent for the Korean won. The exchange rate value of the Japanese yen and most other Asian and Pacific currencies declined about 15 percent, and all European currencies (except the British pound) declined from 10 to 15 percent relative to the U.S. dollar. The Canadian dollar and Mexican peso fell about 5 percent. At December 1997 exchange rates, assuming underlying compensation trends in all countries were similar to U.S. trends between 1996 and December 1997, Japanese compensation costs in U.S. dollars would fall slightly below U.S. costs, and the trade- weighted average costs of the Asian NIEs would fall to about 30 percent of the U.S. cost level. The European trade-weighted average would fall from 126 percent to 110 percent of U.S. costs, and the trade-weighted average of all 28 foreign economies would decline from 91 percent to 80 percent of the U.S. cost level. Additional data available In addition to the compensation cost measures covered in this news release, additional data are available showing comparative levels of hourly compensation costs, hourly direct pay, and pay for time worked and the structure of compensation in manufacturing for all years from 1975 through 1996. BLS also computes comparative measures for 39 component manufacturing industries. Data are available through 1994. These data for the component industries are not included in this release because, in general, the data limitations are greater than they are for the total manufacturing measures. Nevertheless, these data are made available upon request and via the Internet (http://stats.bls.gov/flshome.htm), and there are no restrictions on their use. For further information, contact the Office of Productivity and Technology, Bureau of Labor Statistics, 2 Massachusetts Avenue, NE, Room 2150, Washington, DC 20212-0001 or call 202-606-5654. Information in this report is available to sensory impaired individuals upon request. Voice phone: 202-606-STAT; TDD phone: 202-606-5897; TDD message referral phone: 1-800-326-2577. This material is in the public domain and, with appropriate credit, may be reproduced without permission. BOX: REVISED MEASURES The hourly compensation costs series for Japan and selected European Union countries (Belgium, Denmark, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Spain, and the United Kingdom) were revised to incorporate data from new labor cost surveys. These revisions are preliminary calculations for Belgium, Denmark, France, Greece, Italy, and the United Kingdom. Data are subject to revision in the next update. For Japan, statistics for 1992 to 1996 were revised to incorporate the results of a 1995 labor cost survey. For the European Union countries, statistics were revised for 1989 to 1996 (1975 to 1996 for Luxembourg) to incorporate data from harmonized 1992 labor cost surveys. The 1992 labor cost surveys for the European Union countries were conducted with a new model questionnaire; industry data were published using a revised industrial classification; and data were published by the Statistical Office of the European Communities (Eurostat) for all employees only. Only Germany collected and published separate data for all employees and production workers. For Luxembourg, BLS used all-employee compensation structure data to recompute benchmark adjustment factors from earlier labor cost surveys and to revise additional compensation costs for 1975 to1996. Additional compensation data for France, Ireland, the Netherlands, Spain, and the United Kingdom already related to all employees. For Belgium, Denmark, Greece, and Italy, BLS made preliminary calculations using the changes in all-employee compensation structure to estimate 1992 benchmark adjustment factors for production workers, and revised the additional compensation adjustment factor time series for 1989 to 1996. For the United Kingdom, BLS made preliminary calculations which included adjustments for changes in the measurement of selected cost items. For France, the revised cost levels from 1989 to 1996 reflect an increase in bonus payments as reported in the 1992 labor cost survey. However, a change in collection procedures for the 1992 survey likely resulted in a discontinuity in compensation structure. For Finland, revised data for 1995-96 reflect the results of new information on social insurance expenditures. END OF BOX (REVISED MEASURES) Table 1. Indexes of hourly compensation costs for production workers in manufacturing, 29 countries or areas and selected economic groups, selected years, 1975-96 (Index, United States = 100) ______________________________________________________________________________ Country or area 1975 1980 1985 1990 1992 1993 1994 1995 1996 ______________________________________________________________________________ United States ...... 100 100 100 100 100 100 100 100 100 Canada ............. 94 88 84 106 106 100 94 93 94 Mexico ............. 23 22 12 11 13 15 15 9 8 Australia .......... 88 86 63 88 81 76 83 88 94 Hong Kong .......... 12 15 13 21 24 26 27 28 29 Israel ............. 35 38 31 57 56 53 54 61 62 Japan .............. 47 56 49 86 102 116 126 138 118 Korea .............. 5 10 9 25 32 34 38 43 46 New Zealand ........ 50 54 34 56 49 49 53 59 62 Singapore .......... 13 15 19 25 31 32 37 43 47 Sri Lanka .......... 4 2 2 2 2 3 3 3 3 Taiwan ............. 6 10 12 26 32 31 33 34 33 Austria ............ 71 90 58 119 126 122 128 148 141 Belgium ............ 101 133 69 129 137 130 137 155 146 Denmark ............ 99 110 62 121 126 116 121 140 137 Finland ............ 72 83 63 141 124 101 113 140 133 France 1 ........... 71 91 58 107 115 108 111 124 120 Germany 2 .......... 100 125 74 148 159 154 161 188 180 Greece ............. 27 38 28 45 47 44 46 53 54 Ireland ............ 48 60 46 78 82 72 73 79 78 Italy .............. 73 83 59 117 120 96 94 94 99 Luxembourg ......... 102 122 60 112 119 114 121 136 127 Netherlands ........ 103 122 67 121 125 122 123 140 131 Norway ............. 106 117 80 144 143 122 124 142 141 Portugal ........... 25 21 12 25 32 27 27 31 32 Spain .............. 40 60 36 76 84 70 68 75 76 Sweden ............. 113 127 74 140 153 107 112 126 139 Switzerland ........ 96 112 74 140 144 137 148 170 160 United Kingdom ..... 53 77 48 85 89 75 76 80 80 Trade-weighted measures 3 All 28 foreign economies .. 60 67 52 83 89 87 89 96 91 OECD 4 .................... 67 74 57 90 97 95 97 104 98 less Mexico, Korea 5 .... 76 84 65 104 111 108 110 119 113 Europe .................... 80 101 61 117 123 112 116 130 126 European Union ............ 79 100 60 115 122 111 114 128 125 Asian NIEs ................ 8 12 13 25 30 31 34 37 39 ______________________________________________________________________________ 1 Discontinuity in compensation costs beginning in 1989. See Revised Measures box. 2 Former West Germany. 3 For description of trade-weighted measures and economic groups, see technical notes. 4 Organization for Economic Cooperation and Development. 5 Mexico joined the OECD in 1994 and Korea joined in 1996. Source: U.S. Department of Labor, Bureau of Labor Statistics, January 1998. Table 2. Hourly compensation costs in U.S. dollars for production workers in manufacturing, 29 countries or areas and selected economic groups, selected years, 1975-96 __________________________________________________________________________________________ Country or area 1975 1980 1985 1990 1992 1993 1994 1995 1996 __________________________________________________________________________________________ United States ...... $6.36 $9.87 $13.01 $14.91 $16.09 $16.51 $16.87 $17.19 $17.70 Canada ............. 5.96 8.67 10.94 15.84 17.03 16.44 15.85 16.04 16.66 Mexico ............. 1.47 2.21 1.59 1.58 2.17 2.40 2.47 1.51 1.50 Australia .......... 5.62 8.47 8.20 13.07 13.02 12.49 14.02 15.05 16.69 Hong Kong .......... .76 1.51 1.73 3.20 3.92 4.29 4.61 4.82 5.14 Israel ............. 2.25 3.79 4.06 8.55 9.09 8.82 9.19 10.54 10.99 Japan .............. 3.00 5.52 6.34 12.80 16.34 19.14 21.29 23.78 20.84 Korea .............. .32 .96 1.23 3.71 5.22 5.64 6.40 7.40 8.22 New Zealand ........ 3.21 5.33 4.47 8.33 7.91 8.01 8.93 10.11 11.03 Singapore .......... .84 1.49 2.47 3.78 4.95 5.25 6.29 7.33 8.32 Sri Lanka .......... .28 .22 .28 .35 .40 .42 .45 .48 .48 Taiwan ............. .40 1.00 1.50 3.93 5.09 5.19 5.49 5.81 5.82 Austria ............ 4.51 8.88 7.58 17.75 20.29 20.16 21.51 25.38 24.95 Belgium ............ 6.41 13.11 8.97 19.17 22.05 21.44 23.07 26.65 25.89 Denmark ............ 6.28 10.83 8.13 18.02 20.20 19.16 20.36 24.10 24.24 Finland ............ 4.61 8.24 8.16 21.03 19.92 16.63 19.06 24.14 23.56 France 1 ........... 4.52 8.94 7.52 15.98 18.58 17.86 18.74 21.28 21.19 Germany 2 .......... 6.35 12.33 9.60 22.03 25.56 25.50 27.19 32.28 31.87 Greece ............. 1.69 3.73 3.66 6.76 7.60 7.23 7.73 9.17 9.63 Ireland ............ 3.03 5.95 5.92 11.66 13.12 11.89 12.39 13.57 13.85 Italy .............. 4.67 8.15 7.63 17.45 19.35 15.79 15.84 16.16 17.48 Luxembourg ......... 6.50 12.03 7.81 16.74 19.10 18.74 20.33 23.35 22.55 Netherlands ........ 6.58 12.06 8.75 18.06 20.10 20.08 20.80 24.02 23.14 Norway ............. 6.77 11.59 10.37 21.47 23.03 20.21 20.97 24.38 25.03 Portugal ........... 1.58 2.06 1.53 3.77 5.17 4.50 4.60 5.37 5.58 Spain .............. 2.53 5.89 4.66 11.38 13.50 11.62 11.51 12.83 13.40 Sweden ............. 7.18 12.51 9.66 20.93 24.59 17.70 18.86 21.64 24.56 Switzerland ........ 6.09 11.09 9.66 20.86 23.23 22.63 24.91 29.30 28.34 United Kingdom ..... 3.37 7.56 6.27 12.70 14.37 12.42 12.80 13.67 14.13 Trade-weighted measures 3 All 28 foreign economies .. 3.83 6.60 6.75 12.36 14.28 14.36 15.05 16.43 16.13 OECD 4 .................... 4.25 7.30 7.40 13.49 15.54 15.60 16.32 17.81 17.42 less Mexico, Korea 5 ... 4.83 8.31 8.48 15.55 17.81 17.84 18.63 20.46 19.95 Europe ..................... 5.10 9.92 7.98 17.41 19.86 18.55 19.52 22.29 22.37 European Union ............. 5.04 9.85 7.87 17.20 19.67 18.34 19.25 21.95 22.06 Asian NIEs ................. .52 1.17 1.65 3.72 4.91 5.18 5.76 6.39 6.87 __________________________________________________________________________________________ 1 Discontinuity in compensation costs beginning in 1989. See Revised Measures box. 2 Former West Germany. 3 For description of trade-weighted measures and economic groups, see technical notes. 4 Organization for Economic Cooperation and Development. 5 Mexico joined the OECD in 1994 and Korea joined in 1996. Source: U.S. Department of Labor, Bureau of Labor Statistics, January 1998. Table 3. Annual percent change in hourly compensation costs in U.S. dollars for production workers in manufacturing, 29 countries or areas and selected economic groups, selected periods, 1975-96 ________________________________________________________________________________________________ Country or area 1975-96 1975-80 1980-85 1985-90 1990-96 1993 1994 1995 1996 ________________________________________________________________________________________________ United States ...... 5.0 9.2 5.7 2.8 2.9 2.6 2.2 1.9 3.0 Canada ............. 5.0 7.8 4.8 7.7 .8 -3.5 -3.6 1.2 3.9 Mexico ............. .1 8.5 -6.4 -.1 -.9 10.6 2.9 -38.9 -.7 Australia .......... 5.3 8.5 -.6 9.8 4.2 -4.1 12.2 7.3 10.9 Hong Kong .......... 9.5 14.7 2.8 13.1 8.2 9.4 7.5 4.6 6.6 Israel ............. 7.8 11.0 1.4 16.1 4.3 -3.0 4.2 14.7 4.3 Japan .............. 9.7 13.0 2.8 15.1 8.5 17.1 11.2 11.7 -12.4 Korea .............. 16.7 24.6 5.1 24.7 14.2 8.0 13.5 15.6 11.1 New Zealand ........ 6.1 10.7 -3.5 13.3 4.8 1.3 11.5 13.2 9.1 Singapore .......... 11.5 12.1 10.6 8.9 14.1 6.1 19.8 16.5 13.5 Sri Lanka .......... 2.6 -4.7 4.9 4.6 5.4 5.0 7.1 6.7 .0 Taiwan ............. 13.6 20.1 8.4 21.2 6.8 2.0 5.8 5.8 .2 Austria ............ 8.5 14.5 -3.1 18.6 5.8 -.6 6.7 18.0 -1.7 Belgium ............ 6.9 15.4 -7.3 16.4 5.1 -2.8 7.6 15.5 -2.9 Denmark ............ 6.6 11.5 -5.6 17.3 5.1 -5.1 6.3 18.4 .6 Finland ............ 8.1 12.3 -.2 20.8 1.9 -16.5 14.6 26.7 -2.4 France 1 ........... 7.6 14.6 -3.4 16.3 4.8 -3.9 4.9 13.6 -.4 Germany 2 .......... 8.0 14.2 -4.9 18.1 6.3 -.2 6.6 18.7 -1.3 Greece ............. 8.6 17.2 -.4 13.1 6.1 -4.9 6.9 18.6 5.0 Ireland ............ 7.5 14.4 -.1 14.5 2.9 -9.4 4.2 9.5 2.1 Italy .............. 6.5 11.8 -1.3 18.0 .0 -18.4 .3 2.0 8.2 Luxembourg ......... 6.1 13.1 -8.3 16.5 5.1 -1.9 8.5 14.9 -3.4 Netherlands ........ 6.2 12.9 -6.2 15.6 4.2 -.1 3.6 15.5 -3.7 Norway ............. 6.4 11.4 -2.2 15.7 2.6 -12.2 3.8 16.3 2.7 Portugal ........... 6.2 5.4 -5.8 19.8 6.8 -13.0 2.2 16.7 3.9 Spain .............. 8.3 18.4 -4.6 19.6 2.8 -13.9 -.9 11.5 4.4 Sweden ............. 6.0 11.7 -5.0 16.7 2.7 -28.0 6.6 14.7 13.5 Switzerland ........ 7.6 12.7 -2.7 16.6 5.2 -2.6 10.1 17.6 -3.3 United Kingdom ..... 7.1 17.5 -3.7 15.2 1.8 -13.6 3.1 6.8 3.4 Trade-weighted measures 3 All 28 foreign economies .. 7.4 12.5 1.0 12.8 4.6 2.1 5.0 4.6 .1 less Mexico, Israel ..... 8.2 13.0 1.7 14.1 5.2 1.3 5.2 9.0 .1 OECD 4 .................... 6.8 12.0 .1 12.4 4.1 1.9 4.3 4.0 -.6 less Mexico, Korea 5 .... 7.1 11.8 .6 13.3 4.1 .4 4.0 8.8 -1.3 Europe .................... 7.3 14.5 -4.1 16.8 3.9 -7.4 4.7 13.0 1.2 European Union ............ 7.3 14.6 -4.1 16.8 3.9 -7.6 4.5 12.7 1.4 Asian NIEs ................ 13.4 18.9 7.0 18.4 10.5 5.7 11.0 10.5 6.9 ________________________________________________________________________________________________ Rates of change based on compound rate method. 1 Discontinuity in compensation costs beginning in 1989. See Revised Measures box. 2 Former West Germany. 3 Trade-weighted percent changes computed as the trade-weighted average of the rates of change for the individual countries or areas. For description of trade-weighted measures and economic groups, see the Technical Notes. 4 Organization for Economic Cooperation and Development. 5 Mexico joined the OECD in 1994 and Korea joined in 1996. Source: U.S. Department of Labor, Bureau of Labor Statistics, January 1998. Table 4. Hourly compensation costs in national currency for production workers in manufacturing, 29 countries or areas, selected years, 1975-96 _________________________________________________________________________________________ Country or area 1975 1980 1985 1990 1992 1993 1994 1995 1996 _________________________________________________________________________________________ United States .. 6.36 9.87 13.01 14.91 16.09 16.51 16.87 17.19 17.70 Canada ......... 6.07 10.13 14.94 18.49 20.59 21.21 21.66 22.02 22.73 Mexico ......... 18 51 409 4440 6716 7.48 8.34 9.66 11.41 Australia ...... 4.30 7.43 11.70 16.74 17.71 18.37 19.16 20.32 21.31 Hong Kong ...... 3.73 7.50 13.46 24.91 30.31 33.19 35.65 37.30 39.74 Israel ......... 1.44 19.42 4.79 17.24 22.36 24.97 27.66 31.73 36.14 Japan .......... 889 1245 1512 1856 2072 2127 2176 2235 2267 Korea .......... 157 583 1074 2623 4075 4531 5141 5710 6610 New Zealand .... 2.65 5.48 8.98 13.98 14.70 14.79 15.06 15.41 16.04 Singapore ...... 2.00 3.20 5.43 6.85 8.07 8.49 9.61 10.39 11.73 Sri Lanka ...... 1.97 3.58 7.58 14.05 17.51 20.20 22.32 24.45 26.49 Taiwan ......... 15.17 36.13 59.60 105.68 128.02 137.00 145.44 153.98 159.90 Austria ........ 78.46 114.78 156.75 201.07 222.93 234.70 245.38 255.87 264.22 Belgium ........ 235.10 382.88 532.39 640.60 709.06 741.27 771.23 785.47 801.77 Denmark ........ 36.00 60.98 86.18 111.56 121.96 124.27 129.43 134.98 140.59 Finland ........ 16.88 30.64 50.56 80.56 89.40 95.19 99.76 105.65 108.24 France 1 ........ 19.34 37.73 67.49 87.05 98.36 101.20 103.96 106.10 108.42 Germany 2 ...... 15.59 22.39 28.23 35.62 39.92 42.20 44.10 46.23 47.96 Greece ......... 55 159 506 1071 1449 1659 1876 2124 2319 Ireland ........ 1.36 2.89 5.55 7.03 7.70 8.12 8.28 8.46 8.66 Italy .......... 3048 6966 14563 20900 23841 24845 25526 26331 26976 Luxembourg ..... 239 352 464 559 614 648 680 688 698 Netherlands .... 16.59 23.93 29.04 32.90 35.35 37.32 37.84 38.52 39.01 Norway ......... 35.29 57.20 89.11 134.26 143.13 143.47 147.92 154.46 161.67 Portugal ....... 40.26 103.28 263.37 538.11 697.80 724.15 763.09 804.35 860.39 Spain .......... 145 422 792 1161 1383 1481 1541 1599 1697 Sweden ......... 29.73 52.91 83.12 123.98 143.26 137.99 145.55 154.51 164.73 Switzerland .... 15.72 18.57 23.71 29.00 32.66 33.45 34.06 34.61 35.03 United Kingdom . 1.52 3.25 4.84 7.12 8.14 8.27 8.36 8.66 9.05 _________________________________________________________________________________________ For currency units, see note to table 6. 1 Discontinuity in compensation costs beginning in 1989. See Revised Measures box. 2 Former West Germany. Source: U.S. Department of Labor, Bureau of Labor Statistics, January 1998. Table 5. Annual percent change in hourly compensation costs in national currency for production workers in manufacturing, 29 countries or areas and selected economic groups, selected periods, 1975-96 ________________________________________________________________________________________________ Country or area 1975-96 1975-80 1980-85 1985-90 1990-96 1993 1994 1995 1996 ________________________________________________________________________________________________ United States ...... 5.0 9.2 5.7 2.8 2.9 2.6 2.2 1.9 3.0 Canada ............. 6.5 10.8 8.1 4.4 3.5 3.0 2.1 1.7 3.2 Mexico ............. 36.0 23.2 51.6 61.1 17.0 11.4 11.5 15.8 18.1 Australia .......... 7.9 11.6 9.5 7.4 4.1 3.7 4.3 6.1 4.9 Hong Kong .......... 11.9 15.0 12.4 13.1 8.1 9.5 7.4 4.6 6.5 Israel ............. 62.0 68.3 200.9 29.2 13.1 11.7 10.8 14.7 13.9 Japan .............. 4.6 7.0 4.0 4.2 3.4 2.7 2.3 2.7 1.4 Korea .............. 19.5 30.0 13.0 19.6 16.7 11.2 13.5 11.1 15.8 New Zealand ........ 9.0 15.6 10.4 9.3 2.3 .6 1.8 2.3 4.1 Singapore .......... 8.8 9.9 11.2 4.8 9.4 5.2 13.2 8.1 12.9 Sri Lanka .......... 13.2 12.7 16.2 13.1 11.1 15.4 10.5 9.5 8.3 Taiwan ............. 11.9 19.0 10.5 12.1 7.1 7.0 6.2 5.9 3.8 Austria ............ 6.0 7.9 6.4 5.1 4.7 5.3 4.6 4.3 3.3 Belgium ............ 6.0 10.2 6.8 3.8 3.8 4.5 4.0 1.8 2.1 Denmark ............ 6.7 11.1 7.2 5.3 3.9 1.9 4.2 4.3 4.2 Finland ............ 9.3 12.7 10.5 9.8 5.0 6.5 4.8 5.9 2.5 France 1 ........... 8.6 14.3 12.3 5.2 3.7 2.9 2.7 2.1 2.2 Germany 2 .......... 5.5 7.5 4.7 4.8 5.1 5.7 4.5 4.8 3.7 Greece ............. 19.5 23.7 26.1 16.2 13.7 14.5 13.1 13.2 9.2 Ireland ............ 9.2 16.3 13.9 4.8 3.5 5.5 2.0 2.2 2.4 Italy .............. 10.9 18.0 15.9 7.5 4.3 4.2 2.7 3.2 2.4 Luxembourg ......... 5.2 8.1 5.7 3.8 3.8 5.5 4.9 1.2 1.5 Netherlands ........ 4.2 7.6 3.9 2.5 2.9 5.6 1.4 1.8 1.3 Norway ............. 7.5 10.1 9.3 8.5 3.1 .2 3.1 4.4 4.7 Portugal ........... 15.7 20.7 20.6 15.4 8.1 3.8 5.4 5.4 7.0 Spain .............. 12.4 23.8 13.4 7.9 6.5 7.1 4.1 3.8 6.1 Sweden ............. 8.5 12.2 9.5 8.3 4.9 -3.7 5.5 6.2 6.6 Switzerland ........ 3.9 3.4 5.0 4.1 3.2 2.4 1.8 1.6 1.2 United Kingdom ..... 8.9 16.4 8.3 8.0 4.1 1.6 1.1 3.6 4.5 Trade-weighted measures 3 All 28 foreign economies .. 10.8 13.6 14.0 11.7 6.1 4.8 4.6 4.8 5.4 less Mexico, Israel .... 7.6 12.0 8.0 6.4 4.9 4.1 3.8 3.6 3.9 OECD 4 .................... 10.2 12.7 12.3 11.7 5.8 4.5 4.0 4.5 5.1 less Mexico, Korea 5 ... 6.5 10.5 7.3 5.0 3.8 3.2 2.6 2.7 2.8 Europe .................... 7.6 12.4 8.7 5.9 4.3 3.8 3.0 3.4 3.3 European Union ............ 7.8 12.8 8.9 5.9 4.4 3.9 3.1 3.5 3.4 Asian NIEs ................ 13.4 19.6 11.6 12.9 10.4 8.2 9.8 7.6 9.4 ________________________________________________________________________________________________ Rates of change based on compound rate method. 1 Discontinuity in compensation costs beginning in 1989. See Revised Measures box. 2 Former West Germany. 3 Trade-weighted percent changes computed as the trade-weighted average of the rates of change for the individual countries or areas. For description of trade-weighted measures and economic groups, see the Technical Notes. 4 Organization for Economic Cooperation and Development. 5 Mexico joined the OECD in 1994 and Korea joined in 1996. Source: U.S. Department of Labor, Bureau of Labor Statistics, January 1998. Table 6. Exchange rates, 29 countries or areas, selected years, 1975-96 (National currency units per U.S. dollar) __________________________________________________________________________________ Country or area 1975 1980 1985 1990 1992 1993 1994 1995 1996 __________________________________________________________________________________ United States .. 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 Canada ......... 1.017 1.169 1.366 1.167 1.209 1.290 1.366 1.373 1.364 Mexico ......... 12.50 22.97 256.9 2813 3095 3.116 3.375 6.419 7.601 Australia ...... .7647 .8772 1.428 1.281 1.360 1.471 1.367 1.350 1.277 Hong Kong ...... 4.939 4.976 7.791 7.790 7.740 7.736 7.729 7.736 7.735 Israel ......... .6390 5.124 1.179 2.016 2.459 2.830 3.011 3.011 3.288 Japan .......... 296.7 225.7 238.5 145.0 126.8 111.1 102.2 93.96 108.8 Korea .......... 484.0 607.4 870.0 707.8 780.6 802.7 803.5 771.3 804.5 New Zealand .... .8254 1.027 2.010 1.677 1.859 1.847 1.685 1.524 1.454 Singapore ...... 2.371 2.141 2.200 1.813 1.629 1.616 1.527 1.417 1.410 Sri Lanka ...... 7.050 16.53 27.16 40.06 43.83 48.32 49.42 51.25 55.27 Taiwan ......... 38.00 36.02 39.85 26.92 25.16 26.42 26.47 26.50 27.47 Austria ........ 17.40 12.93 20.68 11.33 10.99 11.64 11.41 10.08 10.59 Belgium ........ 36.69 29.20 59.34 33.42 32.15 34.58 33.43 29.47 30.97 Denmark ........ 5.735 5.629 10.60 6.190 6.037 6.486 6.356 5.600 5.801 Finland ........ 3.665 3.719 6.197 3.830 4.487 5.725 5.234 4.376 4.595 France ......... 4.282 4.220 8.980 5.447 5.294 5.667 5.546 4.986 5.116 Germany 1 ...... 2.455 1.815 2.942 1.617 1.562 1.655 1.622 1.432 1.505 Greece ......... 32.29 42.62 138.1 158.5 190.6 229.3 242.6 231.7 240.7 Ireland ........ .4500 .4860 .9379 .6033 .5868 .6827 .6680 .6236 .6250 Italy .......... 652.4 855.1 1909 1198 1232 1573 1611 1629 1543 Luxembourg ..... 36.78 29.24 59.38 33.42 32.15 34.60 33.46 29.48 30.96 Netherlands .... 2.523 1.985 3.318 1.822 1.759 1.858 1.819 1.604 1.686 Norway ......... 5.214 4.936 8.593 6.254 6.214 7.098 7.055 6.336 6.459 Portugal ....... 25.45 50.05 172.1 142.7 135.1 161.1 165.9 149.9 154.3 Spain .......... 57.39 71.64 170.0 102.0 102.4 127.5 133.9 124.6 126.7 Sweden ......... 4.142 4.229 8.603 5.923 5.826 7.796 7.716 7.141 6.708 Switzerland .... 2.581 1.675 2.455 1.390 1.406 1.478 1.367 1.181 1.236 United Kingdom . .4501 .4300 .7708 .5605 .5662 .6660 .6528 .6335 .6407 __________________________________________________________________________________ 1 Former West Germany. Note: National currency units are: United States, dollar; Canada, dollar; Mexico, old peso (1975-92), new peso (1993-96); Australia, dollar; Hong Kong, dollar; Israel, shekel (1975-84), new shekel (1985-96); Japan, yen; Korea, won; New Zealand, dollar; Singapore, dollar; Sri Lanka, rupee; Taiwan, dollar; Austria, schilling; Belgium, franc; Denmark, krone; Finland, markka; France, franc; Germany, mark; Greece, drachma; Ireland, pound; Italy, lira; Luxembourg, franc; Netherlands, guilder; Norway,krone; Portugal, escudo; Spain, peseta; Sweden, krona; Switzerland, franc; United Kingdom, pound. Source: U.S. Department of Labor, Bureau of Labor Statistics, January 1998. Table 7. Annual percent change in exchange rates (U.S. dollars per national currency unit), 29 countries or areas and selected economic groups, selected years, 1975-96 ________________________________________________________________________________________________ Country or area 1975-96 1975-80 1980-85 1985-90 1990-96 1993 1994 1995 1996 ________________________________________________________________________________________________ United States ...... - - - - - - - - - Canada ............. -1.4 -2.7 -3.1 3.2 -2.6 -6.3 -5.6 -.5 .7 Mexico ............. -26.3 -11.5 -38.3 -38.0 -15.3 -.7 -7.7 -47.4 -15.6 Australia .......... -2.4 -2.7 -9.3 2.2 .1 -7.5 7.6 1.3 5.7 Hong Kong .......... -2.1 -.1 -8.6 .0 .1 .1 .1 -.1 .0 Israel ............. -29.3 -34.1 -66.3 -10.2 -7.8 -13.1 -6.0 .0 -8.4 Japan .............. 4.9 5.6 -1.1 10.5 4.9 14.1 8.7 8.8 -13.6 Korea .............. -2.4 -4.4 -6.9 4.2 -2.1 -2.8 -.1 4.2 -4.1 New Zealand ........ -2.7 -4.3 -12.6 3.7 2.4 .6 9.6 10.6 4.8 Singapore .......... 2.5 2.1 -.5 3.9 4.3 .8 5.8 7.8 .5 Sri Lanka .......... -9.3 -15.7 -9.5 -7.5 -5.2 -9.3 -2.2 -3.6 -7.3 Taiwan ............. 1.6 1.1 -2.0 8.2 -.3 -4.8 -.2 -.1 -3.5 Austria ............ 2.4 6.1 -9.0 12.8 1.1 -5.6 2.0 13.2 -4.8 Belgium ............ .8 4.7 -13.2 12.2 1.3 -7.0 3.4 13.4 -4.8 Denmark ............ -.1 .4 -11.9 11.4 1.1 -6.9 2.0 13.5 -3.5 Finland ............ -1.1 -.3 -9.7 10.1 -3.0 -21.6 9.4 19.6 -4.8 France ............. -.8 .3 -14.0 10.5 1.1 -6.6 2.2 11.2 -2.5 Germany 1 .......... 2.4 6.2 -9.2 12.7 1.2 -5.6 2.0 13.3 -4.9 Greece ............. -9.1 -5.4 -21.0 -2.7 -6.7 -16.9 -5.5 4.7 -3.7 Ireland ............ -1.6 -1.5 -12.3 9.2 -.6 -14.0 2.2 7.1 -.2 Italy .............. -4.0 -5.3 -14.8 9.8 -4.1 -21.7 -2.4 -1.1 5.6 Luxembourg ......... .8 4.7 -13.2 12.2 1.3 -7.1 3.4 13.5 -4.8 Netherlands ........ 1.9 4.9 -9.8 12.7 1.3 -5.3 2.1 13.4 -4.9 Norway ............. -1.0 1.1 -10.5 6.6 -.5 -12.5 .6 11.3 -1.9 Portugal ........... -8.2 -12.7 -21.9 3.8 -1.3 -16.1 -2.9 10.7 -2.9 Spain .............. -3.7 -4.3 -15.9 10.8 -3.5 -19.7 -4.8 7.5 -1.7 Sweden ............. -2.3 -.4 -13.2 7.8 -2.1 -25.3 1.0 8.1 6.5 Switzerland ........ 3.6 9.0 -7.4 12.0 2.0 -4.9 8.1 15.7 -4.4 United Kingdom ..... -1.7 .9 -11.0 6.6 -2.2 -15.0 2.0 3.0 -1.1 Trade-weighted measures 2 All 28 foreign economies.. -2.3 -.5 -9.4 2.9 -1.2 -2.6 .4 .3 -4.9 less Mexico, Israel ... .6 1.0 -5.8 7.3 .3 -2.6 1.3 5.3 -3.8 OECD 3 ................... -2.4 -.3 -9.6 2.8 -1.4 -2.5 .4 .0 -5.3 less Mexico, Korea 4 .. .7 1.3 -6.1 7.9 .3 -2.7 1.4 5.8 -4.0 Europe ................... -.3 2.0 -11.7 10.3 -.4 -10.9 1.7 9.2 -2.1 European Union ........... -.4 1.7 -11.9 10.3 -.5 -11.1 1.4 8.9 -2.0 Asian NIEs ............... .0 -.5 -4.2 4.9 .2 -2.3 1.1 2.6 -2.3 ________________________________________________________________________________________________ Rates of change based on compound rate method. 1 Former West Germany. 2 Trade-weighted percent changes computed as the trade-weighted average of the rates of change for the individual countries or areas. For description of trade-weighted measures and economic groups, see the Technical Notes. 3 Organization for Economic Cooperation and Development. 4 Mexico joined the OECD in 1994 and Korea joined in 1996. Source: U.S. Department of Labor, Bureau of Labor Statistics, January 1998. Technical Notes The tables in this news release present international comparisons of hourly compensation costs for production workers in manufacturing in selected countries or areas. The total compensation measures are prepared by the Bureau of Labor Statistics in order to assess international differences in employer labor costs. Comparisons based on the more readily available average earnings statistics published by many countries can be very misleading. National definitions of average earnings differ considerably; average earnings do not include all items of labor compensation; and the omitted items of compensation frequently represent a large proportion of total compensation. The compensation measures are computed in national currency units and are converted into U.S. dollars at prevailing commercial market currency exchange rates. The foreign currency exchange rates used in the calculations are the average daily exchange rates for the reference period. They are appropriate measures for comparing levels of employer labor costs. They do not indicate relative living standards of workers or the purchasing power of their income. Prices of goods and services vary greatly among countries, and commercial market exchange rates are not reliable indicators of relative differences in prices. Definitions Hourly compensation costs include (1) hourly direct pay and (2) employer social insurance expenditures and other labor taxes. Hourly direct pay includes all payments made directly to the worker, before payroll deductions of any kind, consisting of (a) pay for time worked (basic time and piece rates plus overtime premiums, shift differentials, other premiums and bonuses paid regularly each pay period, and cost-of-living adjustments) and (b) other direct pay (pay for time not worked (vacations, holidays, and other leave, except sick leave), seasonal or irregular bonuses and other special payments, selected social allowances, and the cost of payments in kind). Social insurance expenditures and other labor taxes include (c) employer expenditures for legally required insurance programs and contractual and private benefit plans (retirement and disability pensions, health insurance, income guarantee insurance and sick leave, life and accident insurance, occupational injury and illness compensation, unemployment insurance, and family allowances) and, for some countries, (d) other labor taxes (other taxes on payrolls or employment (or reductions to reflect subsidies), even if they do not finance programs that directly benefit workers, because such taxes are regarded as labor costs). For consistency, compensation is measured on an hours-worked basis for every country. The BLS definition of hourly compensation costs is not the same as the International Labour Office (ILO) definition of total labor costs. Hourly compensation costs do not include all items of labor costs. The costs of recruitment, employee training, and plant facilities and services(such as cafeterias and medical clinics(are not included because data are not available for most countries. The labor costs not included account for no more than 4 percent of total labor costs in any country for which the data are available. Production workers generally include those employees who are engaged in fabricating, assembly, and related activities; material handling, warehousing, and shipping; maintenance and repair; janitorial and guard services; auxiliary production (for example, powerplants); and other services closely related to the above activities. Working supervisors are generally included; apprentices and other trainees are generally excluded. Methods Total compensation is computed by adjusting each country's average earnings series for items of direct pay not included in earnings and for employer expenditures for legally required insurance, contractual and private benefit plans, and other labor taxes. For the United States and other countries that measure earnings on an hours-paid basis, the figures are also adjusted in order to approximate compensation per hour worked. Earnings statistics are obtained from surveys of employment, hours, and earnings or from surveys or censuses of manufactures. Adjustment factors are obtained from periodic labor cost surveys and interpolated or projected to nonsurvey years on the basis of other information for most countries. The information used includes annual tabulations on employer social security contribution rates provided by the International Studies Staff of the U.S. Social Security Administration, information on contractual and legislated fringe benefit changes from ILO and national labor bulletins, and statistical series on indirect labor costs. For other countries, adjustment factors are obtained from surveys or censuses of manufactures or from reports on fringe-benefit systems and social security. For the United States, the adjustment factors are special calculations for international comparisons based on data from several surveys. The statistics are also adjusted, where necessary, to account for major differences in worker coverage; differences in industrial classification systems; and changes over time in survey coverage, sample benchmarks, or frequency of surveys. Nevertheless, some differences in industrial coverage remain and, with the exception of the United States, Canada, and several other countries, the data exclude very small establishments (less than 5 employees in Japan and less than 10 employees in most European and some other countries). For the United States, the methods used, as well as the results, differ somewhat from those for other BLS series on U.S. compensation costs. Hourly compensation costs are converted to U.S. dollars using the average daily exchange rate for the reference period. The exchange rates used are prevailing commercial market exchange rates as published by either the U.S. Federal Reserve Board or the International Monetary Fund. For further details on survey sources and on special estimation procedures for some countries because of incomplete data, see International Comparisons of Hourly Compensation Costs for Production Workers in Manufacturing, 1995 (Report 909, Bureau of Labor Statistics, September 1996). Country notes The following are exceptions to the standard coverage and definitions explained above: Australia. Compensation relates to production workers and nonproduction workers other than those in managerial, executive, professional, and higher supervisory positions. Hong Kong. Average of selected manufacturing industries. The industries covered accounted for about 70 percent of all persons employed in manufacturing in 1988. Compensation excludes overtime pay. Austria. Excludes workers in establishments considered handicraft manufacturers. (All printing and publishing and miscellaneous manufacturing establishments are classified in handicrafts.) In 1986, handicraft employment was about 35 percent of all manufacturing employment. Average compensation per employee was about 10 percent lower in manufacturing including handicrafts than in manufacturing excluding handicrafts. Finland. Includes workers in mining and electrical power plants. For comparability with other countries, compensation excludes some obligatory training and plant facilities costs; these costs would add 1.6 percent to average hourly compensation costs in 1994. Germany. Refers to former West Germany. Excludes workers in establishments considered handicraft manufacturers. In 1990, handicraft employment was about 25 percent of all manufacturing employment. Average hourly earnings of production workers were about 3 percent lower in manufacturing including handicrafts than in manufacturing excluding handicrafts. Ireland. Data refer to September for 1975. Norway. For comparability with other countries, compensation excludes some obligatory training and plant facilities costs; these costs would add 2.2 percent to average hourly compensation costs in 1994. Trade-weighted measures The trade weights used to compute the average compensation cost measures for selected country or economic groups are the sum of U.S. imports of manufactured products for consumption (customs value) and U.S. exports of domestic manufactured products (free along side {f.a.s.} value) in 1992 for each country or area and each economic group. See table A. The trade data used to compute the weights are U.S. Bureau of the Census statistics of U.S. imports and exports converted to an industrial classification basis from data initially collected under the Harmonized Tariff Schedule commodity classification system. The Organization for Economic Cooperation and Development (OECD) includes Canada, Mexico, Australia, Japan, Korea, New Zealand, and all European countries. The European Union (EU) consists of Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Sweden, and the United Kingdom. Europe includes the EU countries plus Norway and Switzerland. The group labeled "Asian NIEs" consists of the four newly industrializing economies of Hong Kong, Korea, Singapore, and Taiwan. The trade weighted measures relate to all the countries or areas covered in the series. Estimates are computed for missing country data using the average trend in other economies to estimate the missing data. Trade weighted average percent changes for the 28 foreign economies are computed both including and excluding Mexico and Israel because their rapid rates of inflation and currency changes in several years distort the trade-weighted averages. Table A. Share of total U.S. imports and exports of manufactured products in 1992 (in percent) Country or area 1992 Country or area 1992 and trade and trade economic group share economic group share Canada 19.2 Greece .1 Mexico 7.6 Ireland .6 Italy 2.3 Australia 1.4 Luxembourg .1 Hong Kong 2.0 Netherlands 1.9 Israel .8 Norway .3 Japan 15.8 Portugal .2 Korea 3.4 Spain .8 New Zealand .3 Sweden .8 Singapore 2.4 Switzerland 1.0 Sri Lanka .1 United Kingdom 4.4 Taiwan 4.4 Economic groups Austria .3 28 foreign Belgium 1.5 economies 80.8 Denmark .3 OECD 2/ 71.1 Finland .2 Europe 23.4 France 3.2 European Union 22.1 Germany 1/ 5.4 Asian NIEs 12.2 1/ Former West Germany. 2/ Organization for Economic Cooperation and Development. Data limitations Because compensation is partly estimated, the statistics should not be considered as precise measures of comparative compensation costs. In addition, the figures are subject to revision as the results of new labor cost surveys or other data used to estimate compensation costs become available. The comparative level figures in this report are averages for all manufacturing industries and are not necessarily representative of all component industries. In the United States and some other countries, such as Japan, differentials in hourly compensation cost levels by industry are quite wide. In contrast, other countries, such as Germany and Sweden, have narrow differentials. Labor costs versus labor income The hourly compensation figures in U.S. dollars shown in the tables provide comparative measures of employer labor costs; they do not provide intercountry comparisons of the purchasing power of worker incomes. Prices of goods and services vary greatly among countries, and the commercial market exchange rates used to compare employer labor costs do not reliably indicate relative differences in prices. Purchasing power parities(that is, the number of foreign currency units required to buy goods and services equivalent to what can be purchased with one unit of U.S. or other base-country currency(must be used for meaningful international comparisons of the relative purchasing power of worker incomes. Total compensation converted to U.S. dollars at purchasing power parities would provide one measure for comparing relative real levels of labor income. It should be noted, however, that total compensation includes employer payments to funds for the benefit of workers in addition to payments made directly to workers. (For a few countries, the compensation measures also include taxes or subsidies on payrolls or employment even if they do not finance programs which directly benefit workers.) Payments into these funds provide either deferred income (for example, payments to retirement funds), a type of insurance (for example, payments to unemployment or health benefit funds), or current social benefits (for example, family allowances), and the relationship between employer payments and current or future worker benefits is indirect. On the other hand, excluding these payments would understate the total value of income derived from work because they substitute for worker savings or self-insurance to cover retirement, medical costs, etc. Total compensation, because it takes account of employer payments into funds for the benefit of workers, is a broader income concept than either total direct earnings or direct spendable earnings. An even broader concept would take account of all social benefits available to workers, including those financed out of general revenues as well as those financed through employment or payroll taxes.