Internet address: http://www.bls.gov/ilc USDL: 09-0304
Technical information: (202) 691-5654 For Release: 10:00 A.M. EDT
Media contact: (202) 691-5902 Thursday, March 26, 2009
INTERNATIONAL COMPARISONS OF HOURLY COMPENSATION
COSTS IN MANUFACTURING, 2007
The trade-weighted average of hourly compensation costs in U.S.
dollars for all employees in manufacturing among 31 foreign economies
was 85 percent of the U.S. level in 2007, increasing from 79 percent in
2006, according to data issued by the Bureau of Labor Statistics, U.S.
Department of Labor. Compensation costs relative to the United States
rose or remained unchanged in all but one of the economies covered in
2007. (See table 1.) This news release contains data for production
workers in addition to the series for all employees. (See discussion on
page 6, table B, and table 7.) A note on China's labor costs appears on
page 6 of this release.
In the United States, hourly compensation costs for all employees in
manufacturing rose 1.9 percent from the 2006 level to $30.56 in 2007.
When measured in national currency terms, trade-weighted average costs
increased 3.4 percent in the combined 31 foreign economies in 2007. The
value of foreign currencies rose 4.9 percent against the U.S. dollar,
resulting in a rise in hourly compensation costs in the foreign economies of
8.5 percent on a U.S. dollar basis. (See chart 1 and table A.)
Chart 1. Hourly compensation costs in U.S. dollars for
all employees in manufacturing, 1998-2007
PRINTED COPY CONTAINS CHART AT THIS POINT.
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Compensation costs for all employees expressed in U.S. dollars
This release provides manufacturing compensation data in terms of
both national currencies and U.S. dollars. While data on a national
currency basis show underlying wage and benefit trends within each
country, frequent and sometimes sharp changes in currency exchange rates
can have a large impact on compensation costs in U.S. dollar terms. Data
on a U.S. dollar basis are calculated by dividing compensation costs in the
national currency by the exchange rate (expressed as national currency
units per U.S. dollar). Compensation costs on a U.S. dollar basis are often
used as indicators of competitiveness of manufactured goods in world
trade and are the focus of the following discussion.
Compensation costs for all employees in manufacturing measured in
U.S. dollars continued to rise in 2007 in most of the foreign economies-
with only one country, Japan, showing a decrease in costs (-1.5 percent).
Hourly compensation costs in Taiwan increased only marginally, by 0.6
percent. The rate of compensation increase in a trade-weighted average of
the 31 foreign economies was 8.5 percent in 2007, more than double the
3.9 percent historical average for the series. (See table A and table 3.)
Chart 2. Indexes of hourly compensation costs in U.S. dollars
for all employees in manufacturing, 2007 (U.S.=100)
PRINTED COPY CONTAINS CHART AT THIS POINT.
Although average costs in the United States continued to be higher
than those in most of the economies covered outside of Europe, 13 of the
19 European countries covered had higher hourly compensation costs than
the United States, in most cases more than 20 percent higher. Hourly
compensation costs in Denmark, Germany, and Norway were especially
high when compared to the United States (56 percent higher, 66 percent
higher, and 80 percent higher, respectively). The euro appreciated against
the U.S. dollar in 2007 by a considerable amount (+9.1 percent), causing
double-digit growth in labor costs measured in U.S. dollars in most
- 3 -
European countries. Trade-weighted average hourly compensation costs in
the four Eastern European countries in the series grew 23.0 percent when
measured in U.S. dollars due in part to double-digit increases in the
exchange rates of their national currencies against the U.S. dollar.
Compensation costs in Europe, on average, continued to be almost $9
higher on a per hour basis than in the United States. However, there is
great variation in the level of compensation costs among the European
countries covered. For example, hourly compensation costs in Europe
ranged from $7.69 in Poland to more than seven times that level in
Norway ($55.03), the highest labor cost country in these comparisons. (See
table 2.)
Outside of Europe, only Canada and Australia had compensation
costs higher than the United States when measured in U.S. dollars. In
2007, the lowest compensation costs relative to the United States were in
Mexico and the Philippines (13 percent and 4 percent of the U.S. level,
respectively). In the East Asia ex-Japan economies, the trade-weighted
average of hourly compensation costs rose to 43 percent of the U.S. level
in 2007, continuing the upward trend seen since 2002, when compensation
costs in the region were 32 percent of the U.S. level.
Annual percent changes in manufacturing compensation costs
measured in U.S. dollars varied considerably in 2007 among the non-
European countries. The only economies outside of Europe that did not
show double-digit increases in hourly compensation costs were Canada,
Mexico, Japan, and Taiwan. As mentioned above, Japan was the only
country in these comparisons to show a decrease in hourly compensation
costs measured in U.S. dollars due to both the depreciation of the Japanese
yen and a relatively unchanged hourly compensation cost in the national
currency of that country. This is the third consecutive year that Japan has
had negative growth in hourly compensation costs when measured in U.S.
dollars.
BOX: A note on the measures
The hourly compensation costs measures in this news release
are based on statistics available to BLS as of January 2009. These
measures are prepared specifically for international comparisons of
employer labor costs in manufacturing. The methods used, as well as
the results, differ somewhat from those of other BLS series on U.S.
compensation costs.
See the Technical Notes for further information regarding
definitions, sources, and computation methods, as well as a
description of the trade-weighted measures for economic groups.
The data for some countries may be revised in later
updates to reflect new or revised data provided to BLS subsequent
to this news release. See International Comparisons of Hourly Compensation
Costs for All Employees and Production Workers in Manufacturing, 22
Manufacturing Industries at http://www.bls.gov/ilc/flshcaeindnaics.htm
for the most recent data.
END OF BOX: A note on the measures
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Exchange rates
The trade-weighted 4.9 percent increase in the value of the currencies
of the 31 foreign economies against the U.S. dollar was the largest increase
since 2004 (5.8 percent). From 1996 to 2002, the trade-weighted value of
the currencies against the U.S. dollar weakened, on average, while the
opposite has been true from 2003 to 2007. The currencies of all economies
appreciated against the U.S. dollar in 2007 with the exception of
Argentina, Mexico, Japan, and Taiwan. (See table 5.)
The movements of the foreign currencies relative to the U.S. dollar in
2007 had an influence on hourly manufacturing compensation costs
measured in U.S. dollars. Hourly compensation costs on a national
currency basis in the 31 foreign economies rose 3.4 percent. However,
when adjusted for the appreciation of the foreign currencies against the
U.S. dollar, this increase in costs was magnified to 8.5 percent. In 2007,
changes in both hourly compensation costs and exchange rates moved in
the same direction for nearly all countries, so that increases (or decreases)
in percent changes in hourly compensation costs in national currency were
larger when measured in U.S. dollars. One exception, for example, is
Argentina, where hourly compensation costs grew 22.7 percent in the
national currency and only 21.4 percent when measured in U.S. dollars
due to a 1.1 percent depreciation of the Argentine peso to the U.S. dollar.
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Table A. Hourly compensation costs, in national currency and in
U.S. dollars, for all employees in manufacturing and exchange
rates (U.S. dollars per national currency unit)
Percent change, 2006-2007
Hourly Hourly
Country compensation, compensation,
or area national Exchange U.S.
currency Rates dollars
Americas
United States 1.9 - 1.9
Argentina 22.7 -1.1 21.4
Brazil 6.5 11.7 19.0
Canada 3.2 5.6 9.0
Mexico 5.1 -.2 4.9
Asia and Oceania
Australia 2.4 11.4 14.0
Israel 3.6 7.8 11.7
Japan -.3 -1.2 -1.5
Korea, Republic of 7.7 2.7 10.7
New Zealand 5.2 13.4 19.4
Philippines 3.1 9.5 13.0
Singapore 6.3 5.4 12.0
Taiwan 1.6 -1.1 .6
Europe
Austria 3.4 9.1 12.8
Belgium 1.9 9.1 11.2
Czech Republic 8.1 10.0 18.9
Denmark 5.7 9.2 15.4
Finland 3.2 9.1 12.6
France 2.7 9.1 12.1
Germany .7 9.1 9.9
Hungary 9.7 13.6 24.7
Ireland 6.2 9.1 15.9
Italy 2.8 9.1 12.2
Netherlands 1.9 9.1 11.2
Norway 6.6 9.5 16.7
Poland 10.4 10.7 22.3
Portugal .5 9.1 9.7
Slovakia 7.9 18.8 28.3
Spain 3.8 9.1 13.3
Sweden 3.6 9.1 13.0
Switzerland 1.5 4.4 6.0
United Kingdom 3.9 8.5 12.8
Trade-weighted measures (1)
All 31 foreign economies 3.4 4.9 8.5
OECD (2) 3.2 4.9 8.2
Europe 2.8 8.9 12.0
Euro Area 2.3 9.2 11.7
Eastern Europe 9.3 12.5 23.0
East Asia ex-Japan 5.1 2.7 8.0
(1) For a description of trade-weighted measures and economic groups,
see the Technical Notes starting on page 10 of this release.
(2) Organization for Economic Cooperation and Development.
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Compensation costs for production workers
BLS also compiles hourly compensation data for production workers
in manufacturing. Production workers generally include those employees
who are engaged in fabricating, assembly, and related activities and
typically account for a large part of manufacturing employment. All
employees include production workers as well as all others employed full
or part time in an establishment. (See the technical notes beginning on
page 10 for more detailed definitions of production workers and all
employees.) The production worker series includes data for Hong Kong
SAR, Sri Lanka, Greece, and Luxembourg, four economies not covered by
the all employee series. Argentina and Slovakia are not included in the
production worker series as comparable data are not available.
BOX: Compensation Costs for China
Acknowledging the importance of China as one of the United
States' largest trading partners, BLS has undertaken the development of
estimates of hourly compensation costs for that country. Data for each
year in the 2002-2006 period are shown below; the data for 2002, 2003, and
2004 were issued previously. Compensation costs for China are not directly
comparable with the data for other countries found in this release and
therefore are presented seperately.
A description of the methods used to construct the estimate for 2002
and data comparability issues can be found in Judith Banister's article
in the August 2005 Monthly Labor Review (which can be found on the BLS
website at http://www.bls.gov/opub/mlr/2005/08/art3full.pdf). In general,
the methods used to prepare the hourly compensation costs data for
subsequent years are the same as used in the Banister article. (A discussion
of the estimates for 2003 and 2004 can be found in the November 2006 Monthly
Labor Review, at http://www.bls.gov/opub/mlr/2006/11/art4full.pdf.) A
discussion of the 2005 and 2006 data for China will be available in a
forthcoming article scheduled for the April 2009 issue of the Review.
China: Hourly Compensation Costs for All Employees in
Manufacturing, 2002-2006
National U.S. Index (1)
Year Currency Dollar (United
Basis Basis States
(Yuan) (US$) =100)
2002 4.73 0.57 2.1
2003 5.17 0.62 2.2
2004 5.50 0.67 2.3
2005 5.94 0.73 2.4
2006 6.43 0.81 2.7
(1) The index represents hourly compensation costs in China as a percent of
hourly compensation costs for all employees in U.S. manufacturing. Previous
releases presented hourly compensation costs in China as a percent of hourly
compensation costs for U.S. manufacturing production workers.
END OF BOX: Compensation Costs for China
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As the final column in Table B shows, hourly compensation costs for
production workers are lower than those for all employees in each
economy covered by the two series, generally ranging from 10 percent to
25 percent lower than all employee hourly compensation costs. The
difference between the two series depends not only upon the higher
compensation of non-production workers than production workers, but
also on the relative employment levels of the two worker groups; typically
the larger the portion of all employees accounted for by production
workers, the smaller the gap in compensation costs.
In the United States, hourly compensation costs for production
workers in manufacturing were $24.59 in 2007, 80 percent of all employee
compensation costs. Only 5 of the 29 foreign economies covered by both
the production worker and all employee hourly compensation costs series
had a larger difference between the compensation levels of the two groups
than the United States.
Canada and Australia were the only non-European economies to have
higher hourly compensation costs than the United States in 2007 for
production workers when measured in U.S. dollars ($28.91 and $30.17,
respectively). Among the European countries, 14 of 20 economies in the
series had higher compensation costs than the United States. Sri Lanka,
which is not covered in the all employee series, had the lowest hourly
compensation costs for production workers at only 2 percent of the U.S.
level.
Measuring compensation costs on a production worker basis changes
the position of some countries relative to the United States. For example,
all employee compensation costs in Singapore were 50 percent of the U.S.
level for 2007. However, the gap between all employee and production
worker hourly compensation costs is much higher in Singapore than in the
United States (46 percent versus 20 percent in 2007), so when
compensation costs are measured on a production worker basis,
Singapore's costs are only 34 percent of the U.S. level.
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Table B. Hourly Compensation Costs of All Employees and Production Workers
in Manufacturing, 2007
Country All Production All Production Production
or area Employees Workers Employees Workers Workers (All
(US=100) (US=100) (US$) (US$) Employees=100)
Americas
United States 100 100 30.56 24.59 80
Argentina 26 - 7.98 - -
Brazil 23 24 7.13 5.96 84
Canada 104 118 31.91 28.91 91
Mexico 13 12 3.91 2.92 75
Asia and Oceania
Australia 114 123 34.75 30.17 87
Hong Kong SAR (1) - 24 - 5.78 -
Israel 52 57 15.92 13.91 87
Japan 78 80 23.95 19.75 82
Korea, Republic of 60 65 18.36 16.02 87
New Zealand 63 70 19.19 17.27 90
Philippines 4 4 1.37 1.10 81
Singapore 50 34 15.43 8.35 54
Sri Lanka - 2 - .61 -
Taiwan 27 27 8.15 6.58 81
Europe
Austria 141 144 43.17 35.33 82
Belgium 127 144 38.75 35.45 92
Czech Republic 32 33 9.67 8.20 85
Denmark 156 172 47.54 42.29 89
Finland 130 139 39.74 34.18 86
France 123 116 37.68 28.57 76
Germany 166 153 50.73 37.66 74
Greece - 73 - 18.03 -
Hungary 34 32 10.49 7.91 75
Ireland 117 118 35.62 29.04 82
Italy 105 115 32.19 28.23 88
Luxembourg - 124 - 30.60 -
Netherlands 129 139 39.47 34.07 86
Norway 180 197 55.03 48.56 88
Poland 25 25 7.69 6.17 80
Portugal 34 34 10.29 8.27 80
Slovakia 28 - 8.49 - -
Spain 80 85 24.55 20.98 85
Sweden 127 147 38.80 36.03 93
Switzerland 125 134 38.34 32.88 86
United Kingdom 120 121 36.66 29.73 81
(1) Hong Kong Special Administrative Region of China.
- 9 -
Additional data available
In addition to the compensation cost measures covered in this news
release, supplementary tables are available for comparative levels of hourly
compensation costs, hourly direct pay, pay for time worked, and the
structure of compensation for all employees in manufacturing for all years
from 1996 to 2007, and for production workers in manufacturing for all
years from 1975 to 2007. Data also are available for national currency
hourly compensation and exchange rates in the supplementary tables
(http://www.bls.gov/ilc).
BLS also computes comparative measures for 22 component
manufacturing industries. Data for the component industries are not
included in this release; in general, the data limitations for the component
industries are greater than for total manufacturing. Data are available via
the Internet (http://www.bls.gov/ilc). This series is updated several times
per year as data become available. The data for component industries
currently are available on a North American Industry Classification System
(NAICS) basis from 1996 to 2006 for all employees and from 1992 to
2006 for production workers.
For further information, contact the Division of International Labor
Comparisons by phone at 202-691-5654, by e-mail at ilchelp@bls.gov, or
by mail at Bureau of Labor Statistics, 2 Massachusetts Avenue, NE,
Room 2150, Washington, DC 20212.
Information in this release will be made available to sensory impaired
individuals upon request. Voice phone: 202-691-5200; TDD message
referral phone: 1-800-877-8339.
This material is in the public domain and, with appropriate credit, may
be reproduced without permission. It may be translated into foreign
languages without permission, with a separate credit for the translation.
