Internet address: http://www.bls.gov USDL 08-0261
Technical information: (202) 691-5654 For Release: 10:00 A.M. EST
Media contact: (202) 691-5902 Thursday, February 28, 2008
INTERNATIONAL COMPARISONS OF MANUFACTURING PRODUCTIVITY AND UNIT
LABOR COST TRENDS 2006, REVISED
Manufacturing labor productivity increased in 2006 in 15 of
the 16 economies compared by the U.S. Department of Labor's Bureau
of Labor Statistics. (See chart 1.) The Republic of Korea had the
largest productivity increase of 10.8 percent, while Germany and
Taiwan followed with increases of 7.1 and 6.9 percent, respectively.
The United States productivity increase of 2.0 percent placed it
twelfth among the 16 economies compared, while Canada was the only
economy with a decline in productivity (-0.1 percent).
Over the 2000-2006 period, of the 16 economies studied, only
Korea, Sweden, and Taiwan had greater productivity growth than the
United States. Average annual growth rates for selected measures
are shown in tables A and B.
The data presented for the United States differ from those
appearing in BLS Productivity and Costs news releases. (See
technical notes.)
PRINTED COPY CONTAINS CHART AT THIS POINT: Chart 1. Percent change in
manufacturing output per hour, 2005-2006
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Manufacturing unit labor costs, expressed in national currency
units, declined in nine of the economies and increased in seven. The
change for the United States was +0.5 percent. (See chart 2.)
However, expressed in U.S. dollars, unit labor costs declined in
six of the economies and increased in ten. Declines in the dollar's
exchange rate reversed the direction of movement in three countries.
The reversal was largest for Korea, from a decline (-3.6 percent) in
unit labor costs in national currency to an almost equivalent
increase in unit labor costs expressed in U.S. dollars. This
difference can be explained by the strong appreciation of the won
relative to the U.S. dollar.
PRINTED COPY CONTAINS CHART AT THIS POINT: Chart 2 Percent change in
manufacturing unit labor cost, 2005-2006
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Table A. Output per hour, hourly compensation, unit labor costs, and related measures
Manufacturing, 16 countries or areas, 2005-2006
Percent change
---------------------------------------------------------------------------------------------------------------
Output Total Hourly Unit Labor Costs
Country per Total Employ- Average compen- compen- National U.S. Exchange
or area Hour Output hours ment hours sation sation currency dollars rate(1)
---------------------------------------------------------------------------------------------------------------
United States 2.0 2.9 0.9 -0.5 1.4 3.4 2.5 0.5 0.5 --
Canada -0.1 -1.0 -0.9 -1.0 0.1 1.0 1.9 2.0 9.0 6.8
Australia 0.3 -1.3 -1.5 -1.2 -0.4 4.1 5.7 5.4 4.1 -1.2
Japan 1.9 4.3 2.4 1.5 0.8 0.9 -1.4 -3.2 -8.4 -5.3
Korea, Republic of 10.8 8.4 -2.1 -0.4 -1.7 4.5 6.8 -3.6 3.5 7.3
Taiwan 6.9 7.2 0.3 1.1 -0.8 2.5 2.1 -4.4 -5.6 -1.2
Belgium 2.2 2.7 0.5 -1.1 1.6 2.5 2.1 -0.1 0.8 0.9
Denmark 5.1 5.4 0.3 -0.2 0.5 3.4 3.1 -2.0 -1.1 0.9
France 3.7 1.6 -2.0 -2.0 0.0 0.5 2.6 -1.0 -0.1 0.9
Germany 7.1 5.8 -1.2 -0.9 -0.3 2.9 4.1 -2.8 -1.9 0.9
Italy 1.4 3.7 2.3 1.2 1.0 4.2 1.8 0.4 1.3 0.9
Netherlands 3.1 2.3 -0.8 -0.8 0.1 2.0 2.8 -0.3 0.6 0.9
Norway 3.3 4.4 1.0 1.1 -0.1 5.6 4.5 1.2 1.7 0.5
Spain 2.7 2.9 0.1 -0.2 0.4 3.2 3.0 0.3 1.2 0.9
Sweden 5.9 5.2 -0.7 -0.7 0.0 3.0 3.8 -2.0 -0.7 1.3
United Kingdom 4.5 1.4 -2.9 -2.6 -0.3 3.8 6.9 2.3 3.6 1.3
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(1) Value of foreign currency relative to the U.S. dollar.
Additional data available
Annual indexes of these variables are estimated for the time
period 1950-2006 and are available at the Bureau of Labor
Statistics, Division of Foreign Labor Statistics website at
http://www.bls.gov/fls/home.htm. However, for analytical purposes,
the international comparisons in this release go back to 1979.
For further information, contact the Office of Productivity and
Technology by phone at 202-691-5654, by e-mail at flspr@bls.gov, or
by mail at Bureau of Labor Statistics, 2 Massachusetts Avenue, NE,
Room 2150, Washington, DC 20212.
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Manufacturing productivity, output, and labor input
Manufacturing productivity increased between 2 and 6 percent in
2006 in most of the compared economies. The United States increase
was at the lower end of this interval with a growth of 2.0 percent.
This was below the U.S. average annual increases during the previous
periods displayed in Table B. Korea led in manufacturing
productivity growth (+10.8 percent), followed by Germany and Taiwan.
Manufacturing productivity increased by only 0.3 percent in
Australia and by 1.4 percent in Italy, while Canada had a slight
decline in productivity. (See tables A and B.)
Manufacturing output increased in 14 of the 16 economies in 2006.
Korea and Taiwan were the leaders in the growth of output. In 2006,
growth in manufacturing output in Germany, Denmark and Norway was
noticeably higher than their average annual rates of increase over
the 1979-2006 period. The U.S. increase of 2.9 percent was almost
the same as its average annual increase since 1979.
While 14 of the economies had increases in output in 2006, 8
economies had reductions in total hours worked in manufacturing.
The United Kingdom had the greatest decline (-2.9 percent) in hours
in 2006, followed by Korea (-2.1 percent) and France (-2.0 percent).
Total hours worked increased in the United States by 0.9 percent,
and by over 2 percent in Japan and Italy.
For the period 2000-2006, total hours worked in manufacturing
declined for all 16 economies. The United Kingdom had the greatest
average annual decline of 4.4 percent, followed by the United
States, with an average annual decline of 3.2 percent.
Manufacturing employment declined in 12 of the 16 economies in
2006. The United Kingdom had the largest decline in employment
(-2.6 percent), while Japan had the greatest increase (+1.5 percent).
The United States was close to the middle of the range with a change
of -0.5 percent.
The United Kingdom and the United States experienced the steepest
average annual declines in manufacturing employment of 4.3 and 3.2
percent, respectively, for the 2000-2006 period.
Six of the sixteen economies experienced decreases in average
hours worked in 2006, eight registered increases, and two had no
change. This compares to 13 economies with declining average annual
manufacturing hours over the 2000-2006 period. Korea and Taiwan had
the greatest declines in average hours worked in 2006. Belgium had
the largest increase in average hours worked (+1.6 percent) and the
United States followed with a growth of 1.4 percent, which was
higher than the U.S. average annual increase during any previous
period displayed in Table B.
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Manufacturing hourly compensation and unit labor costs
Total labor compensation in manufacturing increased in all 16
economies in 2006, from 0.5 percent in France to 5.6 percent in
Norway. For most, the increases were between 2 and 4 percent. U.S.
compensation rose by 3.4 percent, which was slightly below the
average annual increase since 1979. (See tables A and B.)
Hourly compensation in manufacturing increased in 15 of the 16
economies in 2006. The greatest increases were in the United
Kingdom (+6.9 percent) and Korea (+6.8 percent). Hourly
compensation decreased only in Japan in 2006. The U.S. increase of
2.5 percent in hourly compensation was substantially below its
average annual increase since 1979. (See tables A and B.)
Unit labor costs, expressed in national currencies, declined in
nine economies in 2006, and increased in seven. The largest
increase occurred in Australia (+5.4 percent) and the greatest
decline was in Taiwan (-4.4 percent). Unit labor costs in U.S.
manufacturing increased by 0.5 percent.
Expressed in U.S. dollars, manufacturing unit labor costs
increased in ten economies in 2006, and declined in six. The unit
labor costs of three economies, Korea, the Netherlands, and Belgium,
went from decreases to increases when computed on a U.S. dollar
basis. This reversal happened because of the appreciation of their
currencies versus the dollar. Korea, with the greatest currency
appreciation, experienced the greatest reversal, from -3.6 to +3.5
percent.
Movements in exchange rates often are the dominant force behind
changes in comparative unit labor costs and international
competitiveness. In 2006, the U.S. dollar weakened against most of
the currencies being compared. The only exceptions were Japan,
Australia, and Taiwan, where the currencies depreciated against the
dollar. This depreciation of the U.S. dollar against most
currencies continues a trend that began after 2000. In 2006, the
dollar fell by 0.9 percent against the euro, following a decline of
0.1 percent in 2005.
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Table B. Output per hour, hourly compensation, unit labor costs, and related measures
Manufacturing, 16 countries or areas, 1979-2006
Average annual rates of change(1)
--------------------------------------------------------------------------------------------------------
Country or area 1979-2006 1979-1990 1990-1995 1995-2000 2000-2006 2004-2005 2005-2006
--------------------------------------------------------------------------------------------------------
Output per hour
United States r3.9 2.8 3.7 5.5 r4.6 r2.2 r2.0
Canada r2.4 2.1 3.4 3.8 r0.8 r3.8 r-0.1
Australia 2.9 2.9 2.9 3.8 2.0 1.0 0.3
Japan r3.7 3.8 3.3 3.4 r3.9 r6.5 r1.9
Korea, Republic of NA NA 9.4 10.8 7.4 6.8 10.8
Taiwan 5.7 6.1 4.7 5.6 6.0 7.2 6.9
Belgium r3.5 4.2 3.1 r3.0 2.8 r3.1 r2.2
Denmark 2.4 2.2 2.7 1.8 r2.8 r1.1 r5.1
France 3.8 3.6 3.8 4.6 3.4 4.3 3.7
Germany (2) 2.9 2.1 2.9 3.7 r3.6 r3.7 r7.1
Italy 1.7 2.8 2.7 0.9 -0.6 -0.1 1.4
Netherlands r3.3 r3.2 3.7 3.3 3.1 3.5 3.1
Norway 2.0 1.9 0.1 1.4 r4.5 r3.5 3.3
Spain 2.5 3.3 3.1 0.8 r1.9 r1.6 r2.7
Sweden r4.5 r2.1 r5.5 r6.8 r6.4 6.2 r5.9
United Kingdom 3.6 4.1 3.1 2.2 4.4 3.6 4.5
Output
United States r2.8 2.2 3.6 5.4 r1.2 r1.0 r2.9
Canada 2.2 1.9 2.2 6.2 r-0.2 r1.6 r-1.0
Australia 1.4 1.6 0.8 2.6 0.7 0.2 -1.3
Japan r2.7 4.7 0.4 1.2 r2.2 r5.2 r4.3
Korea, Republic of 8.9 10.7 8.2 7.9 6.9 7.1 8.4
Taiwan 6.0 7.4 4.4 5.8 4.9 6.6 7.2
Belgium r1.8 2.6 0.6 r2.9 r0.7 r-0.2 r2.7
Denmark r1.1 1.3 2.1 1.7 r-0.3 r-3.1 r5.4
France 1.6 1.3 0.9 3.5 1.1 1.3 1.6
Germany (2) r1.1 1.2 -1.0 2.2 r1.8 r1.4 r5.8
Italy 1.3 2.6 1.6 0.7 -0.8 -2.5 3.7
Netherlands 2.1 2.4 2.0 3.3 0.7 0.0 2.3
Norway 0.8 -0.5 0.7 1.4 r2.7 r4.5 r4.4
Spain 2.2 2.1 0.6 5.0 r1.5 r1.0 r2.9
Sweden 3.8 r1.7 3.8 7.4 r4.6 r4.6 r5.2
United Kingdom 0.6 0.9 0.5 1.3 -0.3 -1.2 r1.4
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Continued on next page
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Table B. Output per hour, hourly compensation, unit labor costs, and related measures
Manufacturing, 16 countries or areas, 1979-2006
Average annual rates of change(1)
--------------------------------------------------------------------------------------------------------
Country or area 1979-2006 1979-1990 1990-1995 1995-2000 2000-2006 2004-2005 2005-2006
--------------------------------------------------------------------------------------------------------
Total hours
United States -1.0 -0.6 -0.1 -0.1 -3.2 -1.2 0.9
Canada -0.1 -0.2 -1.2 2.3 r-1.0 r-2.1 r-0.9
Australia -1.4 -1.3 -2.0 -1.2 -1.2 -0.8 -1.5
Japan -1.0 0.8 -2.8 r-2.1 r-1.7 -1.3 r2.4
Korea, Republic of NA NA -1.1 -2.6 -0.5 0.2 -2.1
Taiwan 0.2 1.2 -0.3 0.1 -1.0 -0.6 0.3
Belgium -1.6 -1.6 -2.4 -0.1 -2.1 -3.2 0.5
Denmark r-1.2 -1.0 -0.7 -0.1 r-3.0 r-4.2 r0.3
France -2.1 -2.2 -2.8 -1.1 -2.2 -2.8 -2.0
Germany (2) -1.7 -0.9 -3.8 -1.4 -1.7 -2.2 r-1.2
Italy -0.4 -0.2 -1.0 -0.2 -0.2 -2.4 2.3
Netherlands -1.2 r-0.9 -1.7 0.0 -2.3 -3.3 -0.8
Norway -1.2 -2.3 0.6 0.0 r-1.7 r1.0 r1.0
Spain -0.3 -1.2 -2.4 4.1 r-0.4 r-0.6 r0.1
Sweden r-0.7 r-0.4 r-1.7 r0.5 r-1.7 r-1.5 r-0.7
United Kingdom -2.9 -3.1 -2.6 -0.9 r-4.4 -4.6 r-2.9
Employment
United States -1.1 -0.8 -0.5 0.0 -3.2 -0.6 -0.5
Canada -0.2 -0.3 -1.5 2.2 r-0.9 r-1.1 r-1.0
Australia -1.4 -1.3 -2.3 -1.1 -1.1 -1.7 -1.2
Japan -0.7 1.0 -1.6 -2.0 -1.9 -0.8 r1.5
Korea, Republic of NA NA -0.8 -2.5 0.6 0.9 -0.4
Taiwan 0.8 2.0 -0.3 0.4 0.0 0.4 1.1
Belgium -1.5 -1.6 -2.2 -0.6 r-1.7 r-1.2 r-1.1
Denmark -1.1 -0.4 -1.2 -1.2 r-2.4 r-2.5 r-0.2
France -1.6 -1.7 -2.5 -0.3 -1.8 -2.6 -2.0
Germany (2) -1.3 -0.1 -4.2 -0.8 -1.4 -1.7 r-0.9
Italy -0.7 -0.8 -1.9 -0.2 0.0 -1.7 1.2
Netherlands r-1.0 r-0.6 -1.6 0.1 -2.2 -3.0 -0.8
Norway -1.2 -2.2 0.4 0.2 r-1.9 r0.1 r1.1
Spain 0.1 -0.7 -2.0 3.3 r0.7 1.0 r-0.2
Sweden -1.4 -1.0 -3.5 r0.2 r-1.8 r-1.1 -0.7
United Kingdom -2.8 -2.9 -2.4 -1.4 -4.3 -4.5 -2.6
--------------------------------------------------------------------------------------------------------
Continued on next page
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Table B. Output per hour, hourly compensation, unit labor costs, and related measures
Manufacturing, 16 countries or areas, 1979-2006
Average annual rates of change(1)
--------------------------------------------------------------------------------------------------------
Country or area 1979-2006 1979-1990 1990-1995 1995-2000 2000-2006 2004-2005 2005-2006
--------------------------------------------------------------------------------------------------------
Average hours
United States 0.1 0.2 0.4 -0.1 -0.1 -0.6 1.4
Canada 0.1 0.1 0.3 0.1 r-0.1 r-1.1 0.1
Australia 0.0 0.0 0.3 -0.1 -0.1 0.9 -0.4
Japan -0.3 -0.2 -1.3 r-0.1 0.2 -0.5 0.8
Korea, Republic of NA NA -0.2 -0.1 -1.1 -0.6 -1.7
Taiwan -0.6 -0.8 0.0 -0.3 -1.0 -1.0 -0.8
Belgium r0.0 0.0 -0.2 0.5 r-0.4 r-2.1 r1.6
Denmark r-0.1 -0.5 0.6 1.1 r-0.7 r-1.8 r0.5
France -0.5 -0.5 -0.3 -0.8 -0.4 -0.2 0.0
Germany (2) -0.4 -0.9 0.4 -0.6 r-0.3 r-0.6 r-0.3
Italy 0.4 0.6 0.9 0.0 -0.2 -0.7 1.0
Netherlands -0.1 -0.2 0.0 -0.1 -0.1 -0.4 0.1
Norway 0.0 -0.1 0.2 -0.2 r0.2 r0.9 r-0.1
Spain -0.4 -0.5 -0.4 0.8 r-1.1 r-1.6 r0.4
Sweden r0.7 r0.7 r1.9 r0.3 r0.0 r-0.4 0.0
United Kingdom -0.1 -0.2 -0.1 0.5 -0.2 -0.1 r-0.3
Total labor compensation(3): National currency basis
United States 3.6 4.9 3.4 4.5 0.8 3.0 3.4
Canada r4.6 6.5 2.4 5.2 r2.3 r2.6 r1.0
Australia NA NA 3.2 3.1 r4.2 r5.2 r4.1
Japan r1.8 5.5 0.7 -1.0 r-1.6 r-0.4 r0.9
Korea, Republic of 13.7 19.6 17.6 5.4 7.3 8.2 4.5
Taiwan 7.5 13.5 6.8 3.6 1.1 3.7 2.5
Belgium 2.7 4.4 1.3 1.9 r1.2 r0.2 r2.5
Denmark r4.2 7.0 2.3 2.8 r1.7 r2.4 r3.4
France 3.6 7.3 1.7 1.7 0.3 -3.4 0.5
Germany (2) r2.7 4.6 2.4 1.6 r0.5 -1.1 r2.9
Italy 6.4 11.4 3.9 2.6 2.7 0.5 4.2
Netherlands r2.8 r3.2 2.7 3.4 1.5 -1.4 2.0
Norway 5.0 6.4 4.1 5.1 r3.0 r5.8 r5.6
Spain 6.9 10.1 5.5 5.6 3.3 r3.3 r3.2
Sweden r5.4 r8.8 r1.9 5.3 r2.3 r1.9 r3.0
United Kingdom 3.9 7.1 1.5 3.3 0.8 r-0.4 r3.8
--------------------------------------------------------------------------------------------------------
Continued on next page
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Table B. Output per hour, hourly compensation, unit labor costs, and related measures
Manufacturing, 16 countries or areas, 1979-2006
Average annual rates of change(1)
--------------------------------------------------------------------------------------------------------
Country or area 1979-2006 1979-1990 1990-1995 1995-2000 2000-2006 2004-2005 2005-2006
--------------------------------------------------------------------------------------------------------
Hourly compensation(3): National currency basis
United States 4.7 5.5 3.5 4.7 4.2 4.2 2.5
Canada r4.7 6.8 3.6 2.9 r3.3 r4.9 r1.9
Australia NA NA 5.4 4.3 r5.4 r6.1 r5.7
Japan 2.8 4.6 3.6 1.2 r0.0 r0.8 r-1.4
Korea, Republic of NA NA 18.9 8.1 7.8 8.0 6.8
Taiwan 7.3 12.1 7.1 3.4 2.1 4.4 2.1
Belgium 4.3 6.1 3.8 2.0 r3.4 r3.5 2.1
Denmark r5.4 8.1 2.9 2.9 r4.9 r6.9 r3.1
France 5.9 9.8 4.6 2.8 2.5 -0.6 2.6
Germany (2) r4.5 5.6 6.4 3.1 r2.3 r1.2 r4.1
Italy 6.8 11.6 5.0 2.8 2.9 3.0 1.8
Netherlands 4.0 4.1 4.5 3.4 3.9 2.0 2.8
Norway r6.3 9.0 3.4 5.2 r4.8 r4.7 r4.5
Spain 7.2 11.4 8.2 1.4 r3.7 r3.9 r3.0
Sweden 6.2 9.1 r3.7 r4.8 r4.1 r3.4 r3.8
United Kingdom 7.0 10.6 4.2 4.2 5.5 r4.4 r6.9
Unit labor costs(3): National currency basis
United States r0.8 2.6 -0.2 -0.8 r-0.4 r1.9 r0.5
Canada r2.3 4.6 0.3 -0.9 r2.4 r1.0 r2.0
Australia NA NA 2.4 0.5 r3.4 r5.1 r5.4
Japan r-0.9 0.8 0.3 -2.2 r-3.7 r-5.4 r-3.2
Korea, Republic of 4.4 8.1 8.7 -2.4 0.4 1.1 -3.6
Taiwan 1.5 5.6 2.3 -2.1 -3.6 -2.7 -4.4
Belgium r0.8 1.8 0.7 r-0.9 r0.6 r0.4 r-0.1
Denmark r3.0 5.7 0.2 1.1 r2.1 r5.7 r-2.0
France 2.0 5.9 0.7 -1.7 -0.8 -4.7 -1.0
Germany (2) r1.6 3.3 3.4 -0.5 r-1.3 r-2.5 r-2.8
Italy 5.0 8.5 2.3 1.9 3.6 3.1 0.4
Netherlands 0.6 r0.8 0.7 0.1 0.7 -1.4 -0.3
Norway 4.2 6.9 r3.3 3.7 0.3 r1.2 1.2
Spain 4.6 7.8 4.9 0.5 r1.8 r2.3 r0.3
Sweden r1.6 r6.9 r-1.8 -1.9 r-2.2 r-2.6 r-2.0
United Kingdom 3.3 6.2 1.0 2.0 r1.1 r0.8 r2.3
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Continued on next page
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Table B. Output per hour, hourly compensation, unit labor costs, and related measures
Manufacturing, 16 countries or areas, 1979-2006
Average annual rates of change(1)
--------------------------------------------------------------------------------------------------------
Country or area 1979-2006 1979-1990 1990-1995 1995-2000 2000-2006 2004-2005 2005-2006
--------------------------------------------------------------------------------------------------------
Unit labor costs(3): U.S. dollar basis
United States r0.8 2.6 -0.2 -0.8 r-0.4 r1.9 r0.5
Canada 2.4 4.6 -2.9 -2.4 r7.2 r8.5 r9.0
Australia NA NA 1.3 -4.2 r8.0 r8.8 r4.1
Japan r1.5 4.6 9.4 -4.8 r-4.9 r-7.0 r-8.4
Korea, Republic of 1.8 4.4 6.9 -9.5 3.2 13.1 3.5
Taiwan 1.8 8.5 2.7 -5.3 -4.2 1.1 -5.6
Belgium r0.5 0.6 3.3 r-8.4 r5.9 r0.5 r0.8
Denmark r2.5 4.1 2.2 -6.1 r7.5 r5.6 r-1.1
France 1.2 3.6 2.5 -8.4 4.4 -4.6 -0.1
Germany (2) r2.2 4.5 5.9 -8.0 r3.9 r-2.4 r-1.9
Italy 2.6 5.0 -3.8 -3.1 9.0 3.2 1.3
Netherlands 1.1 r1.7 3.3 -7.6 6.0 -1.3 0.6
Norway 3.3 4.9 3.1 -2.9 r5.7 r5.9 1.7
Spain 2.0 3.8 0.8 -6.6 r7.2 r2.4 r1.2
Sweden r-0.4 r3.8 r-5.4 -6.7 r1.5 r-4.2 r-0.7
United Kingdom 2.7 4.5 -1.4 1.1 4.4 r0.1 r3.6
Exchange rates(4)
United States -- -- -- -- -- -- --
Canada 0.1 0.0 -3.2 -1.6 4.6 7.4 6.8
Australia -1.5 -3.2 -1.1 -4.7 4.4 3.6 -1.2
Japan 2.4 3.8 9.1 -2.7 -1.3 -1.8 -5.3
Korea, Republic of -2.5 -3.4 -1.7 -7.3 2.9 11.9 7.3
Taiwan 0.4 2.7 0.3 -3.3 -0.6 3.9 -1.2
Belgium -0.3 -1.2 2.5 -7.6 5.3 0.1 0.9
Denmark -0.5 -1.5 2.0 -7.1 5.3 -0.1 0.9
France -0.8 -2.2 1.8 -6.8 5.3 0.1 0.9
Germany (2) 0.6 1.1 2.5 -7.5 5.3 0.1 0.9
Italy -2.3 -3.3 -6.0 -4.9 5.3 0.1 0.9
Netherlands 0.5 0.9 2.6 -7.6 5.3 0.1 0.9
Norway -0.9 -1.9 -0.3 -6.4 5.5 4.6 0.5
Spain -2.5 -3.7 -3.9 -7.1 5.3 0.1 0.9
Sweden -2.0 -2.9 -3.7 -4.9 3.7 -1.6 1.3
United Kingdom -0.5 -1.6 -2.4 -0.8 3.3 -0.7 1.3
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r=revised NA=data not available
(1) Rates of change based on the compound rate method.
(2) Data for years before 1991 pertain to the former West Germany.
(3) Adjusted for employment taxes and government subsidies to estimate the actual cost to employers.
(4) Value of foreign currency relative to the U.S. dollar.
-11-
Trade-weighted unit labor costs
BLS constructs indexes of U.S. unit labor cost trends relative to
a trade-weighted average of unit labor cost trends in the other
economies to take account of differences in the relative importance
of foreign economies to U.S. trade in manufactured goods. Relative
trade-weighted unit labor cost indexes are calculated on both a
national currency and a U.S. dollar basis.
In this release, the relative U.S. trade-weighted indexes are
estimated against 14 economies for which comparable data are
available over the period of comparison; the indexes underlying this
chart are shown in table C.
Chart 3 begins in 1979, a year in which U.S. manufacturing output
reached a business cycle peak.
PRINTED COPY CONTAINS CHART AT THIS POINT: Chart 3. U.S. manufacturing
unit labor cost relative to 14(1) other economies, 1979-2006
In the chart, the dotted line shows that, on a national currency
basis, U.S. unit labor costs tended to fall more or increase less
than unit labor costs in the other economies throughout this period.
The solid line compares the unit labor costs on a U.S. dollar
basis. From 1979 to 1985, and again from 1995 to 2001, U.S. unit
labor costs on a U.S. dollar basis generally rose more or declined
less than in the other economies, due to the appreciation of the
dollar. Since 2001, relative U.S. unit labor costs declined with
the weakening of the U.S. dollar.
-12-
Table C. U.S. manufacturing unit labor
costs relative to 14(1) competitors, 1979-2006
----------------------------------------------------------------
Unit Labor Costs Unit Labor Costs
National Currency Basis U.S. Dollar Basis
Year Own Competitors' Own Competitors'
Index Index Ratio Index Index Ratio
----------------------------------------------------------------
1979 100.0 100.0 100.0 100.0 100.0 100.0
1980 112.7 111.4 101.2 112.7 109.9 102.6
1981 117.6 120.8 97.4 117.6 108.8 108.1
1982 127.4 131.3 97.0 127.4 108.5 117.5
1983 122.7 133.8 91.7 122.7 106.6 115.1
1984 123.8 133.8 92.5 123.8 100.1 123.7
1985 126.2 136.3 92.6 126.2 98.1 128.6
1986 130.1 141.8 91.7 130.1 117.5 110.7
1987 125.4 145.0 86.5 125.4 134.2 93.4
1988 126.4 147.8 85.6 126.4 146.8 86.1
1989 129.4 151.7 85.2 129.4 148.7 87.0
1990 133.2 158.3 84.1 133.2 161.9 82.3
1991 136.7 166.6 82.1 136.7 171.6 79.7
1992 137.8 170.1 81.0 137.8 176.1 78.2
1993 136.7 170.9 80.0 136.7 168.7 81.0
1994 134.1 168.3 79.7 134.1 165.8 80.9
1995 131.6 170.0 77.4 131.6 175.3 75.1
1996 129.1 171.8 75.1 129.1 171.2 75.4
1997 127.1 169.4 75.0 127.1 157.2 80.8
1998 125.7 170.4 73.8 125.7 146.9 85.6
1999 124.4 167.0 74.5 124.4 147.0 84.6
2000 126.2 162.6 77.6 126.2 138.6 91.0
2001 127.7 168.2 75.9 127.7 134.9 94.7
2002 123.9 168.6 73.5 123.9 136.6 90.6
2003 124.7 168.1 74.2 124.7 153.0 81.5
2004 120.1 166.6 72.1 120.1 163.7 73.3
2005 122.4 165.0 74.2 122.4 167.4 73.1
2006 123.0 164.2 74.9 123.0 170.3 72.2
----------------------------------------------------------------
(1) Australia has been omitted from this table because data are
not available before 1990.
-13-
Technical Notes
With the exception of the United States, the comparisons in this
release are based on data available to the Bureau of Labor
Statistics as of the end of December 2007. The United States data
incorporate the BEA manufacturing output revisions of January 29,
2008.
Definitions. Labor productivity is defined as real output per hour
worked. Although the labor productivity measure presented in this
release relates output to the hours worked of persons employed in
manufacturing, it does not measure the specific contributions of
labor as a single factor of production. Rather, it reflects the
joint effects of many influences, including new technology, capital
investment, capacity utilization, energy use, and managerial skills,
as well as the skills and efforts of the workforce.
Unit labor costs are defined as the cost of labor input required to
produce one unit of output. They are computed as compensation in
nominal terms divided by real output. Unit labor costs can also be
computed by dividing hourly compensation by output per hour, that
is, by labor productivity.
Methodology. BLS constructs trends of manufacturing labor
productivity and unit labor costs from three basic aggregate
measures: output, total labor hours, and total compensation. The
hours and compensation measures, as well as the employment measures,
refer to employees (wage and salary earners) in Belgium and Taiwan.
For all other economies, the measures refer to all employed persons,
including employees, self-employed persons, and unpaid family
workers.
In general, the measures relate to total manufacturing as defined by
the International Standard Industrial Classification (ISIC).
However, the measures for France include parts of mining. Data for
the United States are in accordance with the North American Industry
Classification System (NAICS 97), except compensation data before
1987. Canadian data are in accordance with NAICS 97 starting in
1961.
The data for the most recent years are based on the United Nations
System of National Accounts 1993 (SNA 93). For earlier years, data
were compiled according to previously used systems.
To obtain historical time series, BLS may link together data series
which were compiled according to different accounting systems by
national statistical offices.
Output. For most of the economies, the output measures are real
value added in manufacturing, based on national accounts. However,
output for Japan prior to 1970 and for the Netherlands prior to 1960
are indexes of industrial production. The manufacturing value added
measures for the United Kingdom are essentially identical to their
indexes of industrial production.
Most economies now estimate manufacturing real output using moving
price weights, as recommended by SNA 93. However, many earlier time
periods within the historical real output series have been estimated
using fixed price weights, with the weights updated periodically
(for example, every 5 or 10 years). Taiwan and Korea still use
fixed price weights to estimate real output.
-14-
Measures of real output also may differ among economies because of
different approaches to quality adjustments.
For the United States, the output measure for the manufacturing
sector is a chain-weighted index of real gross product originating
(deflated value added) produced by the Bureau of Economic Analysis
(BEA) of the U.S. Department of Commerce. For more information on
the U.S. measure, see "Improved Estimates of Gross Product by
Industry for 1947-98," Survey of Current Business, June 2000, pp.
24-38 and "Gross Domestic Product by Industry for 1947-86. New
Estimates Based on the North American Industry Classification
System," Survey of Current Business, December 2005, pp. 70-84.
The U.S. manufacturing output series used for international
comparisons differs from the manufacturing output series that BLS
publishes as part of its major sector productivity and costs
measures for the United States. The international comparisons
program uses a value added output concept, while the major sector
series is on a sectoral output basis. Sectoral output is gross
output less intra-sector sales and transfers. The U.S. major sector
productivity and costs measures can be found at
http://www.bls.gov/lpc/home.htm. For information on sectoral output,
see "Measurement of productivity growth in U.S. manufacturing,"
Monthly Labor Review, July 1995, pp. 13-28.
Value added measures have been used for the international
comparisons series because the data are more readily available from
the economies' national accounts, whereas sectoral output would
require a complex estimation procedure. Even though BLS has
determined that sectoral output is the correct concept for U.S.
measures of productivity, there are other considerations that may
make value added a better concept for international comparisons of
labor productivity, such as differences among economies in the
extent of vertical integration of industries.
Labor Input. For the most recent years, the term "hours" refers to
hours worked. For some earlier years, BLS uses other hours
measures.
For the United States, the employment and hours data series
beginning with 1987 are taken from the NAICS-based manufacturing
all-employed series published by BLS as part of the major sector
productivity and cost measures. For the period before 1987, these
series are linked to NAICS-based, employees-only data from the
Current Employment Statistics (CES) program.
For most other economies, recent years' aggregate hours series are
obtained from national statistical offices, usually from national
accounts. However, for some earlier years, BLS calculates the
aggregate hours series using employment figures published with the
national accounts, or other comprehensive employment series, and
data on average hours worked.
Compensation (Labor Cost). The compensation measures are from
national accounts. Compensation includes employer expenditures for
legally required insurance programs and contractual and private
benefit plans, in addition to all payments made in cash or in kind
directly to employees. When data for the self-employed are not
available, total compensation is estimated by assuming the same
average compensation for the self-employed as for employees.
-15-
Labor cost is defined as compensation plus employment taxes minus
employment subsidies, i.e. the cost to employers of using labor. For
most economies, labor cost is the same as compensation. However, for
Australia, Canada, France, and Sweden, compensation is increased to
account for important taxes on payroll or employment. For the United
Kingdom, compensation is reduced between 1967 and 1991 to account
for subsidies.
Data for Germany. German data prior to 1991 pertain to the former
West Germany. The data series are linked in 1991.
Data for Australia. Australian data are published by fiscal years,
which run from July 1 through June 30. The Australian Bureau of
Statistics provides unpublished calendar-year data for real value
added, employment, and hours worked. For compensation, BLS estimates
calendar-year series using two-year moving averages of the data for
fiscal years. Manufacturing compensation data are not available for
years prior to 1990.
Data for Recent Years. The measures for recent years may be
estimates based on various current indicators until national
accounts and other preferred statistics become available.
Trade-Weighted Measures. The trade weights used to calculate the
relative unit labor cost indexes of the United States and the other
economies are based on the relative dollar value of U.S. trade in
manufactured commodities (exports plus imports) with each economy in
2006. The trade data are compiled by the U.S. Census Bureau.
The following weights were used for the entire period for which
trade-weighted unit labor cost measures are produced:
Weight Weight
Canada 36.10 Germany 10.38
Japan 16.44 Italy 3.58
Korea 6.24 Netherlands 3.68
Taiwan 4.86 Norway 0.51
Belgium 2.81 Spain 1.26
Denmark 0.62 Sweden 1.44
France 4.75 United Kingdom 7.31
Level Comparisons. The BLS measures are limited to trend
comparisons. BLS does not prepare level comparisons of manufacturing
productivity and unit labor costs because of data limitations and
technical problems in comparing the levels of manufacturing output
among economies. Each economy measures manufacturing output in its
own currency units. To compare outputs among economies, a common
unit of measure is needed. Market exchange rates are not suitable as
a basis for comparing output levels. What is needed are purchasing
power parities, which are the number of foreign currency units
required to buy goods and services equivalent to what can be bought
with one unit of U.S. currency.
-16-
Purchasing power parities are available for total gross domestic
product (GDP) from the Organization for Economic Cooperation and
Development (OECD). However, these parities are derived for
expenditures made by consumers, business, and government for goods
and services - not for value added by industry. Therefore, they do
not provide purchasing power parities by industry. The parities
developed for total GDP are not suitable for each component
industry, such as manufacturing.
European exchange rates. On Jan. 1, 1999, 11 European countries
joined the European Monetary Union (EMU). In subsequent years they
were joined by Greece and Slovenia. The euro, the official currency
of the EMU, was established at fixed conversion rates to the
previous national currencies of EMU members. Data on manufacturing
value added and labor compensation for euro-area countries are now
reported in euros.
In order to maintain historical continuity of data series, data for
euro-area countries for years before 1999 have been converted to
euros by applying the fixed euro/national currency conversion rates.
For countries and years where output, compensation, and exchange
rates are converted from national currency units into euros, the
following fixed conversion rates are used:
1 euro equals: 40.3399 Belgian francs 1936.27 Italian lire
6.55957 French francs 2.20371 Netherlands guilders
1.95583 German marks 166.386 Spanish pesetas
The currency exchange rates cited in this publication are annual
averages of daily buying rates in New York City.
United States Department of Labor
