Internet address: http://www.bls.gov USDL 08-1343
Technical information: (202) 691-5654 For Release: 10:00 A.M. EDT
Media contact: (202) 691-5902 Friday, September 26, 2008
INTERNATIONAL COMPARISONS OF MANUFACTURING PRODUCTIVITY AND UNIT LABOR
COST TRENDS, 2007
Manufacturing labor productivity increased in 2007 in 14 of the 16
economies compared by the U.S. Department of Labor's Bureau of Labor
Statistics. (See chart 1.) The Republic of Korea and Taiwan had the
largest productivity increases of 8.7 percent each, while Germany followed
with an increase of 5.0 percent. The United States productivity increase
of 4.1 percent was the fourth largest among the 16 economies compared.
Italy and Norway both had declines in productivity (-0.5 and -0.2 percent,
respectively).
Over the 2000-2007 period, of the 16 economies studied, only Korea,
Taiwan, and Sweden had greater productivity growth in manufacturing than
the United States. Average annual growth rates for selected measures
over various time periods 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 hours, 2006-2007
-2-
Expressed in national currency units, manufacturing unit labor costs
increased in ten and declined in six of the economies in 2007. The
decline for the United States (-0.5 percent) was the fifth steepest
decline among the economies compared. (See chart 2.)
However, expressed in U.S. dollars, manufacturing unit labor costs
increased in 13 of the economies and declined in three. Declines in
the dollar's exchange rate reversed the direction of movement in three
countries. The largest contrast was for Australia, from +2.8 percent
in unit labor costs in national currency to +14.5 percent in unit labor
costs expressed in U.S. dollars. This difference can be explained by
the strong appreciation of the Australian dollar relative to the U.S.
dollar.
PRINTED COPY CONTAINS CHART AT THIS POINT: Chart 2 Percent change in
manufacturing unit labor costs, 2006-2007
-3-
Table A. Output per hour, hourly compensation, unit labor costs, and related measures
Manufacturing, 16 countries or areas, 2006-2007
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 4.1 2.3 -1.7 -1.7 0.0 1.7 3.5 -0.5 -0.5 --
Canada 2.1 -1.0 -3.1 -2.9 -0.2 0.6 3.8 1.6 7.4 5.6
Australia 3.1 3.4 0.2 1.8 -1.5 6.3 6.0 2.8 14.5 11.4
Japan 2.8 2.8 -0.1 0.3 -0.4 -0.3 -0.3 -3.0 -4.2 -1.2
Korea, Republic of 8.7 6.5 -2.1 -1.3 -0.8 5.5 7.8 -0.9 1.8 2.7
Taiwan 8.7 10.3 1.5 1.4 0.1 3.2 1.6 -6.5 -7.5 -1.1
Belgium 2.1 2.5 0.3 0.4 -0.1 3.0 2.7 0.5 9.7 9.1
Denmark 0.7 4.1 3.4 0.4 2.9 5.2 1.7 1.1 10.4 9.2
France 2.6 1.2 -1.3 -1.3 0.0 1.6 2.9 0.3 9.5 9.1
Germany 5.0 6.3 1.3 1.3 -0.1 3.0 1.7 -3.1 5.8 9.1
Italy -0.5 1.0 1.5 0.9 0.6 3.7 2.1 2.6 12.0 9.1
Netherlands 2.8 3.2 0.4 0.2 0.3 3.4 2.9 0.2 9.3 9.1
Norway -0.2 4.3 4.6 3.8 0.7 9.5 4.7 4.9 14.9 9.5
Spain 3.8 2.8 -1.0 -0.6 -0.4 3.8 4.9 1.0 10.3 9.1
Sweden 0.9 2.5 1.6 0.5 1.1 5.2 3.5 2.6 12.0 9.1
United Kingdom 2.5 0.6 -1.9 -2.2 0.4 0.5 2.5 -0.1 8.5 8.6
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(1) Value of foreign currency relative to the U.S. dollar.
Additional data available
Annual indexes of the variables shown in table A are estimated for
the time period 1950-2007 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.
-4-
Manufacturing productivity, output, and labor input
Manufacturing productivity increased in 14 of the 16 economies
compared in 2007. The United States increase of 4.1 was the fourth
largest among the 16 economies. This was slightly above the 3.9
percent U.S. average annual increase since 1979. Korea and Taiwan led
in manufacturing productivity growth (+8.7 percent each), followed by
Germany (+5.0 percent). Manufacturing productivity decreased in Italy
and in Norway (-0.5 percent and -0.2 percent respectively). (See
tables A and B.)
Manufacturing output increased in 15 of the 16 economies in 2007.
Taiwan and Korea were the leaders in the growth of output. In 2007,
growth in manufacturing output in Germany, Taiwan and Norway was
noticeably higher than their average annual rates of increase over the
1979-2007 period. The U.S. increase of 2.3 percent was somewhat lower
than its average annual increase since 1979.
While 15 of the manufacturing sectors had increases in 2007 in
output, 9 had increases in total hours worked. Norway and Denmark had
the largest increases in total hours worked of 4.6 and 3.4 percent,
respectively. Canada had the steepest decline (-3.1 percent) in hours
in 2007, followed by Korea (-2.1 percent), the United Kingdom
(-1.9 percent). The United States had the fourth steepest decline in
hours worked (-1.7 percent).
For the period 2000-2007, total hours worked in manufacturing
declined for all 16 economies. The United Kingdom had the steepest
average annual decline (-3.9 percent), followed by the United States (-
3.1 percent).
Manufacturing employment increased in 10 of the 16 economies in
2007. Norway had the largest increase in employment (+3.8 percent),
and Australia was second (+1.8 percent). Canada had the largest
decline in employment (-2.9 percent), followed by the United Kingdom (-
2.2 percent) and the United States (-1.7 percent).
Over the 2000-2007 period, the United Kingdom and the United States
experienced the steepest average annual declines in manufacturing
employment (-4.0 and -3.0 percent respectively).
In 2007 average hours worked in manufacturing declined in 7 of the
16 economies and increased in 7. The United States and France showed
no change in average hours worked. This compares to 11 economies with
declining average annual manufacturing hours over the 2000-2007 period.
Australia and Korea had the steepest declines in average hours worked
in 2007. Denmark had the largest increase in average hours worked
(+2.9 percent) and Sweden followed with a growth of 1.1 percent.
-5-
Manufacturing hourly compensation and unit labor costs
Total labor compensation in manufacturing increased in 15 of the 16
economies in 2007. The largest increases were in Norway (+9.5 percent)
and Australia (+6.3 percent). U. S. compensation rose by 1.7 percent.
Japan was the only economy with a decline in total labor compensation.
(See tables A and B.)
Hourly compensation in manufacturing also increased in 15 of the 16
economies in 2007, with Japan again the exception. The largest
increases were in the Korea (+7.8 percent) and Australia (+6.0
percent). The U.S. increase of 3.5 percent in hourly compensation was
below its average annual increase since 1979. (See tables A and B.)
Expressed in national currencies, unit labor costs increased in 10
economies in 2007 and decreased in 6. The largest increase occurred in
Norway (+4.9 percent) and the largest decline was in Taiwan (-6.5
percent). Unit labor costs in U.S. manufacturing decreased by 0.5
percent.
Expressed in U.S. dollars, manufacturing unit labor costs increased
in 13 economies in 2007 and declined in 3. The unit labor costs of
three economies, Germany, the United Kingdom, and Korea, went from
decreases to increases when computed on a U.S. dollar basis.
Australia, with the largest currency appreciation, showed the largest
difference, from +2.8 percent in unit labor costs in national currency
to +14.5 percent in unit labor costs expressed in U.S. dollars.
Movements in exchange rates often are the dominant force behind
changes in comparative unit labor costs and international
competitiveness. In 2007, the U.S. dollar weakened against most of the
currencies being compared. The only exceptions were Japan and Taiwan,
where the currencies depreciated against the dollar. This depreciation
of the U.S. dollar against most currencies continues a trend that began
in 2001. In 2007, the dollar fell 9.1 percent against the euro,
following a decline of 0.9 percent in 2006.
-6-
Table B. Output per hour, hourly compensation, unit labor costs, and related measures
Manufacturing, 16 countries or areas, 1979-2007
Average annual rates of change(1)
--------------------------------------------------------------------------------------------------------
Country or area 1979-2007 1979-1990 1990-1995 1995-2000 2000-2007 2005-2006 2006-2007
--------------------------------------------------------------------------------------------------------
Output per hour
United States 3.9 2.8 3.7 5.6 4.6 2.2 4.1
Canada 2.4 2.1 3.4 3.8 1.1 -0.1 2.1
Australia 2.3 2.2 1.3 3.5 2.1 1.0 3.1
Japan 3.6 3.8 3.3 3.4 3.8 1.9 2.8
Korea, Republic of NA NA 9.4 10.8 7.6 10.1 8.7
Taiwan 5.9 6.1 4.7 5.6 6.4 7.1 8.7
Belgium 3.4 4.2 3.1 3.0 2.7 2.2 2.1
Denmark 2.3 2.2 2.7 1.8 2.5 5.1 0.7
France 3.8 3.8 3.4 4.6 3.5 4.0 2.6
Germany (2) 3.0 2.1 2.9 3.7 3.8 7.1 5.0
Italy 2.2 3.4 3.8 1.4 -0.2 -0.4 -0.5
Netherlands 3.3 3.2 3.7 3.3 3.2 3.2 2.8
Norway 1.9 1.9 0.1 1.4 3.7 2.9 -0.2
Spain 2.5 3.3 3.1 0.8 2.1 2.0 3.8
Sweden 4.4 2.1 5.5 6.8 5.6 5.9 0.9
United Kingdom 3.6 4.1 2.8 2.7 3.9 4.9 2.5
Output
United States 2.8 2.2 3.6 5.4 1.4 2.9 2.3
Canada 2.1 1.9 2.2 6.2 -0.3 -1.0 -1.0
Australia 1.5 1.6 0.8 2.6 1.1 -1.0 3.4
Japan 2.7 4.7 0.4 1.2 2.3 4.3 2.8
Korea, Republic of 8.8 10.7 8.2 7.9 6.9 8.5 6.5
Taiwan 6.2 7.4 4.4 5.8 5.7 7.5 10.3
Belgium 1.9 2.6 0.6 2.9 0.9 2.7 2.5
Denmark 1.2 1.3 2.1 1.7 0.3 5.4 4.1
France 1.6 1.5 0.6 3.4 1.2 1.1 1.2
Germany (2) 1.3 1.2 -1.0 2.2 2.5 5.8 6.3
Italy 1.5 2.6 1.6 1.2 -0.2 1.2 1.0
Netherlands 2.2 2.4 2.0 3.3 1.4 2.7 3.2
Norway 1.0 -0.5 0.7 1.4 3.3 6.9 4.3
Spain 2.2 2.1 0.6 5.0 1.5 1.9 2.8
Sweden 3.7 1.7 3.8 7.4 4.3 5.2 2.5
United Kingdom 0.6 0.9 0.5 1.3 -0.1 1.6 0.6
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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, 1979-2007
Average annual rates of change(1)
--------------------------------------------------------------------------------------------------------
Country or area 1979-2007 1979-1990 1990-1995 1995-2000 2000-2007 2005-2006 2006-2007
--------------------------------------------------------------------------------------------------------
Total hours
United States -1.1 -0.6 -0.1 -0.1 -3.1 0.7 -1.7
Canada -0.2 -0.2 -1.2 2.3 -1.3 -0.9 -3.1
Australia -0.8 -0.7 -0.5 -0.9 -1.0 -1.9 0.2
Japan -0.9 0.8 -2.8 -2.1 -1.4 2.4 -0.1
Korea, Republic of NA NA -1.1 -2.6 -0.7 -1.4 -2.1
Taiwan 0.3 1.2 -0.3 0.1 -0.6 0.3 1.5
Belgium -1.5 -1.6 -2.4 -0.1 -1.7 0.5 0.3
Denmark -1.1 -1.0 -0.7 -0.1 -2.2 0.3 3.4
France -2.1 -2.2 -2.8 -1.1 -2.3 -2.8 -1.3
Germany (2) -1.6 -0.9 -3.8 -1.4 -1.3 -1.2 1.3
Italy -0.7 -0.8 -2.1 -0.2 -0.1 1.6 1.5
Netherlands -1.1 -0.9 -1.7 0.0 -1.8 -0.5 0.4
Norway -0.9 -2.3 0.6 0.0 -0.4 3.9 4.6
Spain -0.3 -1.2 -2.4 4.1 -0.6 -0.1 -1.0
Sweden -0.7 -0.4 -1.7 0.5 -1.2 -0.7 1.6
United Kingdom -2.8 -3.1 -2.3 -1.4 -3.9 -3.1 -1.9
Employment
United States -1.2 -0.8 -0.5 0.0 -3.0 -0.6 -1.7
Canada -0.3 -0.3 -1.5 2.2 -1.2 -1.0 -2.9
Australia -1.3 -1.3 -2.3 -1.1 -0.7 -1.2 1.8
Japan -0.6 1.0 -1.6 -2.0 -1.6 1.5 0.3
Korea, Republic of NA NA -0.8 -2.5 0.4 0.3 -1.3
Taiwan 0.9 2.0 -0.3 0.4 0.2 1.1 1.4
Belgium -1.4 -1.6 -2.2 -0.6 -1.4 -1.1 0.4
Denmark -1.1 -0.4 -1.2 -1.2 -2.0 -0.2 0.4
France -1.6 -1.8 -2.5 -0.3 -1.8 -1.9 -1.3
Germany (2) -1.2 -0.1 -4.2 -0.8 -1.0 -0.9 1.3
Italy -0.7 -0.8 -1.9 -0.2 0.2 0.9 0.9
Netherlands -1.0 -0.6 -1.6 0.1 -1.8 -0.6 0.2
Norway -1.0 -2.2 0.4 0.2 -0.7 3.9 3.8
Spain 0.1 -0.7 -2.0 3.3 0.5 -0.2 -0.6
Sweden -1.4 -1.0 -3.5 0.2 -1.4 -0.7 0.5
United Kingdom -2.8 -2.9 -2.7 -1.2 -4.0 -2.7 -2.2
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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, 1979-2007
Average annual rates of change(1)
--------------------------------------------------------------------------------------------------------
Country or area 1979-2007 1979-1990 1990-1995 1995-2000 2000-2007 2005-2006 2006-2007
--------------------------------------------------------------------------------------------------------
Average hours
United States 0.1 0.2 0.4 -0.1 -0.1 1.3 0.0
Canada 0.1 0.1 0.3 0.1 -0.1 0.1 -0.2
Australia 0.6 0.6 1.9 0.3 -0.3 -0.7 -1.5
Japan -0.3 -0.2 -1.3 -0.1 0.1 0.8 -0.4
Korea, Republic of NA NA -0.2 -0.1 -1.1 -1.7 -0.8
Taiwan -0.6 -0.8 0.0 -0.3 -0.8 -0.8 0.1
Belgium 0.0 0.0 -0.2 0.5 -0.3 1.6 -0.1
Denmark 0.0 -0.5 0.6 1.1 -0.2 0.5 2.9
France -0.5 -0.5 -0.3 -0.8 -0.5 -0.9 0.0
Germany (2) -0.4 -0.9 0.4 -0.6 -0.3 -0.2 -0.1
Italy -0.1 0.1 -0.2 0.0 -0.3 0.7 0.6
Netherlands -0.1 -0.2 0.0 -0.1 0.0 0.1 0.3
Norway 0.0 -0.1 0.2 -0.2 0.3 0.0 0.7
Spain -0.4 -0.5 -0.4 0.8 -1.1 0.2 -0.4
Sweden 0.7 0.7 1.9 0.3 0.2 0.0 1.1
United Kingdom 0.0 -0.2 0.4 -0.1 0.1 -0.4 0.4
Total labor compensation(3): National currency basis
United States 3.5 4.9 3.4 4.5 0.8 4.9 1.7
Canada 4.4 6.5 2.4 5.2 2.0 1.0 0.6
Australia NA NA 3.2 3.1 4.5 4.4 6.3
Japan 1.7 5.5 0.7 -1.0 -1.5 0.9 -0.3
Korea, Republic of 13.5 19.6 17.6 5.4 7.3 7.0 5.5
Taiwan 7.3 13.5 6.8 3.6 1.3 2.3 3.2
Belgium 2.7 4.4 1.3 1.9 1.5 2.5 3.0
Denmark 4.2 7.0 2.3 2.8 2.2 3.4 5.2
France 3.5 6.7 1.6 1.7 1.3 1.9 1.6
Germany (2) 2.7 4.6 2.4 1.6 0.9 2.9 3.0
Italy 6.3 11.6 3.9 2.4 2.9 3.6 3.7
Netherlands 2.8 3.2 2.7 3.4 1.8 2.3 3.4
Norway 5.3 6.4 4.1 5.1 4.5 9.8 9.5
Spain 6.8 10.1 5.5 5.6 3.6 4.2 3.8
Sweden 5.3 8.8 1.9 5.3 2.6 2.1 5.2
United Kingdom 3.8 7.1 1.5 3.3 0.7 3.7 0.5
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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, 1979-2007
Average annual rates of change(1)
--------------------------------------------------------------------------------------------------------
Country or area 1979-2007 1979-1990 1990-1995 1995-2000 2000-2007 2005-2006 2006-2007
--------------------------------------------------------------------------------------------------------
Hourly compensation(3): National currency basis
United States 4.6 5.5 3.5 4.7 4.0 4.1 3.5
Canada 4.7 6.8 3.6 2.9 3.4 1.9 3.8
Australia NA NA 3.8 4.0 5.6 6.4 6.0
Japan 2.6 4.6 3.6 1.2 0.0 -1.4 -0.3
Korea, Republic of NA NA 18.9 8.1 8.1 8.6 7.8
Taiwan 7.0 12.1 7.1 3.4 2.0 1.9 1.6
Belgium 4.2 6.1 3.8 2.0 3.3 2.1 2.7
Denmark 5.3 8.1 2.9 2.9 4.5 3.1 1.7
France 5.8 9.1 4.5 2.8 3.7 4.9 2.9
Germany (2) 4.4 5.6 6.4 3.1 2.2 4.1 1.7
Italy 7.1 12.5 6.1 2.7 3.0 2.0 2.1
Netherlands 3.9 4.1 4.5 3.4 3.6 2.8 2.9
Norway 6.3 9.0 3.4 5.2 4.9 5.7 4.7
Spain 7.2 11.4 8.2 1.4 4.2 4.3 4.9
Sweden 6.0 9.1 3.7 4.8 3.9 2.9 3.5
United Kingdom 6.8 10.5 3.9 4.7 4.8 7.1 2.5
Unit labor costs(3): National currency basis
United States 0.7 2.6 -0.2 -0.8 -0.6 1.9 -0.5
Canada 2.2 4.6 0.3 -0.9 2.3 2.0 1.6
Australia NA NA 2.4 0.5 3.4 5.4 2.8
Japan -0.9 0.8 0.3 -2.2 -3.6 -3.2 -3.0
Korea, Republic of 4.3 8.1 8.7 -2.4 0.4 -1.4 -0.9
Taiwan 1.1 5.6 2.3 -2.1 -4.2 -4.9 -6.5
Belgium 0.8 1.8 0.7 -0.9 0.6 -0.1 0.5
Denmark 2.9 5.7 0.2 1.1 1.9 -2.0 1.1
France 1.9 5.1 1.0 -1.7 0.1 0.9 0.3
Germany (2) 1.4 3.3 3.4 -0.5 -1.5 -2.7 -3.1
Italy 4.8 8.8 2.2 1.2 3.1 2.4 2.6
Netherlands 0.6 0.8 0.7 0.1 0.4 -0.4 0.2
Norway 4.2 6.9 3.3 3.7 1.1 2.7 4.9
Spain 4.5 7.8 4.9 0.5 2.0 2.3 1.0
Sweden 1.6 6.9 -1.8 -1.9 -1.6 -2.9 2.6
United Kingdom 3.1 6.2 1.1 2.0 0.9 2.1 -0.1
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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, 1979-2007
Average annual rates of change(1)
--------------------------------------------------------------------------------------------------------
Country or area 1979-2007 1979-1990 1990-1995 1995-2000 2000-2007 2005-2006 2006-2007
--------------------------------------------------------------------------------------------------------
Unit labor costs(3): U.S. dollar basis
United States 0.7 2.6 -0.2 -0.8 -0.6 1.9 -0.5
Canada 2.6 4.6 -2.9 -2.4 7.1 9.0 7.4
Australia NA NA 1.3 -4.2 8.9 4.1 14.5
Japan 1.3 4.6 9.4 -4.8 -4.8 -8.4 -4.2
Korea, Republic of 1.9 4.4 6.9 -9.5 3.3 5.8 1.8
Taiwan 1.5 8.5 2.7 -5.3 -4.9 -6.0 -7.5
Belgium 0.8 0.6 3.3 -8.4 6.4 0.8 9.7
Denmark 2.8 4.1 2.2 -6.1 7.9 -1.1 10.4
France 1.4 2.7 2.8 -8.4 6.0 1.8 9.5
Germany (2) 2.3 4.5 5.9 -8.0 4.2 -1.8 5.8
Italy 2.8 5.2 -3.9 -3.7 9.1 3.3 12.0
Netherlands 1.4 1.7 3.3 -7.6 6.2 0.5 9.3
Norway 3.7 4.9 3.1 -2.9 7.2 3.2 14.9
Spain 2.3 3.8 0.8 -6.6 8.0 3.2 10.3
Sweden -0.1 3.8 -5.4 -6.7 2.8 -1.6 12.0
United Kingdom 2.9 4.5 -1.4 1.1 4.9 3.4 8.5
Exchange rates(4)
United States -- -- -- -- -- -- --
Canada 0.3 0.0 -3.2 -1.6 4.8 6.8 5.6
Australia -1.0 -3.2 -1.1 -4.7 5.4 -1.2 11.4
Japan 2.2 3.8 9.1 -2.7 -1.3 -5.3 -1.2
Korea, Republic of -2.3 -3.4 -1.7 -7.3 2.8 7.3 2.7
Taiwan 0.3 2.7 0.3 -3.3 -0.7 -1.2 -1.1
Belgium 0.0 -1.2 2.5 -7.6 5.8 0.9 9.1
Denmark -0.1 -1.5 2.0 -7.1 5.8 0.9 9.2
France -0.4 -2.2 1.8 -6.8 5.8 0.9 9.1
Germany (2) 0.9 1.1 2.5 -7.5 5.8 0.9 9.1
Italy -1.9 -3.3 -6.0 -4.9 5.8 0.9 9.1
Netherlands 0.8 0.9 2.6 -7.6 5.8 0.9 9.1
Norway -0.5 -1.9 -0.3 -6.4 6.0 0.5 9.5
Spain -2.1 -3.7 -3.9 -7.1 5.8 0.9 9.1
Sweden -1.6 -2.9 -3.7 -4.9 4.5 1.3 9.1
United Kingdom -0.2 -1.6 -2.4 -0.8 4.1 1.3 8.6
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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
competitors' index, which is a trade-weighted average of unit labor
cost trends in the other economies, in order 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. Australia has been omitted because unit
labor cost data are not available before 1990. 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, 1979-2007
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 from 1979 until 1998. After
that, the year-to-year fluctuations do not follow a clear trend.
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, 1979-2007
----------------------------------------------------------------
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 112.7 111.3 101.3 112.7 109.9 102.6
1981 117.6 120.7 97.5 117.6 108.6 108.3
1982 127.4 131.1 97.2 127.4 108.2 117.8
1983 122.7 133.5 91.9 122.7 106.1 115.6
1984 123.8 133.4 92.8 123.8 99.5 124.4
1985 126.2 136.0 92.8 126.2 97.6 129.2
1986 130.1 141.5 91.9 130.1 117.0 111.2
1987 125.4 144.6 86.7 125.4 133.6 93.9
1988 126.4 147.4 85.8 126.4 146.0 86.6
1989 129.4 151.3 85.5 129.4 147.9 87.5
1990 133.3 157.9 84.4 133.3 161.1 82.7
1991 136.7 166.1 82.3 136.7 170.7 80.1
1992 137.8 169.6 81.3 137.8 175.2 78.7
1993 136.7 170.4 80.3 136.7 167.6 81.6
1994 134.1 167.8 79.9 134.1 164.7 81.4
1995 131.6 169.6 77.6 131.6 174.4 75.5
1996 129.0 171.4 75.3 129.0 170.4 75.7
1997 127.1 168.9 75.2 127.1 156.4 81.3
1998 125.7 169.9 74.0 125.7 146.3 86.0
1999 124.4 166.6 74.7 124.4 146.2 85.1
2000 126.1 162.2 77.8 126.1 137.7 91.6
2001 127.7 167.6 76.2 127.7 134.0 95.3
2002 123.8 168.1 73.7 123.8 135.9 91.1
2003 124.6 167.6 74.3 124.6 152.1 81.9
2004 119.9 165.9 72.3 119.9 162.7 73.7
2005 119.5 164.4 72.7 119.5 166.4 71.9
2006 121.9 164.1 74.3 121.9 169.8 71.7
2007 121.2 163.4 74.2 121.2 178.0 68.1
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(1) Australia has been omitted from this table because data are
not available before 1990.
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Technical Notes
The comparisons in this release are based on data available to the
Bureau of Labor Statistics as of the end of August 2008 from the
national statistical offices of the 16 economies compared.
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.
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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
2007. 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 36.12 Germany 10.64
Japan 16.00 Italy 3.54
Korea 6.09 Netherlands 3.67
Taiwan 4.84 Norway 0.54
Belgium 3.02 Spain 1.36
Denmark 0.65 Sweden 1.42
France 4.82 United Kingdom 7.29
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.
Purchasing power parities, for most economies, are available for total
gross domestic product (GDP) from the Organization for Economic
Cooperation and Development
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(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
