Internet address: http://stats.bls.gov/flshome.htm USDL: 00-254 Technical information: (202) 691-5654 For Release: 10:00 A.M. EDT Media contact: (202) 691-5902 Thursday, September 7, 2000 INTERNATIONAL COMPARISONS OF HOURLY COMPENSATION COSTS FOR PRODUCTION WORKERS IN MANUFACTURING, 1999 Average hourly compensation costs in U.S. dollars for manufacturing production workers in 28 foreign economies remained at 79 percent of the U.S. level in 1999, after declining in the previous three years, according to the Bureau of Labor Statistics, U.S. Department of Labor. Although costs in Europe and Canada continued to decline relative to the United States, compensation costs in Mexico, Japan, and the Asian newly industrializing economies (NIEs) of Hong Kong, Korea, Singapore, and Taiwan increased at a faster rate than in the United States. (See chart 1.) Despite four years of relative declines, 1999 hourly compensation costs in Europe were still 6 percent higher than in the United States. And, despite a slight increase in 1999, costs in the Asian NIEs were approximately only one- third of the U.S. level. After briefly dropping below the U.S. level in 1998, Japanese compensation costs rose to a level 9 percent above the United States. Canadian costs fell to 81 percent of the U.S. level. (See table 1.) Chart 1. Hourly compensation costs in U.S. dollars for production workers in manufacturing, 1975-99 PRINTED COPY CONTAINS CHART AT THIS POINT. Comparative compensation costs in U.S. dollars In the United States, hourly compensation costs for production workers were $19.20 in 1999, a 2.9 percent increase from the 1998 level. Hourly compensation costs increased 5.1 percent in the combined 28 foreign economies, following cost declines in the three previous years. In Europe, costs declined 1.3 percent in 1999, whereas they increased 7.6 percent in the Asian NIEs. Changes in compensation costs in U.S. dollars reflect both the movements of costs in national currencies and changes in exchange rates. Costs in Canada remained unchanged at their 1998 level, reflecting both the stability of the Canadian dollar vis-à-vis the U.S. dollar during the year and of compensation costs measured in national currency. In Mexico, however, the 15.2 percent increase in compensation costs was the second highest increase of the 28 countries studied. Despite the depreciation of the Mexican peso, the sharp upward trend in Mexican compensation costs in pesos led to the increase. (See tables A and 2.) BOX: A NOTE ON THE MEASURES The hourly compensation measures in this news release are based on statistics available to BLS as of June 2000. The 1999 compensation statistics are preliminary measures; for some of the foreign countries, they are based on less than full-year data. 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. 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. Hourly compensation is partly estimated, and 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. See the Technical Notes for further information regarding definitions, sources, and computation methods and a description of the trade-weighted measures for economic groups. END OF BOX (A NOTE ON THE MEASURES) Table A. 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) Percent change, 1998-99 Country National Exchange U.S. or area Currency Rates dollar North America United States 2.9 - 2.9 Canada .1 -.1 .0 Mexico 20.2 -4.2 15.2 Asia and Oceania Australia 3.7 2.6 6.5 Hong Kong SAR 1 -.4 -.2 -.5 Israel 7.9 -8.2 -.9 Japan -.9 15.2 14.2 Korea 5.9 17.6 24.5 New Zealand 2.7 -1.3 1.4 Singapore -6.3 -1.4 -7.6 Sri Lanka - - - Taiwan 2.8 3.8 6.6 Europe Austria 2.6 -4.2 -1.7 Belgium 2.6 -4.1 -1.6 Denmark 5.5 -4.1 1.2 Finland 1.7 -4.2 -2.6 France 2.6 -4.2 -1.6 Germany, Former West 2.1 -4.1 -2.1 Germany, Unified 2.0 -4.1 -2.2 Greece - - - Ireland 6.7 -5.1 1.3 Italy 1.5 -4.5 -3.0 Luxembourg - - - Netherlands 3.1 -4.1 -1.1 Norway 5.2 -3.3 1.7 Portugal - - - Spain 4.2 -4.4 -.2 Sweden 1.9 -3.9 -2.0 Switzerland .2 -3.6 -3.4 United Kingdom 3.3 -2.4 .8 Trade-weighted measures 2,3 All 28 foreign economies 2.9 2.3 5.1 OECD 4 3.2 2.5 5.7 less Mexico, Korea 5 .9 2.5 3.4 Europe 2.7 -3.8 -1.3 Asian NIEs 1.3 6.0 7.6 Dash means data not available. 1 Hong Kong Special Administrative Region of China. 2 The 1998-99 percent changes for the trade weighted measures are based upon the changes for the countries or areas for which 1999 data are available. 3 German data included in the trade-weighted measures relate to the former West Germany. 4 OECD refers to the Organization for Economic Cooperation and Development. 5 Mexico joined the OECD in 1994 and Korea joined in 1996. The largest contribution to the overall increase in costs for the 28 economies came from the Asian economies. Costs in Japan, Korea, and Taiwan increased by 14.2, 24.5, and 6.6 percent, respectively. The increases in Korea and Japan were among the highest of any of the countries studied and reflected the strong appreciation of the Korean won and the Japanese yen in 1999. The changes in these countries did not appreciably affect the relative levels of the NIEs, as a sharp decline in Singapore offset increases in Korea and Taiwan. Average hourly compensation costs in Europe were $20.31, the lowest for this region in three years. In relative terms, the gap in compensation costs between Europe and the United States shrunk to its smallest size in 10 years (European costs were 6 percentage points above U.S. costs.) Only four European countries had rising costs in 1999--Denmark, Ireland, Norway, and the United Kingdom. The largest declines in compensation costs were in Italy and Switzerland, where costs decreased by approximately 3 percent. The former West Germany continued to have the highest costs of the 28 foreign economies at $26.93, 40 percent higher than the United States, despite a consistent decrease in relative costs in the last four years. (Data for Unified Germany are also available in tables 1-7). Compensation costs in U.S. dollars for nine European countries continued to be higher than U.S. costs in 1999. However, costs have declined or increased at a low rate in most of these countries in the past four years compared with U.S. costs, which continued to increase. Because of these trends, some countries, such as France and Italy, which had costs above those of the United States as recently as 1996, now have costs well below U.S. costs. In 1999, Italy's costs fell to 86 percent of the U.S. level, and costs in France dropped to 94 percent of the U.S. level. (See chart 2.) Chart 2. Indexes of hourly compensation costs in U.S. dollars for for production workers in manufacturing, 1999 PRINTED COPY CONTAINS CHART AT THIS POINT. Comparative cost trends in national currencies 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 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). For U.S. competitors, compensation costs in national currency experienced a low rate of growth in 1999. The trade-weighted average cost increase for all 28 foreign economies fell to 2.9 percent, following a 3.8 percent increase in 1998. The 2.9 percent increase was the smallest in the history of the series, which dates back to 1975. Excluding Mexico and Israel, which historically have high rates of increase, the trade-weighted increase in compensation costs for the foreign economies was only 1 percent in 1999. Several Asian countries experienced declines in compensation costs in national currency. Costs declined 0.4 percent in Hong Kong, 0.9 percent in Japan, and 6.3 percent in Singapore. The large decline in costs which occurred in Singapore stemmed from a reduction in employer contribution rates to the national pension plan. This was the first time in the history of this series that there were negative growth rates in these three Asian countries. National currency compensation costs in Europe rose at a rate of 2.7 percent, similar to the increase the previous year. Switzerland and Italy had the lowest rates of growth in Europe, at 0.2 and 1.5 percent, respectively. Costs grew fastest in Denmark, Ireland, and Norway, at more than 5 percent. National currency compensation costs increased by less than 2 percent or actually declined in eight countries, as the rate of compensation growth continued to slow in many countries. From 1975 to 1991, there was only one year in which more than two countries had growth of 2 percent or less. Since 1992, the number of countries exhibiting such low growth has steadily increased. In 1998 as well as in 1999, there were eight countries in which costs failed to increase by at least 2 percent. Also reflecting slowing compensation cost growth in 1999, only 7 countries had increases greater than 4 percent, the first year in which fewer than 12 countries failed to exceed 4 percent growth. Exchange rates Appreciation of the dollar against the currencies of most foreign countries continued in 1999, but to a lesser degree than in the previous three years. Although the European currencies continued to depreciate against the dollar in 1999, currencies in Australia, Japan, Korea, and Taiwan appreciated, in some cases sharply. Primarily because of the strength of the Japanese yen, the trade-weighted value of the currencies of the 28 foreign economies rose 2.3 percent against the dollar in 1999. The currency values of the largest U.S. trading partners in the study (as measured by trade weights) moved in different directions in 1999. The Canadian dollar (the currency with the largest trade weight) remained approximately at its 1998 level, while the Japanese yen (the currency with the second largest weight) appreciated approximately 15 percent. The third largest trading partner in the study, Mexico, saw the value of its currency fall about 4 percent against the dollar. The currencies of the Asian NIEs appreciated an average 6 percent against the dollar in 1999. The Korean won appreciated 17.6 percent, and the New Taiwan dollar appreciated nearly 4 percent. Currencies in Hong Kong and Singapore declined, but only slightly. The appreciation of the currencies of the Asian NIEs was the largest since 1989. BOX: A NOTE ON EUROPEAN EXCHANGE RATES FOR 1999 On January 1, 1999, several European countries joined the European Monetary Union (EMU): Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain. Currencies of EMU members are established at fixed conversion rates to the euro, the official currency of the EMU. Exchange rates between the national currencies of EMU countries and the U.S. dollar are no longer reported; only the exchange rate between the euro and the U.S. dollar is available. In this news release, 1999 exchange rates in national currencies are calculated for the EMU countries by taking the number of euros per U.S. dollar and then converting euros into national currencies at fixed conversion rates. The following are the fixed conversion rates between national currencies and the euro for the EMU countries in this release: 1 euro = 13.7603 Austrian Schillings = 40.3399 Belgian Francs = 5.94573 Finnish Markkas = 6.55957 French Francs = 1.95583 German Marks = .787564 Irish Pounds = 1936.27 Italian Lire = 40.3399 Luxembourg Francs = 2.20371 Netherlands Guilders = 200.482 Portuguese Escudos = 166.386 Spanish Pesetas In 1999, 1 U.S. dollar was equal to 1.0653 euros. END OF BOX (A NOTE ON EUROPEAN EXCHANGE RATES FOR 1999) The European currencies continued to depreciate against the U.S. dollar in 1999, falling a trade-weighted average of 3.8 percent against the U.S. dollar. As in 1997 and 1998, the British pound remained the strongest European currency in 1999, declining only 2.4 percent against the dollar. Most of the currencies pegged to the euro beginning in 1999 declined a little more than 4 percent from 1998 to 1999, with the largest decline in Ireland, at 5.1 percent. The movements of the foreign currencies relative to the U.S. dollar in 1999 had a significant influence on hourly compensation costs measured in U.S. dollars. Hourly compensation costs on a national currency basis in the 28 foreign economies rose only 2.9 percent, but, when adjusted for a 2.3 percent appreciation of the foreign currencies against the U.S. dollar, hourly compensation costs rose 5.1 percent. The effect that exchange rate changes can have on hourly compensation costs is particularly evident when comparing European costs to costs in the Asian NIEs. On a national currency basis, the increase in hourly compensation costs in 1999 was 1-1/2 percentage points higher in Europe than in the Asian NIEs. When costs are adjusted for changes in exchange rates in the two regions, however, costs in the Asian NIEs increased 7.6 percent while costs in Europe declined 1.3 percent. Additional data available In addition to the compensation cost measures covered in this news release, data are available for comparative levels of hourly compensation costs, hourly direct pay, pay for time worked, and the structure of compensation in manufacturing for all years from 1975 through 1999. BLS also computes comparative measures for 39 component manufacturing industries. Data through 1996 are available upon request and via the Internet (http://stats.bls.gov/flshome.htm). Data for the component industries are not included in this release; in general, the data limitations for them are greater than for total manufacturing. For further information, contact the Office of Productivity and Technology, Bureau of Labor Statistics, 2 Massachusetts Avenue, NE, Room 2150, Washington, DC 20212, or call 202-691-5654. 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. BOX: REVISED MEASURES The hourly compensation costs series for Ireland, Japan, and New Zealand were revised to incorporate new labor cost surveys and to make other adjustments. Data for Ireland were revised back to 1993 with the incorporation of 1996 labor cost survey data. For Japan, revisions were made back to 1996 with the incorporation of 1998 labor cost survey data. For New Zealand, data were revised to reflect changes in the Quarterly Employment Survey. The new survey includes expanded coverage of small businesses and other changes. Data from the previous series were linked to data from the new series at August 1999. Data for Korea were revised for 1997 and 1998, reflecting increases in employers' severance pay costs in those years. END OF BOX (REVISED MEASURES) Table 1. Indexes of hourly compensation costs in U.S. dollars for production workers in manufacturing, 29 countries or areas and selected economic groups, selected years, 1975-99 (Index, United States = 100) Country or area 1975 1980 1985 1990 1995 1996 1997 1998 1999 North America United States ...... 100 100 100 100 100 100 100 100 100 Canada ............. 94 88 84 107 94 94 90 84 81 Mexico ............. 23 22 12 11 9 9 10 10 11 Asia and Oceania Australia .......... 88 86 63 88 89 95 91 80 83 Hong Kong SAR 1 .... 12 15 13 21 28 29 30 29 28 Israel ............. 35 38 31 57 61 64 66 64 62 Japan .............. 47 56 49 86 139 119 107 98 109 Korea .............. 5 10 9 25 42 46 43 29 35 New Zealand ........ 50 53 34 55 58 61 59 48 48 Singapore .......... 13 15 19 25 43 47 45 42 37 Sri Lanka .......... 4 2 2 2 3 3 3 3 - Taiwan ............. 6 10 12 26 35 34 32 28 29 Europe Austria ............ 71 90 58 119 147 140 120 119 114 Belgium ............ 101 133 69 129 155 147 125 124 119 Denmark ............ 99 110 62 121 140 136 121 122 120 Finland ............ 72 83 63 141 140 132 117 116 110 France ............. 71 91 58 104 116 113 98 98 94 Germany, Former West 99 124 73 147 184 176 152 147 140 Germany, Unified ... - - - - 178 171 147 143 136 Greece ............. 27 38 28 45 53 54 50 48 - Ireland ............ 48 60 46 78 79 79 74 72 71 Italy .............. 73 83 59 117 94 100 96 92 86 Luxembourg ......... 102 122 60 112 136 127 104 100 - Netherlands ........ 103 122 67 121 140 131 115 113 109 Norway ............. 106 117 80 144 142 142 130 126 125 Portugal ........... 25 21 12 25 31 32 29 29 - Spain .............. 40 60 36 76 75 76 67 65 63 Sweden ............. 113 127 74 140 125 138 122 118 112 Switzerland ........ 96 112 74 140 170 160 132 131 123 United Kingdom ..... 53 77 48 85 80 80 85 88 86 Trade-weighted measures 2,3 All 28 foreign econ. 60 67 52 83 95 91 84 79 79 OECD 4 ............. 67 74 57 90 103 98 90 85 86 less Mexico, Korea5 76 84 65 104 118 112 103 98 98 Europe ............. 80 100 61 116 128 125 112 110 106 Asian NIEs ......... 8 12 13 25 37 39 37 31 32 Dash means data not available. 1 Hong Kong Special Administrative Region of China. 2 Data for Germany relate to the former West Germany only. 3 For description of trade-weighted measures and economic groups, see the Technical Notes preceding these tables. 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, September 2000. Table 2. Hourly compensation costs in U.S. dollars for production workers in manufacturing, 29 countries or areas and selected economic groups, selected years, 1975-99 Country or area 1975 1980 1985 1990 1995 1996 1997 1998 1999 North America United States ...... $6.36 $9.87 $13.01 $14.91 $17.19 $17.70 $18.27 $18.66 $19.20 Canada ............. 5.96 8.67 10.95 15.95 16.10 16.64 16.47 15.60 15.60 Mexico ............. 1.47 2.21 1.59 1.58 1.51 1.54 1.78 1.84 2.12 Asia and Oceania Australia .......... 5.62 8.47 8.20 13.07 15.27 16.88 16.58 14.92 15.89 Hong Kong SAR 1 .... .76 1.51 1.73 3.20 4.82 5.14 5.42 5.47 5.44 Israel ............. 2.25 3.79 4.06 8.55 10.54 11.32 12.04 12.02 11.91 Japan .............. 3.00 5.52 6.34 12.80 23.82 21.00 19.54 18.29 20.89 Korea .............. .32 .96 1.23 3.71 7.29 8.22 7.86 5.39 6.71 New Zealand ........ 3.15 5.22 4.38 8.17 9.91 10.81 10.81 9.01 9.14 Singapore .......... .84 1.49 2.47 3.78 7.33 8.32 8.24 7.77 7.18 Sri Lanka .......... .28 .22 .28 .35 .48 .48 .46 .47 - Taiwan ............. .40 1.00 1.50 3.93 5.94 5.95 5.90 5.27 5.62 Europe Austria ............ 4.51 8.88 7.58 17.75 25.32 24.80 21.97 22.21 21.83 Belgium ............ 6.41 13.11 8.97 19.17 26.65 25.97 22.88 23.20 22.82 Denmark ............ 6.28 10.83 8.13 18.04 24.07 24.11 22.03 22.69 22.96 Finland ............ 4.61 8.24 8.16 21.03 24.10 23.41 21.32 21.66 21.10 France ............. 4.52 8.94 7.52 15.49 20.01 19.93 17.99 18.28 17.98 Germany, Former West 6.31 12.25 9.53 21.88 31.58 31.20 27.68 27.52 26.93 Germany, Unified ... - - - - 30.65 30.26 26.84 26.76 26.18 Greece ............. 1.69 3.73 3.66 6.76 9.17 9.59 9.20 8.91 - Ireland ............ 3.03 5.95 5.92 11.66 13.61 13.91 13.61 13.39 13.57 Italy .............. 4.67 8.15 7.63 17.45 16.22 17.75 17.57 17.11 16.60 Luxembourg ......... 6.50 12.03 7.81 16.74 23.35 22.55 19.02 18.74 - Netherlands ........ 6.58 12.06 8.75 18.06 24.12 23.22 20.98 21.17 20.94 Norway ............. 6.77 11.59 10.37 21.47 24.38 25.05 23.72 23.50 23.91 Portugal ........... 1.58 2.06 1.53 3.77 5.37 5.58 5.38 5.48 - Spain .............. 2.53 5.89 4.66 11.38 12.88 13.51 12.24 12.14 12.11 Sweden ............. 7.18 12.51 9.66 20.93 21.44 24.37 22.22 22.02 21.58 Switzerland ........ 6.09 11.09 9.66 20.86 29.30 28.34 24.19 24.38 23.56 United Kingdom ..... 3.37 7.56 6.27 12.70 13.67 14.09 15.47 16.43 16.56 Trade-weighted measures 2,3 All 28 foreign econ. 3.83 6.60 6.75 12.36 16.36 16.09 15.30 14.72 15.24 OECD 4 ............. 4.25 7.30 7.40 13.49 17.72 17.36 16.45 15.85 16.44 less Mexico, Korea5 4.82 8.30 8.48 15.54 20.36 19.88 18.79 18.21 18.80 Europe ............. 5.10 9.90 7.96 17.31 21.97 22.07 20.43 20.61 20.31 Asian NIEs ......... .52 1.17 1.65 3.72 6.41 6.92 6.83 5.83 6.20 Dash means data not available. 1 Hong Kong Special Administrative Region of China. 2 Data for Germany relate to the former West Germany only. 3 For description of trade-weighted measures and economic groups, see the Technical Notes preceding these tables. 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, September 2000. 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, 1975-99 Country or area 1975-99 1975-80 1980-85 1985-90 1990-95 1995-99 1997 1998 1999 North America United States ...... 4.7 9.2 5.7 2.8 2.9 2.8 3.2 2.1 2.9 Canada ............. 4.1 7.8 4.8 7.8 .2 -.8 -1.0 -5.3 .0 Mexico ............. 1.5 8.5 -6.4 -.1 -.9 8.9 15.6 3.4 15.2 Asia and Oceania Australia .......... 4.4 8.5 -.6 9.8 3.2 1.0 -1.8 -10.0 6.5 Hong Kong SAR 1 .... 8.5 14.7 2.8 13.1 8.5 3.1 5.4 .9 -.5 Israel ............. 7.2 11.0 1.4 16.1 4.3 3.1 6.4 -.2 -.9 Japan .............. 8.4 13.0 2.8 15.1 13.2 -3.2 -7.0 -6.4 14.2 Korea .............. 13.5 24.6 5.1 24.7 14.5 -2.1 -4.4 -31.4 24.5 New Zealand ........ 4.5 10.6 -3.4 13.3 3.9 -2.0 .0 -16.7 1.4 Singapore .......... 9.4 12.1 10.6 8.9 14.2 -.5 -1.0 -5.7 -7.6 Sri Lanka .......... (2)2.3 -4.7 4.9 4.6 6.5 - -4.2 2.2 - Taiwan ............. 11.6 20.1 8.4 21.2 8.6 -1.4 -.8 -10.7 6.6 Europe Austria ............ 6.8 14.5 -3.1 18.6 7.4 -3.6 -11.4 1.1 -1.7 Belgium ............ 5.4 15.4 -7.3 16.4 6.8 -3.8 -11.9 1.4 -1.6 Denmark ............ 5.6 11.5 -5.6 17.3 5.9 -1.2 -8.6 3.0 1.2 Finland ............ 6.5 12.3 -.2 20.8 2.8 -3.3 -8.9 1.6 -2.6 France ............. 5.9 14.6 -3.4 15.5 5.3 -2.6 -9.7 1.6 -1.6 Germany, Former West 6.2 14.2 -4.9 18.1 7.6 -3.9 -11.3 -.6 -2.1 Germany, Unified ... - - - - - -3.9 -11.3 -.3 -2.2 Greece ............. (2)7.5 17.2 -.4 13.1 6.3 - -4.1 -3.2 - Ireland ............ 6.4 14.4 -.1 14.5 3.1 -.1 -2.2 -1.6 1.3 Italy .............. 5.4 11.8 -1.3 18.0 -1.5 .6 -1.0 -2.6 -3.0 Luxembourg ......... (2)4.7 13.1 -8.3 16.5 6.9 - -15.7 -1.5 - Netherlands ........ 4.9 12.9 -6.2 15.6 6.0 -3.5 -9.6 .9 -1.1 Norway ............. 5.4 11.4 -2.2 15.7 2.6 -.5 -5.3 -.9 1.7 Portugal ........... (2)5.6 5.4 -5.8 19.8 7.3 - -3.6 1.9 - Spain .............. 6.7 18.4 -4.6 19.6 2.5 -1.5 -9.4 -.8 -.2 Sweden ............. 4.7 11.7 -5.0 16.7 .5 .2 -8.8 -.9 -2.0 Switzerland ........ 5.8 12.7 -2.7 16.6 7.0 -5.3 -14.6 .8 -3.4 United Kingdom ..... 6.9 17.5 -3.7 15.2 1.5 4.9 9.8 6.2 .8 Trade-weighted measures 3,4 All 28 foreign econ. 6.4 12.5 1.0 12.8 5.6 -.4 -1.8 -4.1 5.1 less Mexico, Israel 6.9 13.0 1.7 14.1 6.3 -1.4 -3.8 -5.0 4.1 OECD 5 ............. 5.9 12.0 .1 12.4 5.1 -.5 -2.2 -3.9 5.7 less Mexico, Korea6 6.0 11.8 .7 13.3 5.3 -1.6 -4.4 -3.2 3.4 Europe ............. 6.0 14.5 -4.1 16.7 4.4 -1.2 -5.6 1.1 -1.3 Asian NIEs ......... 11.2 18.9 7.0 18.4 11.3 -.7 -.8 -13.6 7.6 Rates of change based on compound rate method. Dash means data not available. 1 Hong Kong Special Administrative Region of China. 2 1975-98. 3 Data for Germany relate to the former West Germany only. 4 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 preceding these tables. 5 Organization for Economic Cooperation and Development. 6 Mexico joined the OECD in 1994, and Korea joined in 1996. Source: U.S. Department of Labor, Bureau of Labor Statistics, September 2000. Table 4. Hourly compensation costs in national currency for production workers in manufacturing, 29 countries or areas, selected years, 1975-99 Country or area 1975 1980 1985 1990 1995 1996 1997 1998 1999 North America United States .. 6.36 9.87 13.01 14.91 17.19 17.70 18.27 18.66 19.20 Canada ......... 6.06 10.13 14.95 18.62 22.10 22.69 22.81 23.15 23.17 Mexico ......... 18 51 409 4440 9.69 11.68 14.12 16.84 20.24 Asia and Oceania Australia ...... 4.30 7.43 11.70 16.74 20.62 21.56 22.30 23.73 24.61 Hong Kong SAR 1 3.73 7.50 13.46 24.91 37.30 39.74 41.99 42.39 42.20 Israel ......... 1.44 19.42 4.79 17.24 31.73 36.14 41.52 45.67 49.29 Japan .......... 889 1245 1512 1856 2238 2285 2367 2396 2375 Korea .......... 157 583 1074 2623 5620 6611 7471 7545 7987 New Zealand .... 2.60 5.37 8.81 13.71 15.10 15.72 16.30 16.81 17.27 Singapore ...... 2.00 3.20 5.43 6.85 10.39 11.73 12.25 12.99 12.17 Sri Lanka ...... 1.97 3.58 7.58 14.05 24.45 26.49 26.86 30.10 - Taiwan ......... 15.17 36.13 59.60 105.69 157.30 163.48 169.86 176.81 181.69 Europe Austria ........ 78.46 114.78 156.75 201.07 255.24 262.64 268.20 274.97 281.99 Belgium ........ 235.10 382.88 532.39 640.60 785.47 804.27 819.51 842.42 864.11 Denmark ........ 36.00 60.98 86.18 111.65 134.77 139.86 145.60 152.11 160.49 Finland ........ 16.88 30.64 50.56 80.56 105.47 107.55 110.78 115.81 117.75 France ......... 19.34 37.73 67.49 84.38 99.77 101.97 105.05 107.88 110.71 Germany, F. West 15.48 22.23 28.04 35.37 45.22 46.95 48.02 48.44 49.44 Germany, Unified - - - - 43.89 45.54 46.57 47.09 48.06 Greece ......... 55 159 506 1071 2124 2309 2514 2632 - Ireland ........ 1.36 2.89 5.55 7.03 8.49 8.70 8.98 9.40 10.03 Italy .......... 3048 6966 14563 20900 26425 27394 29945 29714 30170 Luxembourg ..... 239 352 464 559 688 698 680 680 - Netherlands .... 16.59 23.93 29.04 32.90 38.69 39.15 40.98 42.01 43.32 Norway ......... 35.29 57.20 89.11 134.26 154.44 161.78 168.10 177.46 186.67 Portugal ....... 40.26 103.28 263.37 538.11 804.35 860.39 943.62 988.13 - Spain .......... 145 422 792 1161 1604 1712 1793 1814 1891 Sweden ......... 29.73 52.91 83.12 123.98 153.14 163.46 169.87 175.11 178.52 Switzerland .... 15.72 18.57 23.71 29.00 34.61 35.03 35.10 35.37 35.45 United Kingdom . 1.52 3.25 4.84 7.12 8.66 9.03 9.44 9.91 10.24 For currency units, see note to table 6. Dash means data not available. 1 Hong Kong Special Administrative Region of China. Source: U.S. Department of Labor, Bureau of Labor Statistics, September 2000. 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, 1975-99 Country or area 1975-99 1975-80 1980-85 1985-90 1990-95 1995-99 1997 1998 1999 North America United States ...... 4.7 9.2 5.7 2.8 2.9 2.8 3.2 2.1 2.9 Canada ............. 5.7 10.8 8.1 4.5 3.5 1.2 .5 1.5 .1 Mexico ............. 34.0 23.2 51.6 61.1 16.9 20.2 20.9 19.3 20.2 Asia and Oceania Australia .......... 7.5 11.6 9.5 7.4 4.3 4.5 3.4 6.4 3.7 Hong Kong SAR 1 .... 10.6 15.0 12.4 13.1 8.4 3.1 5.7 1.0 -.4 Israel ............. 54.5 68.3 200.9 29.2 13.0 11.6 14.9 10.0 7.9 Japan .............. 4.2 7.0 4.0 4.2 3.8 1.5 3.6 1.2 -.9 Korea .............. 17.8 30.0 13.0 19.6 16.5 9.2 13.0 1.0 5.9 New Zealand ........ 8.2 15.6 10.4 9.2 2.0 3.4 3.7 3.1 2.7 Singapore .......... 7.8 9.9 11.2 4.8 8.7 4.0 4.4 6.0 -6.3 Sri Lanka ..........(2)12.6 12.7 16.2 13.1 11.7 - 1.4 12.1 - Taiwan ............. 10.9 19.0 10.5 12.1 8.3 3.7 3.9 4.1 2.8 Europe Austria ............ 5.5 7.9 6.4 5.1 4.9 2.5 2.1 2.5 2.6 Belgium ............ 5.6 10.2 6.8 3.8 4.2 2.4 1.9 2.8 2.6 Denmark ............ 6.4 11.1 7.2 5.3 3.8 4.5 4.1 4.5 5.5 Finland ............ 8.4 12.7 10.5 9.8 5.5 2.8 3.0 4.5 1.7 France ............. 7.5 14.3 12.3 4.6 3.4 2.6 3.0 2.7 2.6 Germany, Former West 5.0 7.5 4.8 4.8 5.0 2.3 2.3 .9 2.1 Germany, Unified ... - - - - - 2.3 2.3 1.1 2.0 Greece .............(2)18.3 23.7 26.1 16.2 14.7 - 8.9 4.7 - Ireland ............ 8.7 16.3 13.9 4.8 3.8 4.3 3.2 4.7 6.7 Italy .............. 10.0 18.0 15.9 7.5 4.8 3.4 9.3 -.8 1.5 Luxembourg ......... (2)4.7 8.1 5.7 3.8 4.2 - -2.6 .0 - Netherlands ........ 4.1 7.6 3.9 2.5 3.3 2.9 4.7 2.5 3.1 Norway ............. 7.2 10.1 9.3 8.5 2.8 4.9 3.9 5.6 5.2 Portugal ...........(2)14.9 20.7 20.6 15.4 8.4 - 9.7 4.7 - Spain .............. 11.3 23.8 13.4 7.9 6.7 4.2 4.7 1.2 4.2 Sweden ............. 7.8 12.2 9.5 8.3 4.3 3.9 3.9 3.1 1.9 Switzerland ........ 3.4 3.4 5.0 4.1 3.6 .6 .2 .8 .2 United Kingdom ..... 8.3 16.4 8.3 8.0 4.0 4.3 4.5 5.0 3.3 Trade-weighted measures 3,4 All 28 foreign econ. 10.0 13.6 14.0 11.7 6.3 4.4 5.2 3.8 2.9 less Mexico, Israel 6.9 12.0 8.0 6.4 5.1 2.6 3.4 2.1 1.0 OECD 5 ............. 9.4 12.8 12.3 11.7 5.9 4.4 5.1 3.7 3.2 less Mexico, Korea6 5.9 10.5 7.3 5.0 3.9 2.1 2.7 1.9 .9 Europe ............. 7.0 12.4 8.7 5.8 4.4 3.1 3.9 2.4 2.7 Asian NIEs ......... 12.2 19.6 11.6 12.9 10.7 5.2 6.8 3.1 1.3 Rates of change based on compound rate method. Dash means data not available. 1 Hong Kong Special Administrative Region of China. 2 1975-98. 3 Data for Germany relate to the former West Germany only. 4 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 preceding these tables. 5 Organization for Economic Cooperation and Development. 6 Mexico joined the OECD in 1994, and Korea joined in 1996. Source: U.S. Department of Labor, Bureau of Labor Statistics, September 2000. Table 6. Exchange rates, 29 countries or areas, selected years, 1975-99 (National currency units per U.S. dollar) Country or area 1975 1980 1985 1990 1995 1996 1997 1998 1999 North America 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 1.373 1.364 1.385 1.484 1.486 Mexico ........... 12.50 22.97 256.9 2813 6.419 7.600 7.918 9.152 9.553 Asia and Oceania Australia ........ .7647 .8772 1.428 1.281 1.350 1.277 1.345 1.590 1.549 Hong Kong SAR 1 .. 4.939 4.976 7.791 7.790 7.736 7.735 7.743 7.747 7.759 Israel ........... .6390 5.124 1.179 2.016 3.011 3.192 3.449 3.800 4.140 Japan ............ 296.7 225.7 238.5 145.0 93.96 108.8 121.1 131.0 113.7 Korea ............ 484.0 607.4 870.0 707.8 771.3 804.5 950.8 1400 1190 New Zealand ...... .8254 1.027 2.010 1.677 1.524 1.454 1.509 1.865 1.889 Singapore ........ 2.371 2.141 2.200 1.813 1.417 1.410 1.486 1.672 1.695 Sri Lanka ........ 7.050 16.53 27.16 40.06 51.25 55.27 59.00 64.59 - Taiwan ........... 38.00 36.02 39.85 26.92 26.50 27.47 28.78 33.55 32.32 Europe Austria .......... 17.40 12.93 20.68 11.33 10.08 10.59 12.21 12.38 12.92 Belgium .......... 36.69 29.20 59.34 33.42 29.47 30.97 35.81 36.31 37.87 Denmark .......... 5.735 5.629 10.60 6.190 5.600 5.800 6.609 6.703 6.990 Finland .......... 3.665 3.719 6.197 3.830 4.376 4.595 5.196 5.347 5.581 France ........... 4.282 4.220 8.980 5.447 4.986 5.116 5.839 5.900 6.157 Germany, F. West 2.455 1.815 2.942 1.617 1.432 1.505 1.735 1.760 1.836 Germany, Unified - - - - 1.432 1.505 1.735 1.760 1.836 Greece ........... 32.29 42.62 138.1 158.5 231.7 240.7 273.1 295.5 - Ireland .......... .4500 .4860 .9379 .6033 .6236 .6252 .6595 .7019 .7393 Italy ............ 652.4 855.1 1909 1198 1629 1543 1704 1737 1818 Luxembourg ....... 36.78 29.24 59.38 33.42 29.48 30.96 35.77 36.30 - Netherlands ...... 2.523 1.985 3.318 1.822 1.604 1.686 1.953 1.984 2.069 Norway ........... 5.214 4.936 8.593 6.254 6.336 6.459 7.086 7.552 7.807 Portugal ......... 25.45 50.05 172.1 142.7 149.9 154.3 175.4 180.3 - Spain ............ 57.39 71.64 170.0 102.0 124.6 126.7 146.5 149.4 156.2 Sweden ........... 4.142 4.229 8.603 5.923 7.141 6.708 7.645 7.952 8.274 Switzerland ...... 2.581 1.675 2.455 1.390 1.181 1.236 1.451 1.451 1.505 United Kingdom ... .4501 .4300 .7708 .5605 .6335 .6407 .6106 .6034 .6184 1 Hong Kong Special Administrative Region of China. Note: National currency units are: United States, dollar; Canada, dollar; Mexico, peso; Australia, dollar; Hong Kong, dollar; Israel, shekel (1975-84), new shekel (1985-99); 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, September 2000. 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, 1975-99 Country or area 1975-99 1975-80 1980-85 1985-90 1990-95 1995-99 1997 1998 1999 North America United States ...... - - - - - - - - - Canada ............. -1.6 -2.7 -3.1 3.2 -3.2 -2.0 -1.5 -6.7 -.1 Mexico ............. -24.2 -11.5 -38.3 -38.0 -15.2 -9.5 -4.0 -13.5 -4.2 Asia and Oceania Australia .......... -2.9 -2.7 -9.3 2.2 -1.0 -3.4 -5.1 -15.4 2.6 Hong Kong SAR 1 .... -1.9 -.1 -8.6 .0 .1 -.1 -.1 -.1 -.2 Israel ............. -30.6 -34.1 -66.3 -10.2 -7.7 -7.7 -7.5 -9.2 -8.2 Japan .............. 4.1 5.6 -1.1 10.5 9.1 -4.7 -10.2 -7.6 15.2 Korea .............. -3.7 -4.4 -6.9 4.2 -1.7 -10.3 -15.4 -32.1 17.6 New Zealand ........ -3.4 -4.3 -12.6 3.7 1.9 -5.2 -3.6 -19.1 -1.3 Singapore .......... 1.4 2.1 -.5 3.9 5.1 -4.4 -5.1 -11.1 -1.4 Sri Lanka ..........(2)-9.2 -15.7 -9.5 -7.5 -4.8 - -6.3 -8.7 - Taiwan ............. .7 1.1 -2.0 8.2 .3 -4.8 -4.6 -14.2 3.8 Europe Austria ............ 1.2 6.1 -9.0 12.8 2.4 -6.0 -13.3 -1.4 -4.2 Belgium ............ -.1 4.7 -13.2 12.2 2.5 -6.1 -13.5 -1.4 -4.1 Denmark ............ -.8 .4 -11.9 11.4 2.0 -5.4 -12.2 -1.4 -4.1 Finland ............ -1.7 -.3 -9.7 10.1 -2.6 -5.9 -11.6 -2.8 -4.2 France ............. -1.5 .3 -14.0 10.5 1.8 -5.1 -12.4 -1.0 -4.2 Germany, Former West 1.2 6.2 -9.2 12.7 2.5 -6.0 -13.3 -1.4 -4.1 Germany, Unified ... - - - - - -6.0 -13.3 -1.4 -4.1 Greece .............(2)-9.2 -5.4 -21.0 -2.7 -7.3 - -11.9 -7.6 - Ireland ............ -2.0 -1.5 -12.3 9.2 -.7 -4.2 -5.2 -6.0 -5.1 Italy .............. -4.2 -5.3 -14.8 9.8 -6.0 -2.7 -9.4 -1.9 -4.5 Luxembourg ......... (2).1 4.7 -13.2 12.2 2.5 - -13.4 -1.5 - Netherlands ........ .8 4.9 -9.8 12.7 2.6 -6.2 -13.7 -1.6 -4.1 Norway ............. -1.7 1.1 -10.5 6.6 -.3 -5.1 -8.8 -6.2 -3.3 Portugal ...........(2)-8.2 -12.7 -21.9 3.8 -1.0 - -12.0 -2.7 - Spain .............. -4.1 -4.3 -15.9 10.8 -3.9 -5.5 -13.5 -1.9 -4.4 Sweden ............. -2.8 -.4 -13.2 7.8 -3.7 -3.6 -12.3 -3.9 -3.9 Switzerland ........ 2.3 9.0 -7.4 12.0 3.3 -5.9 -14.8 .0 -3.6 United Kingdom ..... -1.3 .9 -11.0 6.6 -2.4 .6 4.9 1.2 -2.4 Trade-weighted measures 3,4 All 28 foreign econ. -2.6 -.5 -9.4 2.9 -.4 -4.4 -6.6 -7.6 2.3 less Mexico, Israel .0 1.0 -5.8 7.3 1.2 -3.8 -6.9 -6.9 3.1 OECD 5 ............. -2.6 -.3 -9.6 2.8 -.6 -4.5 -7.0 -7.2 2.5 less Mexico, Korea6 .2 1.3 -6.1 7.9 1.4 -3.5 -6.8 -5.0 2.5 Europe ............. -.9 2.0 -11.7 10.3 .0 -4.0 -9.1 -1.2 -3.8 Asian NIEs ......... -.8 -.5 -4.2 4.9 .7 -5.5 -7.0 -16.3 6.0 Rates of change based on compound rate method. 1 Hong Kong Special Administrative Region of China. 2 1975-98. 3 Data for Germany relate to the former West Germany only. 4 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 preceding these tables. 5 Organization for Economic Cooperation and Development. 6 Mexico joined the OECD in 1994, and Korea joined in 1996. Source: U.S. Department of Labor, Bureau of Labor Statistics, September 2000. 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 of 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 SAR. 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. Hong Kong became a Special Administrative Region (SAR) of China in July 1997. 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. Excludes workers in establishments considered handicraft manufacturers. In 1990, handicraft employment in the former West Germany 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 economic groups are relative importances derived from 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 below. 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 SAR 1 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 3 71.1 Finland .2 Europe 23.4 France 3.2 European Union 22.1 Germany 2 5.4 Asian NIEs 12.2 1 Hong Kong Special Administrative Region of China. 2 Former West Germany. 3 Organization for Economic Cooperation and Development. 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. Europe consists of Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom. The group labeled "Asian NIEs" consists of the four newly industrializing economies of Hong Kong SAR, Korea, Singapore, and Taiwan. The trade weighted measures relate to all the countries or areas covered in the series. Data for Germany relate to the former West Germany. 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. The trade-weighted average rates of change are computed as the trade-weighted arithmetic average of the rates of change for the individual countries or areas; the trade-weighted average hourly compensation costs are computed as the trade- weighted arithmetic average of cost levels for the individual countries or areas. Rates of change derived from the trade-weighted average hourly compensation cost levels need not be the same as the trade-weighted average rates of change. 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 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.