For release 10:00 a.m. (EST) Wednesday, December 19, 2012    USDL-12-2460

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INTERNATIONAL COMPARISONS OF HOURLY COMPENSATION COSTS
IN MANUFACTURING, 2011

In comparison with 33 foreign countries covered, U.S. manufacturing hourly 
compensation costs in 2011 ranked approximately in the middle at $35.53, the 
U.S. Bureau of Labor Statistics reported today (see chart 1). In addition to 
Australia, Canada, Italy, and Japan, countries with higher hourly compensation 
costs were primarily in northern and western Europe. Countries with lower 
hourly compensation costs were primarily in southern and eastern Europe, Asia, 
and Latin America.

Between 1997 and 2011, compensation costs in manufacturing as a percent of 
U.S. costs (see table 1) increased or remained the same in all economies 
compared except Taiwan, improving U.S. cost competitiveness.

Chart 1. Hourly compensation costs in manufacturing, U.S. dollars, 2011

PDF CONTAINS CHART AT THIS POINT.


Changes in a country's compensation costs in U.S. dollars are roughly 
equivalent to the change in compensation costs in a country's national 
currency plus the change in the value of the country's currency relative 
to the U.S. dollar. This relationship is illustrated in chart 2, where 
the bars in the right panel for each country can be summed to equal the 
bars in the left panel. In 2011, most countries had increases in hourly 
compensation costs in national currency combined with larger appreciations 
in national currency relative to the U.S. dollar, resulting in increases 
in U.S. dollar-denominated hourly compensation costs. Only Greece experienced
a decrease in U.S. dollar hourly compensation costs.

Chart 2. Annual percent change in hourly compensation costs in 
         manufacturing and exchange rates, 2010-2011

PDF CONTAINS CHART AT THIS POINT.


Chart 3. Benefit components of hourly compensation costs as a percent 
         of total compensation, 2011

PDF CONTAINS CHART AT THIS POINT.


Chart 3 shows the benefit components of manufacturing employers' compensation 
costs as a percent of total costs. (See table 3 for data in U.S. dollars.) 
Economies are ordered based on social insurance expenditures as a percent of 
total compensation. In countries with the highest ratio of social insurance 
costs, such as Sweden, Belgium, and Brazil, social insurance makes up 
approximately one-third of total compensation costs. In the United States, 
social insurance costs account for about 24 percent of total compensation, 
while in the Asian countries social insurance is less than 20 percent. 
Directly-paid benefits comprise pay for leave time, bonuses, and pay in kind. 
The percentage of compensation that is directly-paid benefits tends to be 
higher in many European countries (due in large part to leave pay) and in 
Japan (where seasonal bonuses are a large portion of costs). Directly-paid 
benefits are a relatively smaller portion of costs in countries such as the 
United States, Australia, and Canada.

The total benefits portion of compensation costs can be seen by combining 
social insurance with directly-paid benefits. Total benefits surpass 40 
percent in 15 countries. In contrast, the ratio of benefit costs in the United 
States is about 33 percent. 

Find additional data. 
Detailed time series tables of compensation costs in U.S. dollars, national 
currencies, and annual indexes for 1996-2011 are available at 
www.bls.gov/web/ichcc.supp.toc.htm.

Compensation costs for sub-manufacturing industries are also available at 
www.bls.gov/ilc/ichcccountry.htm and www.bls.gov/ilc/ichccindustry.htm. Data 
tables are available by country and industry.

Go to www.bls.gov/ilc/#compensation for additional information.

Analyze trends with interactive dashboard. 
The time series data tables in Excel include an interactive dashboard that 
displays charts from a custom selection of variables, countries, and time 
periods at www.bls.gov/ilc/dashboards.htm.

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BOX: China and India

BLS has developed estimates of hourly compensation costs for employees in the 
Chinese and Indian manufacturing sectors.(1)(2)  Due to various data gaps and 
methodological issues, compensation costs for China and India are not directly 
comparable to each other or with the data for other countries found in this 
release, and therefore are presented separately. Data are available for China 
through 2008 and for India through 2007.(3)

For China, BLS approximates average hourly compensation costs in manufacturing 
by filling important data gaps for hours worked per year and for benefit 
components of labor compensation. Further, the concepts and coverage of 
Chinese statistics on manufacturing employment and wages often do not follow 
international standards and can be difficult to understand. Largely because of 
these data gaps and challenges, BLS estimates for China cannot be considered 
as robust as the manufacturing statistics for the other countries in this news 
release.

For India, BLS estimates of compensation costs refer to formal manufacturing 
only, rather than to total manufacturing in the country. Unorganized sector 
manufacturing workers account for approximately 80 percent of total 
manufacturing employment in India and earn substantially less than their 
formal sector counterparts. For this reason, employers' average compensation 
costs in formal manufacturing overstate average compensation costs for Indian 
manufacturing as a whole.(4)

Hourly compensation costs in manufacturing for China and India,
       in U.S. dollars, 2003-2008

PDF CONTAINS CHART AT THIS POINT.


(1) For the most recent BLS work on China, see Judith Banister and George 
Cook, "China's employment and compensation costs in manufacturing through 
2008," Monthly Labor Review, March 2011, pp. 39-52, at 
www.bls.gov/opub/mlr/2011/03/art4full.pdf.

(2) For the most recent BLS work on India, see Jessica R. Sincavage, "Labor 
costs in India's organized manufacturing sector," Monthly Labor Review, May 
2010, pp. 3-22, at www.bls.gov/opub/mlr/2010/05/art1full.pdf.

(3) For a discussion of the limitations associated with comparing compensation 
costs for China and India, see Sincavage, "Labor costs in India's organized 
manufacturing sector."

(4) For additional information on employment and compensation costs in China 
and India, see www.bls.gov/ilc/china.htm and www.bls.gov/ilc/india.htm.


END OF BOX: China and India