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Because You Asked - CWS 30 October 2.19

CWS 30
Dear Prying,
It depends on where your temporary workforce is located and what skills we are talking about. Hourly labor costs in the European Union rose only 1.6 percent for the 12 month-period up to the second quarter of 2010. This compares with a rise of 2.1 percent for the 12-month period leading up to the first quarter of 2010. So, if anything, wage increases are still cooling off slightly, especially when compared with the peak of 4.1 percent seen in the third quarter of 2008. In fact, the figures are at an all-time low since these data were first recorded at the beginning of 2001.

The two main components of labor costs are wages and salaries and non-wage costs. In the European Union, hourly wages and salaries rose by 1.5 percent and the non-wage component grew by 1.7 percent. Non-wage costs include employers' social contributions plus employment taxes (less subsidies intended to refund part or all of the employer's cost of direct remuneration).

Eurostat, the main statistical authority for the European Union, reports these numbers each quarter and is a useful source of information for much employment-related data (
As I mentioned before, there is some variation among industry sectors; labor costs per hour grew by 1.1 percent in both industry and construction, but grew by 1.8% in services.

Of course, not surprisingly, there is also considerable variation by country. Europe may be an economic union with (mostly) a single currency, but it would be a mistake to ignore local trends. The highest annual increases in hourly labor costs were registered in Bulgaria (8.6 percent) and Romania (5.0 percent), while the highest annual decreases were observed in the Baltic states of Lithuania (7.0 percent), Latvia (5.8 percent) and Estonia (2.6 percent). Having enjoyed strong growth rates between 2000 and 2006, the Baltic states have become increasingly fragile since the global economic crisis. In Latvia, average public sector wage cuts are at 28 percent and unemployment is registering at more than 20 percent.

Among the larger European economies, France is experiencing quite strong increases in hourly labor costs (3.8 percent) but Germany and the United Kingdom are both lagging at 0.7 percent.


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