In 2008, average hourly labor costs in the West German industry amounted to 35.22 Euro. This was 31 percent above the EU average excluding the new member countries. Only in Norway and Belgium labor costs were still higher. In spite of this, strict cost discipline has reduced Germany’s cost disadvantage considerably since 1995. The gap between labor costs in West and East Germany hovers at 40 percent. The reason is that between 2000 and 2008 the growth rate of labor costs in East Germany was only 0.1 percentage points above the West German rate.