Germany‘s Disadvantage Has Become Smaller

In 2007, hourly labor costs in the West German industry amounted to 34.29 euro, 29 percent above the EU average excluding the new member countries. However, Germany‘s cost disadvantage has decreased considerably since 1995 compared to the other EU-15 countries, after a strong increase in the first half of the nineties.

From 2000 to 2007, Germany exercised more cost discipline than the other EU-members. The gap between labor costs in West and East Germany has remained 40 percent in the last few years. The reason is that over the seven years up to 2007 the growth rate of labor costs in East Germany was only 0.2 percentage points above the West German rate.