In 2013 labour costs in western German manufacturing were running at 38.77 euros per employee hour. This puts western Germany in sixth place among the 44 countries covered by the IW Labour Costs Comparison with labour costs more than a quarter higher than the average for fully industrialised countries. For Germany as a whole the cost disadvantage falls to a fifth since, at 23.93 euros, the east German level is 38 per cent lower than that in the west. Although in the last three years labour cost growth in Germany has sometimes been above average, the country has done well overall since the turn of the millennium – in contrast to its performance in the 1990s. Among EU Member States Germany’s annual av-erage increase of some 2 per cent between 2000 and 2013 was undercut only by Portugal. Greece has recently attracted attention with its high labour cost discipline. Labour costs there have dropped for three years in a row.
In 2021, German unit labour costs were an average of 13 per cent higher than in the 27 countries in our comparison and 8 per cent higher than in other countries in the Eurozone.
The demands of digitalisation and climate protection are creating an additional need for fundamental renewal of Germany’s capital stock.