An International Comparison of Industrial Labour Costs

In 2015 labour costs in western German manufacturing industry were 40.90 euros per employee-hour, putting the region sixth out of a total of 44 countries in the IW labour cost comparison. Its labour costs are almost a quarter higher than the average for highly industrialised nations. At 26.26 euros, however, labour costs in eastern Germany are 36 per cent below the level in the west, which reduces the cost disadvantage for Germany as a whole to a sixth. Taking the long view, Germany’s position has changed little compared either with established industrialised countries worldwide or with the Eurozone. Germany’s competitiveness in this respect declined in the 1990s, but after the turn of the new millennium the country enjoyed below-average growth in labour costs. Although in the last few years the cost of labour in Germany has risen significantly faster than in the Eurozone as a whole, the recent weakness of the euro has improved German labour cost competiveness in relation to other countries.