An International Comparison of Industrial Productivity and Unit Labour Costs

In 2012 unit labour costs in German industry increased by more than 4 per cent, making them 10 per cent higher than in 2007, the last year before the crisis. In 2012 foreign industry was 15 per cent less productive on average. Abroad, however, labour costs are also 19 per cent lower, giving Germany a high level of industrial unit labour costs. Overall, foreign countries have an advantage of 5 per cent lower unit labour costs – not least because they are almost one fifth lower in the USA. By contrast, unit labour costs in the member states of the European Union are almost 2 per cent higher, and over 3 per cent higher in the Eurozone. A long-term perspective shows that unit labour costs in both German and foreign industry are at present approximately as high as in the early 1990s. Neither the long- and short-term dynamics nor the current level of unit labour costs provide evidence of wage restraint having made German industry unduly competitive on price.