An International Comparison of Productivity and Unit Labour Costs in Manufacturing Industry

In 2013 unit labour costs in German manufacturing industry increased by more than 3 per cent to a level 12 per cent higher than in the pre-crisis year of 2007. In the same year manufacturing in other countries was on average 15 per cent less productive than in Ger-many. However, foreign labour costs were also 24 per cent lower, leaving Germany with industrial unit labour costs at an outstandingly high level. The foreign competition has an overall advantage of 10 per cent, due not least to the approximately 20 per cent lower unit labour costs in the USA. Even European Union Member States had unit labour costs 6 per cent under the German level, while the cost advantage for the other countries in the Euro-zone is only 4 per cent. Over the long term, unit labour costs can be seen to have developed less favourably in Germany than abroad, increasing between 1991 and 2013 by an overall 12 per cent, while beyond the German borders they eased slightly in both national-currency and euro terms. An analysis of unit labour costs therefore provides no evidence of irre-sponsibly low wages in Germany.