International Comparison of Labor Costs in Manufacturing

In 2010, average hourly labor costs in the West German industry amounted to 36.28 euro. This was 25 percent above the average of the countries compared excluding the new member countries of the EU and other emerging countries. Only in some small countries – Norway, Switzerland, Belgium, Sweden and Denmark – labor costs were still higher. In spite of this, favorable exchange rates in the second half of the 1990s and improved cost discipline in the new millennium have reduced Germany’s cost disadvantage considerably since 1995, especially in comparison with the other EU countries. The gap between labor costs in West and East Germany hovers at 40 percent because the growth rate of labor costs in East Germany was only 0.2 percentage points higher than the West German rate over the past decade.