In 2012 the cost of labour in western German manufacturing was 38.88 euros per employee hour. This figure puts western Germany, with labour costs almost a quarter higher than the average of the advanced industrial countries, in fifth position in the 44-country comparison of labour costs drawn up by the Cologne Institute for Economic Research (IW). The cost handicap for Germany as whole is actually 6 percentage points lower since, at 23.57 euros, eastern German manufacturing has labour costs almost 40 per cent below the level in the west. In the last two years cost discipline has been noticeably weaker in Germany than abroad. Initial data for 2013 show this development continuing. Since the turn of the new millennium, cost growth in Germany has remained significantly below the level of the 1990s. In this longer term perspective, German manufacturing has also performed well internationally. In the European Union only Portugal managed to beat Germany’s average annual increase of just over 2 per cent between 2000 and 2012.