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December, 1988, Vol. 111, No. 12

International comparisons of productivity
and unit labor cost trends in manufacturing

Arthur Neef and James Thomas

The manufacturing labor productivity increase in the United States in 1987—about 3½ percent—was more rapid than the gains in 7 of 11 other countries studies. Norway and the United Kingdom had the largest increases (about 7 percent) followed by Japan and Sweden (around 4 percent). Gains recorded in the other countries ranged from about 3 percent in Belgium, France, and Italy; 1 to 2½ percent in Canada, Denmark, and Germany, and less than 1 percent in the Netherlands.¹

Unit labor costs, which reflect the interplay of productivity and hourly compensation costs, fell by slightly more than 1 percent in the United States in 1987. Belgian unit labor costs decreased at a similar rate and Japan had a larger decline of around 2½ percent for the year. Taiwan, newly added to the unit labor cost comparisons, had a decline of about 2 percent. Unit labor costs were basically unchanged in France; increased less than ½ percent in the United Kingdom; rose between 2 and 3 percent in Canada, Germany, Italy, the Netherlands, Sweden, and South Korea (which was added to the unit labor cost comparisons last year); and increased more than 9 percent in Denmark and Norway.

The U.S. competitive position was aided for the second consecutive year by exchange rate developments, which resulted in 1987 appreciations of between 5 and 22 percent in foreign currency values relative to the U.S. dollar. Measured in U.S. dollar terms, unit labor costs rose between a low of 7½ percent in Canada and high of around 30 percent in Denmark

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Footnote

1 The data relate to all employed persons, including the self-employed, in the United States and Canada, and to wage and salary employees in the other industrial countries, Korea, and Taiwan. Hours refer to hours paid in the United States and to hours worked in the other countries.
   The comparisons are limited to trend measures only because reliable level comparisons of manufacturing productivity and unit labor costs are not available. See Arthur Neef, "International trends in productivity and unit labor costs in manufacturing," Monthly Labor Review, December 1986, p. 17, footnote 2.
   This article includes some revisions which have not yet been incorporated in "Current Labor Statistics," table 47, this issue.

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