Foreign Labor Statistics

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Description of Methods

The emphasis of the current program is on the development of international comparisons of productivity and unit labor costs; hourly compensation costs of manufacturing production workers; the labor force, employment, and unemployment; gross domestic product per capita and per employed person; and consumer prices and other measures. The measures compiled relate primarily to the major industrial countries, but other countries or areas of importance to U.S. foreign trade are included in some of the measures. Most of the series are prepared on an annual average basis; comparative figures on unemployment and consumer prices are prepared on a monthly and quarterly basis, as well.

Productivity and unit labor costs

Comparative trends in manufacturing labor productivity (output per hour), hourly compensation costs, unit labor costs (labor compensation per unit of output), and related measures are compiled in the form of annual time series for the United States, Canada, Australia, Japan, Korea, Taiwan, Belgium, Denmark, France, Germany (both unified and former West), Italy, the Netherlands, Norway, Sweden, and the United Kingdom.

The comparisons are limited to trend measures only; reliable comparisons of levels of manufacturing productivity and unit labor costs are not available. BLS does not prepare comparisons of levels of manufacturing productivity and unit labor costs because of data problems in comparing the levels of manufacturing output among countries. To compare manufacturing output across countries, a common unit of measurement is needed, such as the U.S. dollar. Market exchange rates are not suitable as a basis for comparing output levels. What are needed are purchasing power parities (PPPs), that is, the number of foreign currency units required to buy goods and services equivalent to what can be bought with one unit of U.S. currency. Reasonably reliable PPPs are available for total gross domestic product (GDP), but not for component industries, such as manufacturing.

The trend measures are expressed in index form and as percent changes at annual rates. For most countries, the series begin with 1950. (Currently, the U.S. labor productivity and unit labor cost indexes are only available from 1977 on a consistent basis.) Indexes of unit labor costs for foreign countries are calculated on a U.S. dollar basis as well as in national currency terms to take account of relative changes in currency exchange rates. In addition to the individual country measures, the Bureau constructs relative trade-weighted measures of unit labor costs, that is, the U.S. measure relative to a trade-weighted average for the other economies.

Hourly compensation costs

Measures of total compensation per hour worked for production workers in all manufacturing and in component manufacturing industries or industry groups are computed for 32 countries or areas. The series are annual and begin with 1975. For all manufacturing, measures of hourly direct pay and pay for time worked are also computed for many countries. The measures are computed in national currency and converted into U.S. dollars at prevailing market currency exchange rates. For total manufacturing, trade-weighted average measures of hourly compensation in U.S. dollars are computed for all foreign economies and for selected regional or economic groups.

Hourly compensation converted into U.S. dollars at market exchange rates is an appropriate measure for comparing levels of employer labor costs. It does not indicate relative living standards of workers or the purchasing power of their income. Prices of goods and services vary greatly among countries, and market exchange rates are not reliable indicators of relative differences in prices. Purchasing power parities (PPPs) must be used for meaningful international comparisons of the relative purchasing power of worker incomes.

Labor force, employment, and unemployment

Comparative measures of the labor force, employment, unemployment, and related indicators are prepared regularly for the United States, Canada, Japan, Australia, France, Germany (former West Germany through 1990 and unified after 1990), Italy, the Netherlands, Sweden, and the United Kingdom. For most of the countries, the series begin with 1960. Current monthly and/or quarterly unemployment rates, approximating U.S. concepts, are prepared monthly for nine of the ten countries; the other measures are calculated annually. Some measures are calculated by sex or by age.

Real gross domestic product per capita and per employed person

Comparative levels and trends in gross domestic product (GDP) per capita, and GDP per employed person are calculated in the form of annual time series for the United States, Canada, Japan, Korea, Australia, and 10 European countries, generally beginning with 1960. The GDP level comparisons are based on purchasing power parities (PPPs), that is, the number of foreign currency units required to buy goods and services in a foreign country equivalent to what can be bought with one dollar in the U.S. A common practice has been to base such comparisons on market currency exchange rates. However, market exchange rates seldom reflect the relative purchasing powers of different currencies.

Consumer prices

Consumer price indexes (CPIs) and percent changes are compiled regularly for the United States and 15 foreign countries. Annual data are available from 1950 for most countries covered. Current monthly and quarterly percent changes in the CPI are prepared monthly for 9 of the 16 countries. The data compiled are from the national consumer price indexes as published by each country. They are not adjusted for comparability, except to convert the indexes to a common base year.

Foreign Labor Statistics