International Comparisons of Hourly Compensation Costs in Manufacturing, 2007
Internet address: http://www.bls.gov/ilc USDL: 09-0304 Technical information: (202) 691-5654 For Release: 10:00 A.M. EDT Media contact: (202) 691-5902 Thursday, March 26, 2009 INTERNATIONAL COMPARISONS OF HOURLY COMPENSATION COSTS IN MANUFACTURING, 2007 The trade-weighted average of hourly compensation costs in U.S. dollars for all employees in manufacturing among 31 foreign economies was 85 percent of the U.S. level in 2007, increasing from 79 percent in 2006, according to data issued by the Bureau of Labor Statistics, U.S. Department of Labor. Compensation costs relative to the United States rose or remained unchanged in all but one of the economies covered in 2007. (See table 1.) This news release contains data for production workers in addition to the series for all employees. (See discussion on page 6, table B, and table 7.) A note on China's labor costs appears on page 6 of this release. In the United States, hourly compensation costs for all employees in manufacturing rose 1.9 percent from the 2006 level to $30.56 in 2007. When measured in national currency terms, trade-weighted average costs increased 3.4 percent in the combined 31 foreign economies in 2007. The value of foreign currencies rose 4.9 percent against the U.S. dollar, resulting in a rise in hourly compensation costs in the foreign economies of 8.5 percent on a U.S. dollar basis. (See chart 1 and table A.) Chart 1. Hourly compensation costs in U.S. dollars for all employees in manufacturing, 1998-2007 PRINTED COPY CONTAINS CHART AT THIS POINT. - 2 - Compensation costs for all employees expressed in U.S. dollars This release provides manufacturing compensation data in terms of both national currencies and U.S. dollars. While data on a national currency basis show underlying wage and benefit trends within each country, frequent and sometimes sharp changes in currency exchange rates can have a large impact on compensation costs in U.S. dollar terms. Data on a U.S. dollar basis are calculated by dividing compensation costs in the national currency by the exchange rate (expressed as national currency units per U.S. dollar). Compensation costs on a U.S. dollar basis are often used as indicators of competitiveness of manufactured goods in world trade and are the focus of the following discussion. Compensation costs for all employees in manufacturing measured in U.S. dollars continued to rise in 2007 in most of the foreign economies- with only one country, Japan, showing a decrease in costs (-1.5 percent). Hourly compensation costs in Taiwan increased only marginally, by 0.6 percent. The rate of compensation increase in a trade-weighted average of the 31 foreign economies was 8.5 percent in 2007, more than double the 3.9 percent historical average for the series. (See table A and table 3.) Chart 2. Indexes of hourly compensation costs in U.S. dollars for all employees in manufacturing, 2007 (U.S.=100) PRINTED COPY CONTAINS CHART AT THIS POINT. Although average costs in the United States continued to be higher than those in most of the economies covered outside of Europe, 13 of the 19 European countries covered had higher hourly compensation costs than the United States, in most cases more than 20 percent higher. Hourly compensation costs in Denmark, Germany, and Norway were especially high when compared to the United States (56 percent higher, 66 percent higher, and 80 percent higher, respectively). The euro appreciated against the U.S. dollar in 2007 by a considerable amount (+9.1 percent), causing double-digit growth in labor costs measured in U.S. dollars in most - 3 - European countries. Trade-weighted average hourly compensation costs in the four Eastern European countries in the series grew 23.0 percent when measured in U.S. dollars due in part to double-digit increases in the exchange rates of their national currencies against the U.S. dollar. Compensation costs in Europe, on average, continued to be almost $9 higher on a per hour basis than in the United States. However, there is great variation in the level of compensation costs among the European countries covered. For example, hourly compensation costs in Europe ranged from $7.69 in Poland to more than seven times that level in Norway ($55.03), the highest labor cost country in these comparisons. (See table 2.) Outside of Europe, only Canada and Australia had compensation costs higher than the United States when measured in U.S. dollars. In 2007, the lowest compensation costs relative to the United States were in Mexico and the Philippines (13 percent and 4 percent of the U.S. level, respectively). In the East Asia ex-Japan economies, the trade-weighted average of hourly compensation costs rose to 43 percent of the U.S. level in 2007, continuing the upward trend seen since 2002, when compensation costs in the region were 32 percent of the U.S. level. Annual percent changes in manufacturing compensation costs measured in U.S. dollars varied considerably in 2007 among the non- European countries. The only economies outside of Europe that did not show double-digit increases in hourly compensation costs were Canada, Mexico, Japan, and Taiwan. As mentioned above, Japan was the only country in these comparisons to show a decrease in hourly compensation costs measured in U.S. dollars due to both the depreciation of the Japanese yen and a relatively unchanged hourly compensation cost in the national currency of that country. This is the third consecutive year that Japan has had negative growth in hourly compensation costs when measured in U.S. dollars. BOX: A note on the measures The hourly compensation costs measures in this news release are based on statistics available to BLS as of January 2009. These measures are prepared specifically for international comparisons of employer labor costs in manufacturing. The methods used, as well as the results, differ somewhat from those of other BLS series on U.S. compensation costs. See the Technical Notes for further information regarding definitions, sources, and computation methods, as well as a description of the trade-weighted measures for economic groups. The data for some countries may be revised in later updates to reflect new or revised data provided to BLS subsequent to this news release. See International Comparisons of Hourly Compensation Costs for All Employees and Production Workers in Manufacturing, 22 Manufacturing Industries at http://www.bls.gov/ilc/flshcaeindnaics.htm for the most recent data. END OF BOX: A note on the measures - 4 - Exchange rates The trade-weighted 4.9 percent increase in the value of the currencies of the 31 foreign economies against the U.S. dollar was the largest increase since 2004 (5.8 percent). From 1996 to 2002, the trade-weighted value of the currencies against the U.S. dollar weakened, on average, while the opposite has been true from 2003 to 2007. The currencies of all economies appreciated against the U.S. dollar in 2007 with the exception of Argentina, Mexico, Japan, and Taiwan. (See table 5.) The movements of the foreign currencies relative to the U.S. dollar in 2007 had an influence on hourly manufacturing compensation costs measured in U.S. dollars. Hourly compensation costs on a national currency basis in the 31 foreign economies rose 3.4 percent. However, when adjusted for the appreciation of the foreign currencies against the U.S. dollar, this increase in costs was magnified to 8.5 percent. In 2007, changes in both hourly compensation costs and exchange rates moved in the same direction for nearly all countries, so that increases (or decreases) in percent changes in hourly compensation costs in national currency were larger when measured in U.S. dollars. One exception, for example, is Argentina, where hourly compensation costs grew 22.7 percent in the national currency and only 21.4 percent when measured in U.S. dollars due to a 1.1 percent depreciation of the Argentine peso to the U.S. dollar. - 5 - Table A. Hourly compensation costs, in national currency and in U.S. dollars, for all employees in manufacturing and exchange rates (U.S. dollars per national currency unit) Percent change, 2006-2007 Hourly Hourly Country compensation, compensation, or area national Exchange U.S. currency Rates dollars Americas United States 1.9 - 1.9 Argentina 22.7 -1.1 21.4 Brazil 6.5 11.7 19.0 Canada 3.2 5.6 9.0 Mexico 5.1 -.2 4.9 Asia and Oceania Australia 2.4 11.4 14.0 Israel 3.6 7.8 11.7 Japan -.3 -1.2 -1.5 Korea, Republic of 7.7 2.7 10.7 New Zealand 5.2 13.4 19.4 Philippines 3.1 9.5 13.0 Singapore 6.3 5.4 12.0 Taiwan 1.6 -1.1 .6 Europe Austria 3.4 9.1 12.8 Belgium 1.9 9.1 11.2 Czech Republic 8.1 10.0 18.9 Denmark 5.7 9.2 15.4 Finland 3.2 9.1 12.6 France 2.7 9.1 12.1 Germany .7 9.1 9.9 Hungary 9.7 13.6 24.7 Ireland 6.2 9.1 15.9 Italy 2.8 9.1 12.2 Netherlands 1.9 9.1 11.2 Norway 6.6 9.5 16.7 Poland 10.4 10.7 22.3 Portugal .5 9.1 9.7 Slovakia 7.9 18.8 28.3 Spain 3.8 9.1 13.3 Sweden 3.6 9.1 13.0 Switzerland 1.5 4.4 6.0 United Kingdom 3.9 8.5 12.8 Trade-weighted measures (1) All 31 foreign economies 3.4 4.9 8.5 OECD (2) 3.2 4.9 8.2 Europe 2.8 8.9 12.0 Euro Area 2.3 9.2 11.7 Eastern Europe 9.3 12.5 23.0 East Asia ex-Japan 5.1 2.7 8.0 (1) For a description of trade-weighted measures and economic groups, see the Technical Notes starting on page 10 of this release. (2) Organization for Economic Cooperation and Development. - 6 - Compensation costs for production workers BLS also compiles hourly compensation data for production workers in manufacturing. Production workers generally include those employees who are engaged in fabricating, assembly, and related activities and typically account for a large part of manufacturing employment. All employees include production workers as well as all others employed full or part time in an establishment. (See the technical notes beginning on page 10 for more detailed definitions of production workers and all employees.) The production worker series includes data for Hong Kong SAR, Sri Lanka, Greece, and Luxembourg, four economies not covered by the all employee series. Argentina and Slovakia are not included in the production worker series as comparable data are not available. BOX: Compensation Costs for China Acknowledging the importance of China as one of the United States' largest trading partners, BLS has undertaken the development of estimates of hourly compensation costs for that country. Data for each year in the 2002-2006 period are shown below; the data for 2002, 2003, and 2004 were issued previously. Compensation costs for China are not directly comparable with the data for other countries found in this release and therefore are presented seperately. A description of the methods used to construct the estimate for 2002 and data comparability issues can be found in Judith Banister's article in the August 2005 Monthly Labor Review (which can be found on the BLS website at http://www.bls.gov/opub/mlr/2005/08/art3full.pdf). In general, the methods used to prepare the hourly compensation costs data for subsequent years are the same as used in the Banister article. (A discussion of the estimates for 2003 and 2004 can be found in the November 2006 Monthly Labor Review, at http://www.bls.gov/opub/mlr/2006/11/art4full.pdf.) A discussion of the 2005 and 2006 data for China will be available in a forthcoming article scheduled for the April 2009 issue of the Review. China: Hourly Compensation Costs for All Employees in Manufacturing, 2002-2006 National U.S. Index (1) Year Currency Dollar (United Basis Basis States (Yuan) (US$) =100) 2002 4.73 0.57 2.1 2003 5.17 0.62 2.2 2004 5.50 0.67 2.3 2005 5.94 0.73 2.4 2006 6.43 0.81 2.7 (1) The index represents hourly compensation costs in China as a percent of hourly compensation costs for all employees in U.S. manufacturing. Previous releases presented hourly compensation costs in China as a percent of hourly compensation costs for U.S. manufacturing production workers. END OF BOX: Compensation Costs for China - 7 - As the final column in Table B shows, hourly compensation costs for production workers are lower than those for all employees in each economy covered by the two series, generally ranging from 10 percent to 25 percent lower than all employee hourly compensation costs. The difference between the two series depends not only upon the higher compensation of non-production workers than production workers, but also on the relative employment levels of the two worker groups; typically the larger the portion of all employees accounted for by production workers, the smaller the gap in compensation costs. In the United States, hourly compensation costs for production workers in manufacturing were $24.59 in 2007, 80 percent of all employee compensation costs. Only 5 of the 29 foreign economies covered by both the production worker and all employee hourly compensation costs series had a larger difference between the compensation levels of the two groups than the United States. Canada and Australia were the only non-European economies to have higher hourly compensation costs than the United States in 2007 for production workers when measured in U.S. dollars ($28.91 and $30.17, respectively). Among the European countries, 14 of 20 economies in the series had higher compensation costs than the United States. Sri Lanka, which is not covered in the all employee series, had the lowest hourly compensation costs for production workers at only 2 percent of the U.S. level. Measuring compensation costs on a production worker basis changes the position of some countries relative to the United States. For example, all employee compensation costs in Singapore were 50 percent of the U.S. level for 2007. However, the gap between all employee and production worker hourly compensation costs is much higher in Singapore than in the United States (46 percent versus 20 percent in 2007), so when compensation costs are measured on a production worker basis, Singapore's costs are only 34 percent of the U.S. level. - 8 - Table B. Hourly Compensation Costs of All Employees and Production Workers in Manufacturing, 2007 Country All Production All Production Production or area Employees Workers Employees Workers Workers (All (US=100) (US=100) (US$) (US$) Employees=100) Americas United States 100 100 30.56 24.59 80 Argentina 26 - 7.98 - - Brazil 23 24 7.13 5.96 84 Canada 104 118 31.91 28.91 91 Mexico 13 12 3.91 2.92 75 Asia and Oceania Australia 114 123 34.75 30.17 87 Hong Kong SAR (1) - 24 - 5.78 - Israel 52 57 15.92 13.91 87 Japan 78 80 23.95 19.75 82 Korea, Republic of 60 65 18.36 16.02 87 New Zealand 63 70 19.19 17.27 90 Philippines 4 4 1.37 1.10 81 Singapore 50 34 15.43 8.35 54 Sri Lanka - 2 - .61 - Taiwan 27 27 8.15 6.58 81 Europe Austria 141 144 43.17 35.33 82 Belgium 127 144 38.75 35.45 92 Czech Republic 32 33 9.67 8.20 85 Denmark 156 172 47.54 42.29 89 Finland 130 139 39.74 34.18 86 France 123 116 37.68 28.57 76 Germany 166 153 50.73 37.66 74 Greece - 73 - 18.03 - Hungary 34 32 10.49 7.91 75 Ireland 117 118 35.62 29.04 82 Italy 105 115 32.19 28.23 88 Luxembourg - 124 - 30.60 - Netherlands 129 139 39.47 34.07 86 Norway 180 197 55.03 48.56 88 Poland 25 25 7.69 6.17 80 Portugal 34 34 10.29 8.27 80 Slovakia 28 - 8.49 - - Spain 80 85 24.55 20.98 85 Sweden 127 147 38.80 36.03 93 Switzerland 125 134 38.34 32.88 86 United Kingdom 120 121 36.66 29.73 81 (1) Hong Kong Special Administrative Region of China. - 9 - Additional data available In addition to the compensation cost measures covered in this news release, supplementary tables are available for comparative levels of hourly compensation costs, hourly direct pay, pay for time worked, and the structure of compensation for all employees in manufacturing for all years from 1996 to 2007, and for production workers in manufacturing for all years from 1975 to 2007. Data also are available for national currency hourly compensation and exchange rates in the supplementary tables (http://www.bls.gov/ilc). BLS also computes comparative measures for 22 component manufacturing industries. Data for the component industries are not included in this release; in general, the data limitations for the component industries are greater than for total manufacturing. Data are available via the Internet (http://www.bls.gov/ilc). This series is updated several times per year as data become available. The data for component industries currently are available on a North American Industry Classification System (NAICS) basis from 1996 to 2006 for all employees and from 1992 to 2006 for production workers. For further information, contact the Division of International Labor Comparisons by phone at 202-691-5654, by e-mail at ilchelp@bls.gov, or by mail at Bureau of Labor Statistics, 2 Massachusetts Avenue, NE, Room 2150, Washington, DC 20212. Information in this release will be made available to sensory impaired individuals upon request. Voice phone: 202-691-5200; TDD message referral phone: 1-800-877-8339. This material is in the public domain and, with appropriate credit, may be reproduced without permission. It may be translated into foreign languages without permission, with a separate credit for the translation.
- Technical Notes
- Table 1. All Employees: Indexes of hourly compensation costs (United States = 100)
- Table 2. All Employees: Hourly compensation costs in U.S. dollars
- Table 3. All Employees: Annual percent change in hourly compensation costs in U.S. dollars
- Table 4. All Employees: Annual percent change in hourly compensation costs in national currency
- Table 5. All Employees: Annual percent change in exchange rates
- Table 6. All Employees: Hourly compensation costs in national currency units and exchange rates
- Table 7. Production Workers: Indexes of hourly compensation costs (United States = 100)
- Table 8. Production Workers: Hourly compensation costs in U.S. dollars
- Table 9. Production Workers: Annual percent change in hourly compensation costs in U.S. dollars
- Table 10. Production Workers: Annual percent change in hourly compensation costs in national currency
- Table 11. Production Workers: Annual percent change in exchange rates
- Table 12. Production Workers: Hourly compensation costs in national currency units and exchange rates
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Last Modified Date: March 26, 2009