HOURLY COMPENSATION COSTS FOR PRODUCTION WORKERS IN MANUFACTURING 30 COUNTRIES OR AREAS 40 MANUFACTURING INDUSTRIES, SELECTED YEARS, 1975-2002 General Notes: The measures for total manufacturing were published in news release USDL 03-507, "International Comparisons of Hourly Compensation Costs for Production Workers in Manufacturing, 2002," September 26, 2003. The measures for individual manufacturing industries are less reliable than the total manufacturing data because there are more technical limitations associated with them. For more information about limitations, see the Technical Notes and Country Notes. The measures in these tables are shown according to the U.S. 1987 Standard Industrial Classification (SIC) for every U.S. two-digit level industry and selected three-digit industries. Data are also shown for two-digit level International Standard Industrial Classification (ISIC) Rev. 2 industry groups. Currently, data are unavailable for the latest years for several countries in which there have been recent changes in wage surveys or in industrial classification. Additional revisions to this database will be made on an SIC basis. In the future, this database will be converted to a NAICS (North American Industry Classification System) basis. Note: Hourly compensation costs in national currency for countries that are members of the European Monetary Union (Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Portugal, and Spain) are expressed in the national currency used in each country prior to the implementation of the euro for 1975-1998, and in euros for 1999-2002. More information about national currency units and exchange rates used in these tables is on page 136. .. Data not available. # Break in series. Data are not comparable with data from the previous year. Prepared By: U.S. Department of Labor, Bureau of Labor Statistics, Office of Productivity And Technology, May 18, 2004. Table of Contents Page Technical Notes.................................................. 1 Revised Measures................................................. 4 Industry Tables: All Manufacturing.............................................. 5 Food, Beverages, and Tobacco................................... 8 Textile, Apparel, and Leather Products........................ 11 Textile Mill Products....................................... 14 Apparel and Other Textile Products.......................... 17 Leather and Leather Products................................ 20 Leather Footwear.......................................... 23 Lumber, Wood Products, and Furniture.......................... 26 Lumber and Wood Products.................................... 29 Furniture and Fixtures...................................... 32 Paper, Printing, and Publishing............................... 35 Paper and Allied Products................................... 38 Printing and Publishing..................................... 41 Chemicals and Petroleum, Rubber and Plastic Products.......... 44 Chemicals and Allied Products............................... 47 Petroleum and Coal Products................................. 50 Petroleum Refining........................................ 53 Rubber and Plastics Products................................ 56 Rubber Products........................................... 59 Tires and Inner Tubes..................................... 62 Plastics Products........................................... 65 Stone, Clay, and Glass Products............................... 68 Glass and Glassware......................................... 71 Pottery and Related Products................................ 74 Primary Metal Manufacturing................................... 77 Iron and Steel.............................................. 80 Iron and Steel Including Foundries.......................... 83 Nonferrous Metals........................................... 86 Nonferrous Metals Including Foundries....................... 89 Fabricated Metal Products, Machinery, and Equipment........... 92 Fabricated Metal Products................................... 95 Industrial and Commercial Machinery and Equipment........... 98 Electronic and Other Electrical Equipment................ 101 Electronic Equipment Manufacturing..................... 104 Household Audio and Video Equipment.................. 107 Electronic Components and Accessories................ 110 Transportation Equipment................................... 113 Motor Vehicles and Equipment............................. 116 Aircraft, Space Vehicles, and Parts...................... 119 Ship and Boat Building and Repairing..................... 122 Instruments and Related Products........................... 125 Miscellaneous Manufacturing.................................. 128 Country Notes.................................................. 131 Exchange Rates................................................. 135 Technical Notes PAGE 1 Introduction The accompanying tables present international comparisons of hourly compensation costs for production workers in manufacturing industries in selected countries or areas. The total compensation measures are prepared by the Bureau of Labor Statistics in order to assess international differences in employer labor costs. Comparisons based on the more readily available average earnings statistics published by many countries can be very misleading. National definitions of average earnings differ considerably; average earnings do not include all items of labor compensation; and the omitted items of compensation frequently represent a large proportion of total compensation. The compensation measures are computed in national currency units and are converted into U.S. dollars at prevailing commercial market currency exchange rates. The foreign currency exchange rates used in the calculations are the average daily exchange rates for the reference period. They are appropriate measures for comparing levels of employer labor costs. They do not indicate relative living standards of workers or the purchasing power of their income. Prices of goods and services vary greatly among countries, and commercial market exchange rates are not reliable indicators of relative differences in prices. Technical limitations to the measures at the two-digit and especially at the three-digit industry level are more pronounced than at the all manufacturing level. Approximations of trends in items of compensation not included in earnings (using data for more aggregate industries) are used for some industries at the two-digit and three-digit level. In addition, differences in industrial classifications among countries can limit the comparability of some industry level measures. This is particularly true at this time of transition in industrial classification systems. The degree to which technical limitations hamper comparability varies by country. Industrial Classifications The measures in these tables are shown according to the U.S. 1987 Standard Industrial Classification (SIC) for every U.S. two-digit level industry and selected three-digit level industries. Data are also shown for two-digit level International Standard Industrial Classification (ISIC) Rev. 2 industry groups. Definitions Hourly compensation costs include (1) hourly direct pay and (2) employer social insurance expenditures and other labor taxes. Hourly direct pay includes all payments made directly to the worker, before payroll deductions of any kind, consisting of (a) pay for time worked (basic time and piece rates plus overtime premiums, shift differentials, other premiums and bonuses paid regularly each pay period, and cost-of-living adjustments) and (b) other direct pay (pay for time not worked (vacations, holidays, and other leave, except sick leave), seasonal or irregular bonuses and other special payments, selected social allowances, and the cost of payments in kind). Social insurance expenditures and other labor taxes include (c) employer expenditures for legally required insurance programs and contractual and private benefit plans (retirement and disability pensions, health insurance, income guarantee insurance and sick leave, life and accident insurance, occupational injury and illness compensation, unemployment insurance, and family allowances) and, for some countries, (d) other labor taxes (other taxes on payrolls or employment (or reductions to reflect subsidies), even if they do not finance programs that directly benefit workers, because such taxes are regarded as labor costs). For consistency, compensation is measured on an hours-worked basis for every country. The BLS definition of hourly compensation costs is not the same as the International Labour Office (ILO) definition of total labor costs. Hourly compensation costs do not include all items of labor PAGE 2 costs. The costs of recruitment, employee training, and plant facilities and services--such as cafeterias and medical clinics--are not included because data are not available for most countries. The labor costs not included account for no more than 4 percent of total labor costs in any country for which the data are available. Production workers generally include those employees who are engaged in fabricating, assembly, and related activities; material handling, warehousing, and shipping; maintenance and repair; janitorial and guard services; auxiliary production (for example, powerplants); and other services closely related to the above activities. Working supervisors are generally included; apprentices and other trainees are generally excluded. Methods Total compensation is computed by adjusting each country's average earnings series for items of direct pay not included in earnings and for employer expenditures for legally required insurance, contractual and private benefit plans, and other labor taxes. For the United States and other countries that measure earnings on an hours-paid basis, the figures are also adjusted in order to approximate compensation per hour worked. Earnings statistics are obtained from surveys of employment, hours, and earnings or from surveys or censuses of manufactures. Adjustment factors are obtained from periodic labor cost surveys and interpolated or projected to nonsurvey years on the basis of other information for most countries. The information used includes tabulations of employer social security contribution rates provided by the International Social Security Association, information on contractual and legislated fringe benefit changes from ILO and national labor bulletins, and statistical series on indirect labor costs. For other countries, adjustment factors are obtained from surveys or censuses of manufactures or from reports on fringe-benefit systems and social security. For the United States, the adjustment factors are special calculations for international comparisons based on data from several surveys. The statistics are also adjusted, where necessary, to account for major differences in worker coverage; differences in industrial classification systems; and changes over time in survey coverage, sample benchmarks, or frequency of surveys. Nevertheless, some differences in industrial coverage remain and, with the exception of the United States, Canada, and several other countries, the data exclude very small establishments (less than 5 employees in Japan and less than 10 employees in most European and some other countries). For the United States, the methods used, as well as the results, differ somewhat from those for other BLS series on U.S. compensation costs. Exceptions to the standard coverage and definitions and special estimation procedures are explained in the country notes following the tables. Hourly compensation costs are converted to U.S. dollars using the average daily exchange rate for the reference period. The exchange rates used are prevailing commercial market exchange rates as published by either the U.S. Federal Reserve Board or the International Monetary Fund. Data Limitations Because compensation is partly estimated, the statistics should not be considered as precise measures of comparative compensation costs. In addition, the figures are subject to revision as the results of new labor cost surveys or other data used to estimate total compensation become available. The hourly compensation figures in U.S. dollars shown in the tables provide comparative measures of PAGE 3 employer labor costs; they do not provide intercountry comparisons of the purchasing power of worker incomes. Prices of goods and services vary greatly among countries, and the commercial market exchange rates used to compare employer labor costs do not reliably indicate relative differences in prices. Purchasing power parities--that is, the number of foreign currency units required to buy goods and services equivalent to what can be purchased with one unit of U.S. or other base-country currency--must be used for meaningful international comparisons of the relative purchasing power of worker incomes. Total compensation converted to U.S. dollars at purchasing power parities would provide one measure for comparing relative real levels of labor income. It should be noted, however, that total compensation includes employer payments to funds for the benefit of workers in addition to payments made directly to workers. (For a few countries, the compensation measures also include taxes or subsidies on payrolls or employment even if they do not finance programs which directly benefit workers.) Payments into these funds provide either deferred income (for example, payments to retirement funds), a type of insurance (for example, payments to unemployment or health benefit funds), or current social benefits (for example, family allowances), and the relationship between employer payments and current or future worker benefits is indirect. On the other hand, excluding these payments would understate the total value of income derived from work because they substitute for worker savings or self-insurance to cover retirement, medical costs, etc. Total compensation, because it takes account of employer payments into funds for the benefit of workers, is a broader income concept than either total direct earnings or direct spendable earnings. An even broader concept would take account of all social benefits available to workers, including those financed out of general revenues as well as Revised Measures PAGE 4 Revisions were made to the data included in the prior update of these tables (August 2003) for many of the countries or areas covered. In this update, revisions of particular note were made for the following countries: For Canada, data beginning in 1999 were revised to include new data on supplementary labor income. For Japan, data beginning in 1991 were revised to include new production worker estimates based on data from the wage structure survey. In addition, data beginning in 1999 were revised with the incorporation of data from the 2002 labor cost survey. For Singapore, data beginning in 1997 were revised to incorporate new data on benefits of employees. For Germany, data beginning in 1991 were revised to incorporate new data on pay for time not worked. Country Notes PAGE 131 Note Adjustment factors are used to include items of compensation not included in a country's published earnings. Brazil Hourly earnings are estimated from annual earnings in each industry by dividing by the annual hours worked in all manufacturing. Adjustment factors relate to all employees. Canada Data for selected industries are not available from 2000 because of a change in industrial classification. For ship and boat building, the adjustment factor relates to shipbuilding only. Mexico Adjustment factors relate to all employees. Australia Earnings and compensation relate to production workers and non-production workers other than those in managerial, executive, professional, and higher supervisory positions. Adjustment factors relate to all manufacturing for every industry. Hong Kong Total manufacturing is the average of selected manufacturing industries. The industries covered accounted for about 70 percent of all persons employed in manufacturing in 1988. Compensation excludes overtime pay. Israel Hourly earnings are estimated from average daily earnings by assuming eight hours of work per day. For years since 1978, daily earnings for production workers are estimated on the basis of the trend in daily earnings for all employees. Japan There are breaks in series at 1990 and 1991 for the following Japanese 3-digit industries: glass and glassware, pottery and related products, basic iron and steel, electronic equipment, motor vehicles and equipment, and ship and boat building. Adjustment factors relate to all employees. Adjustment factors for the appropriate Japanese 2-digit industries are used for the following 3-digit industries: glass and glassware, pottery and related products, basic iron and steel, electronic equipment, motor vehicles and equipment, and ship and boat building. For 1975-85, the adjustment factors for plastics products and miscellaneous manufacturing refer to miscellaneous (including plastics products) manufacturing, and the adjustment factors for rubber and plastics products refer to rubber and miscellaneous (including plastics products) manufacturing. Korea Data for some component industries are not available from 1993 because of an industrial PAGE 132 classification change in 1993. For remaining industries, breaks in series occurred at 1993 and 1994. Hourly earnings for production workers for 1975-84 are estimated on the basis of average hourly earnings for all employees adjusted for the relative level of production worker monthly earnings to all employee earnings; they are linked to new earnings data for production workers at 1985. From 1999, hourly earnings are estimated using the trend in hourly earnings for all employees. Special estimates derived from annual survey of manufactures data are made for the following industries: basic iron and steel, electronic equipment, motor vehicles and equipment, and ship and boat building. Adjustment factors relate to all employees, and are based on labor cost surveys for 1982-2002. Adjustment factors for the appropriate Korean 3-digit industries were used for the following 4-digit industries: basic iron and steel, electronic equipment, motor vehicles and equipment, and ship and boat building. New Zealand Hourly earnings are the mid-point of an estimated production worker earnings range (80-90 percent of all employee earnings). Singapore Hourly compensation costs are estimated for the years since 1985 using the trend in average weekly earnings and benefit costs for production workers or (for 1985-86) average compensation per employee from the national accounts. Taiwan Adjustment factors relate to all employees, and are based on labor cost surveys for 1984-94 and 1996. Adjustment factors for the appropriate Taiwanese 2-digit industries are used for the following 3-digit industries: lumber and wood products, furniture and fixtures; paper and allied products, printing and publishing; rubber tires, glass and glassware, pottery and related products; iron and steel, nonferrous metals; electronic equipment; motor vehicles and equipment, aircraft and parts, and ship and boat building. Austria Excludes workers in establishments considered handicraft manufacturers. (All of printing and publishing and miscellaneous manufacturing establishments are classified in handicrafts.) In 1986, handicraft employment was about 35 percent of all manufacturing employment. Average compensation per employee was about 10 percent lower in manufacturing including handicrafts than in manufacturing excluding handicrafts. Belgium For the lumber and wood products industry and the wood furniture and fixtures industry, the adjustment factors relate to lumber, wood products, and wood furniture. Changes in all employee additional compensation are used to estimate 1992 and 1996 benchmark additional compensation adjustment factors for production workers. Denmark Changes in all employee additional compensation are used to estimate 1992 and 1996 benchmark PAGE 133 additional compensation adjustment factors for production workers. Finland There are breaks in series in 1994 and in 1995 for selected industries for which adjustment or link cannot be made (see industry footnotes). These breaks are due to the implementation of new earnings and labor cost surveys. For comparability with other countries, compensation excludes some obligatory training and plant facilities costs; these costs would add 1.6 percent to average hourly compensation costs in 1994. For the lumber and wood products industry and the wood furniture and fixtures industry, the adjustment factors relate to lumber, wood products, and wood furniture through 1994. France Data for selected industries are not available from 1995 because of a change in industrial classification. Adjustment factors relate to all employees. For the lumber and wood products industry and the wood furniture and fixtures industry, the adjustment factors relate to lumber, wood products, and wood furniture. Germany Excludes workers in establishments considered handicraft manufacturers. In 1990, handicraft employment was about 25 percent of all manufacturing employment in the former West Germany. Average hourly earnings of production workers were about 3 percent lower in manufacturing including handicrafts than in manufacturing excluding handicrafts. Greece For the lumber and wood products industry and the furniture and fixtures industry, the adjustment factors relate to lumber, wood products, and furniture. Changes in all employee additional compensation are used to estimate 1992 and 1996 benchmark additional compensation adjustment factors for production workers. Ireland Earnings refer to September for 1975-1976. Adjustment factors relate to all employees. Compensation excludes redundancy pay. Italy Both hourly earnings and additional compensation adjustment factors are obtained from periodic labor cost surveys and interpolated or projected to nonsurvey years using the trends in contractual wage rates and in benefit entitlements and costs. Changes in all employee additional compensation are used to estimate 1992 benchmark additional compensation adjustment factors for production workers. Hourly earnings benchmarks are not available for 1992. Netherlands Adjustment factors relate to all employees. PAGE 134 Norway For comparability with other countries, compensation excludes some obligatory training and plant facilities costs; these costs would add 2.2 percent to average hourly compensation costs in 1994. The adjustment factor for all primary metal, metal products, machinery, and equipment manufacturing is used for the following component industries: primary metals; metal products, machinery, and equipment; and ship and boat building and repairing. Portugal Adjustment factors relate to all employees. Spain Data for selected industries are not available from 1996 because of a change in industrial classification; for remaining industries, there are breaks in series at 1996. Hourly earnings for all manufacturing in 1975-1976 are estimated on the basis of 1977 manufacturing earnings and the general earnings trend for the total private non-farm economy. Adjustment factors relate to all employees. For electronic equipment, the adjustment factor relates to electronic and other electrical equipment. Sweden Data for selected industries are not available from 1994 because of an industrial classification change; for remaining industries, there are breaks in series at 1994. United Kingdom Data for selected industries are not available from 1996 because of an industrial classification change; data for remaining industries are linked to previous series at 1995. Adjustment factors relate to all employees. EXCHANGE RATES: NATIONAL CURRENCY UNITS PER U.S. DOLLAR PAGE 135 -------------------------------------------------------------------------------------------------------------------------- COUNTRY OR AREA 1975 1980 1985 1990 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 -------------------------------------------------------------------------------------------------------------------------- United States........... 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 Brazil.................. .. .. .. .. .. .. .. 1.005 1.078 1.161 1.821 1.830 2.353 2.921 Canada.................. 1.017 1.169 1.366 1.167 1.290 1.366 1.373 1.364 1.385 1.484 1.486 1.486 1.549 1.570 Mexico.................. 12.50 22.97 256.9 2813 3.116 3.375 6.419 7.600 7.918 9.152 9.553 9.459 9.337 9.663 Australia............... .7647 .8772 1.428 1.281 1.471 1.367 1.350 1.277 1.345 1.590 1.549 1.720 1.935 1.839 Hong Kong SAR........... 4.939 4.976 7.791 7.790 7.736 7.729 7.736 7.735 7.743 7.747 7.759 7.792 7.800 7.800 Israel.................. .6390 5.124 1.179 2.016 2.830 3.011 3.011 3.192 3.449 3.800 4.140 4.077 4.206 4.738 Japan................... 296.7 225.7 238.5 145.0 111.1 102.2 93.96 108.8 121.1 131.0 113.7 107.8 121.6 125.2 Korea................... 484.0 607.4 870.0 707.8 802.7 803.5 771.3 804.5 950.8 1400 1190 1131 1292 1250 New Zealand............. .8254 1.027 2.010 1.677 1.847 1.685 1.524 1.454 1.509 1.865 1.889 2.189 2.380 2.153 Singapore............... 2.371 2.141 2.200 1.813 1.616 1.527 1.417 1.410 1.486 1.672 1.695 1.725 1.793 1.791 Sri Lanka............... 7.050 16.53 27.16 40.06 48.32 49.42 51.25 55.27 59.00 64.45 70.64 77.01 89.38 95.66 Taiwan.................. 38.00 36.02 39.85 26.92 26.42 26.47 26.50 27.47 28.78 33.55 32.32 31.26 33.82 34.54 Austria................. 17.40 12.93 20.68 11.33 11.64 11.41 10.08 10.59 12.21 12.38 .9387 1.083 1.117 1.058 Belgium................. 36.69 29.20 59.34 33.42 34.58 33.43 29.47 30.97 35.81 36.31 .9387 1.083 1.117 1.058 Denmark................. 5.735 5.629 10.60 6.190 6.486 6.356 5.600 5.800 6.609 6.703 6.990 8.095 8.332 7.886 Finland................. 3.665 3.719 6.197 3.830 5.725 5.234 4.376 4.595 5.196 5.347 .9387 1.083 1.117 1.058 France.................. 4.282 4.220 8.980 5.447 5.667 5.546 4.986 5.116 5.839 5.900 .9387 1.083 1.117 1.058 Germany, Former West.... 2.455 1.815 2.942 1.617 1.655 1.622 1.432 1.505 1.735 1.760 .9387 1.083 1.117 1.058 Germany, Unified........ .. .. .. .. 1.655 1.622 1.432 1.505 1.735 1.760 .9387 1.083 1.117 1.058 Greece.................. 32.29 42.62 138.1 158.5 229.3 242.6 231.7 240.7 273.1 295.5 .. .. .. .. Ireland................. .4500 .4860 .9379 .6033 .6827 .6680 .6236 .6252 .6595 .7019 .9387 1.083 1.117 1.058 Italy................... 652.4 855.1 1909 1198 1573 1611 1629 1543 1704 1737 .9387 1.083 1.117 1.058 Luxembourg.............. 36.78 29.24 59.38 33.42 34.60 33.46 29.48 30.96 35.77 36.30 .9387 1.083 1.117 1.058 Netherlands............. 2.523 1.985 3.318 1.822 1.858 1.819 1.604 1.686 1.953 1.984 .9387 1.083 1.117 1.058 Norway.................. 5.214 4.936 8.593 6.254 7.098 7.055 6.336 6.459 7.086 7.552 7.807 8.813 8.996 7.984 Portugal................ 25.45 50.05 172.1 142.7 161.1 165.9 149.9 154.3 175.4 180.3 .9387 1.083 1.117 1.058 Spain................... 57.39 71.64 170.0 102.0 127.5 133.9 124.6 126.7 146.5 149.4 .9387 1.083 1.117 1.058 Sweden.................. 4.142 4.229 8.603 5.923 7.796 7.716 7.141 6.708 7.645 7.952 8.274 9.174 10.34 9.720 Switzerland............. 2.581 1.675 2.455 1.390 1.478 1.367 1.181 1.236 1.451 1.451 1.505 1.690 1.689 1.557 United Kingdom.......... .4501 .4300 .7708 .5605 .6660 .6528 .6335 .6407 .6106 .6034 .6184 .6598 .6946 .6660 -------------------------------------------------------------------------------------------------------------------------- See notes on following page Exchange Rate Notes PAGE 136 Notes on Exchange Rates Hong Kong SAR relates to the Special Administrative Region of Hong Kong. The exchange rates for Germany are used to convert hourly compensation costs into U.S. dollars for both the former West Germany and for unified Germany. On January 1, 1999, several European countries joined the European Monetary Union (EMU): Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain. Greece joined on January 1, 2001. Currencies of EMU members were established at fixed conversion rates to the euro, the official currency of the EMU. Exchange rates between the national currencies of EMU countries and the U.S. dollar are no longer reported; only the exchange rate between the euro and the U.S. dollar is available. National currency units are Unites States, dollar; Brazil, real; Canada, dollar; Mexico, peso; Austrailia, dollar; Hong Kong, dollar; Israel, shekel (1975-84), new shekel (1985-2002); Japan, yen; Korea, won; New Zeland, dollar; Singapore, dollar; Sri Lanka, rupee; Taiwan, dollar; Austria, schilling (1975-1998), euro (1999-2002); Belgium, franc (1975-1998), euro (1999-2002); Denmark, krone; Finland, markkaa (1975-1998), euro (1999-2002); Germany, mark (1975-1998), euro (1999-2002); Greece, drachma; Ireland, pound (1975-1998), euro (1999-2002); Italy, lira (1975-1998), euro (1999-2002); Luxembourg, franc (1975-1998), euro (1999-2002); Netherlands, guilder (1975-1998), euro (1999-2002); Norway, kroner; Portugal, escudo (1975-1998), euro (1999-2002); Spain, peseta (1975-1998), euro (1999-2002); Sweden, krona; Switzerland, franc; United Kingdom, pound.