HOURLY COMPENSATION COSTS FOR PRODUCTION WORKERS IN MANUFACTURING 33 COUNTRIES OR AREAS 22 MANUFACTURING INDUSTRIES, 1992-2005 General Notes: The measures for total manufacturing were published in news release USDL 06-2020, "International Comparisons of Hourly Compensation Costs for Production Workers in Manufacturing, 2005," November 30, 2006. For some countries, data for total manufacturing have been revised in these tables to reflect revisions subsequent to the news release. 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. The measures in these tables are shown according to the North American Industry Classification System (NAICS) for most NAICS 3-digit level industries; selected additional industry combinations are shown as well. These data as well as data on a U.S. 1987 Standard Industrial Classification (SIC) basis for selected years, 1975-2002, are available at https://www.bls.gov/fls. Note: Hourly compensation costs in national currency for countries that are members of the Euro area (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 1992-1998, and in euros for 1999-2005. More information about national currency units and exchange rates used in these tables is on page 6. Notations: .. 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, December 14, 2007. Table of Contents Technical Notes....................................................... 1 Exchange Rates........................................................ 5 Industry Tables: Manufacturing....................................................... 7 Food, Beverage, and Tobacco Product Manufacturing ................. 10 Textiles and Textile Products Manufacturing ....................... 13 Apparel Manufacturing ............................................. 16 Textiles and Apparel Manufacturing ................................ 19 Leather and Allied Products Manufacturing ......................... 22 Textiles, Apparel and Allied Products Manufacturing ............... 25 Wood Product Manufacturing ........................................ 28 Paper Manufacturing ............................................... 31 Petroleum and Coal Products Manufacturing ......................... 34 Chemical Manufacturing ............................................ 37 Plastics and Rubber Products Manufacturing ........................ 40 Nonmetallic Mineral Product Manufacturing ......................... 43 Primary Metal Manufacturing ....................................... 46 Fabricated Metal Product Manufacturing ............................ 49 Primary and Fabricated Metal Products Manufacturing ............... 52 Machinery Manufacturing ........................................... 55 Computer and Electronic Product Manufacturing ..................... 58 Electrical Equipment, Appliance, and Component Manufacturing ...... 61 Transportation Equipment Manufacturing ............................ 64 Motor Vehicle and Parts Manufacturing ............................. 67 Aerospace Product and Parts Manufacturing ......................... 70 Furniture and Related Product Manufacturing ....................... 73 Technical Notes PAGE 1 Introduction The accompanying tables present international comparisons of hourly compensation costs for production workers in component 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. Differences in industrial classifications among countries can limit the comparability of some sub-manufacturing industry level measures. In addition, data at the sub-manufacturing level are subject to greater limitations than at the all manufacturing level: data for some items of compensation may not be available for all years and may be estimated using trends in similar industries or in all manufacturing; data for some industries may be based on small sample sizes and therefore may fluctuate more from year to year than data at the all manufacturing level; and industry-specific events or events at large firms can have a large effect on data for a particular industry. The data for some countries have been revised since the previous version of these tables to incorporate updated data from statistical agencies. Industrial Classifications The measures in these tables are shown according to the North American Industry Classification System (NAICS) for most NAICS 3-digit level industries; selected additional industry combinations are shown as well. For each industry, only countries for which data are available are shown. The concordance between NAICS (which is used in the United States, Canada, and Mexico) and the industry classifications used in other countries is only approximate. Because the requisite data are not available, it is not possible to adjust for all the differences between NAICS and other classification systems. The extent to which these differences affect the comparability of the data varies by industry and by country. In general, most of these differences are minor and do not significantly affect the comparisons; where differences may be more important, they are noted on the appropriate industry table. With the exceptions of Japan and Taiwan, most of the economies in this report that do not use NAICS use classification systems that are closely based on the International Standard Industrial Classification of all Economic Activities, Revision 3 (ISIC Rev. 3). In addition, the classification systems used by European Union countries are linked to the European Union’s official classification system (NACE Rev. 1), which is in turn closely linked to ISIC Rev. 3. Because of this, some exceptions in industry classification noted in the tables may apply to several countries, including most European Union countries. In such cases, a general footnote to the table that states "for NACE countries" is included. When the general footnote also applies to some non-European Union countries, those countries are included in the footnote as well. PAGE 2 For the purposes of these tables, "NACE countries" refers to the following countries: Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Luxembourg, Netherlands, Norway, Poland, Portugal, Spain, Sweden, and the United Kingdom. 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 and (b) other direct pay. Pay for time worked includes basic time and piece rates plus overtime premiums, shift differentials, other premiums and bonuses paid regularly each pay period, and cost-of-living adjustments. Other direct pay includes pay for time not worked (vacation, 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 and (d) other labor taxes. Social insurance expenditures include employer expenditures for 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. Other labor taxes includes 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. The BLS definition of hourly compensation costs is not the same as the International Labor Office (ILO) definition of total labor costs. Hourly compensation costs do not include all items of labor 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 many 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, power plants); 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 non-survey 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 labor bulletins, and statistical series on indirect labor costs. For other countries, adjustment PAGE 3 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. While every attempt is undertaken to make the measures among countries as comparable as possible, there are important differences in worker coverage, industrial classification systems, changes over time in survey coverage, frequency and timing of surveys, and data availability of compensation components that limit the comparability of the measures. Where possible, BLS makes adjustments to the measures to make them as comparable as possible. In other cases, BLS may estimate some components of compensation using appropriate indicators or trends. Some of the more prevalent differences that affect the measures are listed below: Additional compensation data relate to all employees: For several countries, data used to calculate the ratio of additional compensation to earnings relate to all employees (both production and salary workers) rather than production workers only. Based on BLS research, the difference in additional compensation ratios between production workers and all employees is typically small in most countries, in part because production workers normally comprise a large portion of all employees in most industries, and in part because the ratio of legally required social insurance costs are typically the same for both production workers and salary workers. Countries for which the ratios of additional compensation relate to all employees are: Brazil, Mexico, Japan, Republic of Korea, New Zealand, Singapore, Taiwan, Belgium, Czech Republic, Denmark, France, Greece, Hungary, Ireland, Italy, Netherlands, Poland, Portugal, Spain, Sweden, and the United Kingdom. Additional compensation ratios in Australia relate to production and non-production workers other than those in managerial, executive, professional, and higher supervisory positions. Hours estimates are used to calculate hourly compensation costs: For some countries, hourly earnings data are not published. For these countries, BLS estimates hourly earnings by dividing average earnings for a time period by the number of average hours worked during that time period. Hourly earnings for Brazil and Mexico are estimated by dividing total annual earnings for all production workers by estimates of total annual hours worked by production workers. Series over time may be linked due to survey changes or changes in industrial classification: In many cases, data series used to estimate the hourly compensation figures are not available for the entire time period. Where appropriate, BLS attempts to link data series in order to construct estimates of compensation over the entire time period of the measures. Data for all manufacturing or more aggregated industries may be used to estimate some components of compensation: Some data needed for the hourly compensation measures may not be available at the sub-manufacturing level, or may only be available for groupings of industries. For example, trends in bonuses and sick pay are not available at the sub-manufacturing level for some countries. Where appropriate, BLS uses the manufacturing or more aggregated industry data to estimate levels or trends in component industries. Data Limitations Because compensation is partly estimated, as described in the section on methods, 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 employer labor costs; they do not provide intercountry comparisons of the purchasing power of PAGE 4 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 those financed through employment or payroll taxes. EXCHANGE RATES: NATIONAL CURRENCY UNITS PER U.S. DOLLAR PAGE 5 -------------------------------------------------------------------------------------------------------------------------- COUNTRY OR AREA 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 -------------------------------------------------------------------------------------------------------------------------- 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 3.075 2.926 2.435 Canada.................. 1.209 1.290 1.366 1.373 1.364 1.385 1.484 1.486 1.486 1.549 1.570 1.401 1.302 1.212 Mexico.................. 3095 3.116 3.375 6.419 7.600 7.918 9.152 9.553 9.459 9.337 9.663 10.79 11.29 10.89 Australia............... 1.360 1.471 1.367 1.350 1.277 1.345 1.590 1.549 1.720 1.935 1.839 1.533 1.358 1.311 Hong Kong SAR........... 7.740 7.736 7.729 7.736 7.735 7.743 7.747 7.759 7.792 7.800 7.800 7.788 7.789 7.778 Israel.................. 2.459 2.830 3.011 3.011 3.192 3.449 3.800 4.140 4.077 4.206 4.738 4.554 4.482 4.488 Japan................... 126.8 111.1 102.2 93.96 108.8 121.1 131.0 113.7 107.8 121.6 125.2 115.9 108.2 110.1 Korea, Republic of...... 780.6 802.7 803.5 771.3 804.5 950.8 1400 1190 1131 1292 1250 1192 1145 1024 New Zealand............. 1.859 1.847 1.685 1.524 1.454 1.509 1.865 1.889 2.189 2.380 2.153 1.718 1.505 1.419 Singapore............... 1.629 1.616 1.527 1.417 1.410 1.486 1.672 1.695 1.725 1.793 1.791 1.743 1.690 1.664 Sri Lanka............... 43.83 48.32 49.42 51.25 55.27 59.00 64.45 70.64 77.01 89.38 95.66 96.54 101.2 .. Taiwan.................. 25.16 26.42 26.47 26.50 27.47 28.78 33.55 32.32 31.26 33.82 34.54 34.41 33.37 32.13 Austria................. 10.99 11.64 11.41 10.08 10.59 12.21 12.38 .9387 1.083 1.117 1.058 .8833 .8040 .8033 Belgium................. 32.15 34.58 33.43 29.47 30.97 35.81 36.31 .9387 1.083 1.117 1.058 .8833 .8040 .8033 Czech Republic.......... .. .. .. 26.54 27.15 31.70 32.28 34.57 38.60 38.04 32.74 28.21 25.70 23.96 Denmark................. 6.037 6.486 6.356 5.600 5.800 6.609 6.703 6.990 8.095 8.332 7.886 6.577 5.989 5.995 Finland................. 4.487 5.725 5.234 4.376 4.595 5.196 5.347 .9387 1.083 1.117 1.058 .8833 .8040 .8033 France.................. 5.294 5.667 5.546 4.986 5.116 5.839 5.900 .9387 1.083 1.117 1.058 .8833 .8040 .8033 Germany................. .. 1.655 1.622 1.432 1.505 1.735 1.760 .9387 1.083 1.117 1.058 .8833 .8040 .8033 Greece.................. 190.6 229.3 242.6 231.7 240.7 273.1 295.5 .. .. .. .. .. .. .. Hungary................. .. .. 105.2 125.7 152.6 186.8 214.4 237.1 282.2 286.5 257.9 224.3 202.7 199.6 Ireland................. .5868 .6827 .6680 .6236 .6252 .6595 .7019 .9387 1.083 1.117 1.058 .8833 .8040 .8033 Italy................... 1232 1573 1611 1629 1543 1704 1737 .9387 1.083 1.117 1.058 .8833 .8040 .8033 Luxembourg.............. 32.15 34.60 33.46 29.48 30.96 35.77 36.30 .9387 1.083 1.117 1.058 .8833 .8040 .8033 Netherlands............. 1.759 1.858 1.819 1.604 1.686 1.953 1.984 .9387 1.083 1.117 1.058 .8833 .8040 .8033 Norway.................. 6.214 7.098 7.055 6.336 6.459 7.086 7.552 7.807 8.813 8.996 7.984 7.080 6.740 6.441 Poland.................. .. .. .. .. .. 3.280 3.480 3.970 4.350 4.094 4.080 3.889 3.658 3.236 Portugal................ 135.1 161.1 165.9 149.9 154.3 175.4 180.3 .9387 1.083 1.117 1.058 .8833 .8040 .8033 Spain................... 102.4 127.5 133.9 124.6 126.7 146.5 149.4 .9387 1.083 1.117 1.058 .8833 .8040 .8033 Sweden.................. 5.826 7.796 7.716 7.141 6.708 7.645 7.952 8.274 9.174 10.34 9.720 8.080 7.348 7.471 Switzerland............. 1.406 1.478 1.367 1.181 1.236 1.451 1.451 1.505 1.690 1.689 1.557 1.345 1.243 1.246 United Kingdom.......... .5662 .6660 .6528 .6335 .6407 .6106 .6034 .6184 .6598 .6946 .6660 .6117 .5456 .5490 -------------------------------------------------------------------------------------------------------------------------- See notes on following page Exchange Rate Notes PAGE 6 Notes on Exchange Rates Hong Kong SAR relates to the Special Administrative Region of Hong Kong. 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 United States, dollar; Brazil, real; Canada, dollar; Mexico, peso; Australia, dollar; Hong Kong, dollar; Israel, new shekel; Japan, yen; Republic of Korea, won; New Zealand, dollar; Singapore, dollar; Sri Lanka, rupee; Taiwan, dollar; Austria, schilling (1992-1998), euro (1999-2005); Belgium, franc (1992-1998), euro (1999-2005); Czech Republic, koruna; Denmark, krone; Finland, markkaa (1992-1998), euro (1999-2005); France, franc (1992-1998), euro (1999-2005); Germany, mark (1992-1998), euro (1999-2005); Greece, drachma (1992-2000), euro (2001-2005); Hungary, forint; Ireland, pound (1992-1998), euro (1999-2005); Italy, lira (1992-1998), euro (1999-2005); Luxembourg, franc (1992-1998), euro (1999-2005); Netherlands, guilder (1992-1998), euro (1999-2005); Norway, kroner; Poland, zloty; Portugal, escudo (1992-1998), euro (1999-2005); Spain, peseta (1992-1998), euro (1999-2005); Sweden, krona; Switzerland, franc; United Kingdom, pound.