International Comparisons of Hourly Compensation Costs in Manufacturing News Release


For release 10:00 a.m. (EST) Wednesday, December 21, 2011      USDL-11-1778

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INTERNATIONAL COMPARISONS OF HOURLY COMPENSATION COSTS
IN MANUFACTURING, 2010

Manufacturing hourly compensation costs in the United States in 2010 were
lower than in several northern and western European countries, Australia,
and Canada, but higher than in the United Kingdom and 19 countries in
southern and eastern Europe, Asia, and South America, the U.S. Bureau of
Labor Statistics reported today (see chart 1). U.S. hourly compensation
costs rose about 2 percent from the previous year to $34.74 (see table 2).

From 1997 to 2010, U.S. compensation cost competitiveness in manufacturing
improved relative to all but five countries covered: Brazil, Germany, Japan,
the Philippines, and Taiwan (see table 1).

Chart 1. Hourly compensation costs in manufacturing, U.S. dollars, 2010

PDF CONTAINS CHART AT THIS POINT.


Changes in a country’s compensation costs in U.S. dollars are roughly
equivalent to the change in compensation costs in a country’s national
currency plus the change in the value of the country’s currency relative
to the U.S. dollar. This relationship is illustrated in chart 2, where
the bars in the right panel for each country can be summed to equal the
bars in the left panel. In 2010, many European countries had modest
increases or declines in hourly compensation costs in national currency
combined with larger depreciations in national currency relative to the
U.S. dollar, resulting in declines in U.S. dollar-denominated hourly
compensation costs. In contrast, all countries outside Europe saw
increases in U.S. dollar hourly compensation costs much higher than in
the United States.

Chart 2. Annual percent change in hourly compensation costs in
         manufacturing and exchange rates, 2009-2010

PDF CONTAINS CHART AT THIS POINT.


Chart 3. Benefit components of hourly compensation costs as a percent
         of total compensation, 2010

PDF CONTAINS CHART AT THIS POINT.


Chart 3 shows the benefit components of manufacturing employers’
compensation costs as a percent of total costs. (See table 3 for data
in U.S. dollars.) Economies are ordered based on social insurance
expenditures as a percent of total compensation. In countries with the
highest ratio of social insurance costs, such as Sweden, Belgium, and
Brazil, social insurance makes up approximately one-third of total
compensation costs. In the United States, social insurance costs account
for about 24 percent of total compensation, while in the Asian countries
social insurance is less than 20 percent.

Directly-paid benefits comprise pay for leave time, bonuses, and pay in
kind. The percentage of compensation that is directly-paid benefits tends
to be higher in many European countries (due in large part to leave pay)
and in Japan (where seasonal bonuses are a large portion of costs).
Directly-paid benefits are a relatively smaller portion of costs in
countries such as the United States, Australia, and Canada. 

The total benefits portion of compensation costs can be seen by
combining social insurance with directly-paid benefits. Total benefits
surpass 40 percent in 15 countries. In contrast, the ratio of benefit
costs in the United States is about 33 percent. 


Analyze trends with interactive dashboard. 
The Excel version of the data tables includes an interactive dashboard
that displays charts from a custom selection of variables, countries,
and time periods at www.bls.gov/ilc/#compensation.

Find additional data. 
Detailed time series tables of compensation costs in U.S. dollars,
national currencies, and annual indexes for 1996-2010 are available at
www.bls.gov/ilc/#compensation.

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BOX: China and India


BLS has developed estimates of hourly compensation costs for employees
in the Chinese and Indian manufacturing sectors.(1)(2) Due to various
data gaps and methodological issues, compensation costs for China and
India are not directly comparable to each other or with the data for
other countries found in this release, and therefore are presented
separately.3 Data are available for China through 2008 and for India
through 2007.(3)

For China, BLS approximates average hourly compensation costs in
manufacturing by filling important data gaps for hours worked per year
and for benefit components of labor compensation. Further, the concepts
and coverage of Chinese statistics on manufacturing employment and wages
often do not follow international standards and can be difficult to
understand. Largely because of these data gaps and challenges, BLS
estimates for China cannot be considered as robust as the manufacturing
statistics for the other countries in this news release. 

For India, BLS estimates of compensation costs refer to organized (or
formal) manufacturing only, rather than to total manufacturing in the
country. Unorganized sector manufacturing workers account for
approximately 80 percent of total manufacturing employment in India
and earn substantially less than their organized sector counterparts.
For this reason, employers’ average compensation costs in organized
manufacturing overstate average compensation costs for Indian
manufacturing as a whole.(4)

Hourly compensation costs in manufacturing for China and India,
       in U.S. dollars, 2003-2008

PDF CONTAINS CHART AT THIS POINT.

(1) For the most recent BLS work on China, see Judith Banister and
George Cook, "China’s employment and compensation costs in manufacturing
through 2008," Monthly Labor Review, March 2011, pp. 39-52, at
www.bls.gov/opub/mlr/2011/03/art4full.pdf.

(2) For the most recent BLS work on India, see Jessica R. Sincavage,
"Labor costs in India’s organized manufacturing sector," Monthly Labor
Review, May 2010, pp. 3-22, at www.bls.gov/opub/mlr/2010/05/art1full.pdf.

(3) For a discussion of the limitations associated with comparing
compensation costs for China and India, see Sincavage, "Labor costs in
India’s organized manufacturing sector."

(4) For additional information on employment and compensation costs in
China and India, see www.bls.gov/ilc/china.htm and www.bls.gov/ilc/india.htm.


END OF BOX: China and India




Table 1. Hourly compensation costs in manufacturing, U.S. dollars,
         and as a percent of costs in the United States

                            Hourly Compensation Costs
                       in U.S. dollars           U.S.=100
                      1997 (1)    2010       1997 (1)   2010
                      
Norway                26.38      57.53       114        166
Switzerland           30.00      53.20       130        153
Belgium               29.12      50.70       126        146
Denmark               24.09      45.48       105        131
Sweden                24.97      43.81       108        126
Germany               29.15      43.76       126        126
Finland               22.35      42.30        97        122
Austria               25.52      41.07       111        118
Netherlands           23.40      40.92       102        118
Australia             19.10      40.60        83        117
France                24.88      40.55       108        117
Ireland               17.03      36.30        74        104
Canada                18.84      35.67        82        103
United States         23.05      34.74       100        100
Italy                 19.67      33.41        85         96
Japan                 22.28      31.99        97         92
United Kingdom        18.50      29.44        80         85
Spain                 13.92      26.60        60         77
Greece                11.56      22.19        50         64
New Zealand           12.37      20.57        54         59
Israel                12.32      20.12        53         58
Singapore             12.15      19.10        53         55
Korea, Republic of     9.36      16.62        41         48
Argentina              7.43      12.66        32         36
Portugal               6.38      11.72        28         34
Czech Republic         3.24      11.50        14         33
Slovakia               2.86      10.72        12         31
Brazil                 7.07      10.08        31         29
Estonia                 NA        9.47        NA         27
Hungary                3.05       8.40        13         24
Taiwan                 7.04       8.36        31         24
Poland                 3.13       8.01        14         23
Mexico                 3.47       6.23        15         18
Philippines            1.28       1.90         6          5

NA=data not available.

(1) With the exception of Estonia, 1997 is the first year
    data for all countries are available to BLS.





Table 2. Average annual percent change in hourly compensation
         costs in manufacturing and exchange rates


                              1997-2010                   2009-2010
                   National   Exchange    U.S.   National  Exchange    U.S.  
                   currency     rate     dollar  currency    rate     dollar      
                    change     change    change   change    change    change 
                                 (1)      (2)                (1)       (2) 

Argentina            15.7       -9.9      4.2      31.0     -4.8      24.8
Brazil                6.7       -3.7      2.8       9.2     13.5      23.9
Australia             4.3        1.6      6.0       2.1     16.1      18.5
Canada                2.7        2.3      5.0       5.7     10.8      17.1
New Zealand           3.3        0.7      4.0       2.7     13.5      16.5
Korea, Republic of    6.1       -1.5      4.5       3.8     10.3      14.5
Philippines           6.5       -3.2      3.1       4.8      5.7      10.8
Mexico                8.4       -3.5      4.6       2.3      6.9       9.4
Israel                4.5       -0.6      3.8       3.9      5.2       9.3
Singapore             2.9        0.7      3.5       2.0      6.7       8.9
Norway                4.9        1.2      6.2       4.3      4.1       8.6
Sweden                3.9        0.5      4.4       1.3      6.2       7.7
Taiwan                2.0       -0.7      1.3       2.6      4.8       7.5
Poland                6.8        0.6      7.5       3.3      3.5       6.9
Japan                 0.3        2.5      2.8      -1.3      6.7       5.4
United States         3.2        0.0      3.2       1.9      0.0       1.9
Switzerland           1.9        2.6      4.5      -2.3      4.1       1.7
Czech Republic        6.0        4.0     10.2       1.1     -0.2       0.9
United Kingdom        4.1       -0.4      3.6       1.2     -1.3      -0.1
Greece                4.7        0.5      5.1       3.4     -4.8      -1.6
Italy                 2.9        1.2      4.2       2.8     -4.8      -2.2
Denmark               3.7        1.2      5.0       2.7     -4.8      -2.2
Hungary               9.0       -0.8      8.1       0.0     -2.7      -2.7
France                2.5        1.3      3.8       1.8     -4.8      -3.1
Portugal              3.6        1.2      4.8       1.6     -4.8      -3.4
Belgium               3.1        1.3      4.4       1.3     -4.8      -3.6
Finland               3.9        1.1      5.0       1.2     -4.8      -3.7
Netherlands           3.1        1.2      4.4       1.2     -4.8      -3.7
Spain                 3.9        1.2      5.1       0.6     -4.8      -4.3
Ireland               5.1        0.8      6.0       0.3     -4.8      -4.6
Slovakia              7.4        3.1     10.7       0.2     -4.8      -4.6
Germany               1.9        1.3      3.2       0.2     -4.8      -4.6
Estonia                NA         NA       NA      -0.9     -4.7      -5.5
Austria               2.4        1.3      3.7      -1.9     -4.8      -6.6

NA=data not available.

(1) Exchange rates are value of foreign currency relative to the U.S. dollar.
(2) U.S. dollar changes are approximately equal to national currency changes
    plus exchange rate changes for each country.













Table 3. Components of hourly compensation costs in manufacturing,
         U.S. dollars, 2010


                                  Hourly Compensation Costs
                                                Direct Pay
                                  Social   Directly-   Pay for
                                  Insur-     Paid       Time
                       Total       ance    Benefits    Worked
                                   (1)        (2)        (3)

Norway                 57.53       9.88          47.65(4)
Switzerland            53.20       8.22      10.69      34.29
Belgium                50.70      16.39      10.29      24.01
Denmark                45.48       3.07       7.62      34.78
Sweden                 43.81      14.47       4.56      24.78
Germany                43.76       9.52       8.43      25.80
Finland                42.30       9.18       8.06      25.05
Austria                41.07      10.56       8.84      21.67
Netherlands            40.92       8.68       8.74      23.49
Australia              40.60       8.20       3.85      28.55
France                 40.55      12.95       6.55      21.06
Ireland                36.30       4.37       5.63      26.29
Canada                 35.67       8.03       3.42      24.23
United States          34.74       8.47       2.95      23.32
Italy                  33.41       9.57       4.88      18.96
Japan                  31.99       5.71       7.97      18.32
United Kingdom         29.44       4.39       3.89      21.16
Spain                  26.60       6.89       5.17      14.53
Greece                 22.19       5.01       4.17      13.01
New Zealand            20.57       0.66       2.62      17.29
Israel                 20.12       3.36       1.48      15.28
Singapore              19.10       3.08       3.34      12.68
Korea, Republic of     16.62       3.27          13.36(4)
Argentina              12.66       2.20       1.77       8.68
Portugal               11.72       2.30       2.26       7.16
Czech Republic         11.50       3.14       1.54       6.81
Slovakia               10.72       2.95       1.75       6.03
Brazil                 10.08       3.24       1.43       5.41
Estonia                 9.47       2.50       0.88       6.10
Hungary                 8.40       2.00       1.65       4.74
Taiwan                  8.36       1.23           7.13(4)
Poland                  8.01       1.26       1.89       4.86
Mexico                  6.23       1.94           4.30(4)
Philippines             1.90       0.18       0.31       1.41

(1) Social insurance includes labor-related taxes net of subsidies.
(2) Directly-paid benefits are primarily pay for leave time,
    bonuses, and pay in kind.
(3) Pay for time worked is wages and salaries for time actually
    worked.
(4) Separate measures of directly-paid benefits and pay for time
    worked are not available. Data relate to total direct pay.

TECHNICAL NOTES

The international comparisons of hourly compensation costs in manufacturing
are prepared to assess differences in employer labor costs among countries.
BLS compensation data permit more meaningful comparisons of employer labor
costs than data based solely on average earnings. Definitions of average
earnings differ considerably by country and do not include many items of
labor cost that frequently make up a large portion of total cost. BLS
compensation data include nearly all labor costs incurred by employers. 

Below is a summary of the concepts used in this release. For more
detailed information, see www.bls.gov/ilc/#compensation.

Definitions. Compensation costs include (1) direct pay (all payments made
directly to the worker, before payroll deductions of any kind) (2) social
insurance expenditures (employer payments to secure entitlement to social
benefits for employees) and (3) labor-related taxes (net of subsidies). 

The data relate to all employees in manufacturing, including part-time and
temporary workers. The self-employed, unpaid family workers, contract
workers, and workers in private households are excluded.

Compensation Costs

Pay for Time Worked
* Basic wages
* Piece rate
* Overtime premiums
* Shift, holiday, or night work premiums
* Cost-of-living adjustments
* Bonuses and premiums paid each pay period

Directly-Paid Benefits
* Pay for time not worked (vacations, holidays, and other leave, except sick leave)
* Seasonal and irregular bonuses
* Payments in kind
* Allowances for family events, commuting, etc.
* Payments to employees’ savings funds

Employer Social Insurance Expenditures and Labor-related Taxes
* Retirement and disability pensions
* Health insurance
* Income guarantee insurance 
* Pay for sick leave
* Life and accident insurance
* Occupational injury and illness compensation 
* Unemployment insurance
* Severance pay 
* Other social insurance expenditures
* Taxes (net of subsidies) on payrolls or employment


Methodology. In general, total compensation for each economy is calculated
by adjusting earnings series to include items of direct pay, social
insurance, and labor-related taxes and subsidies not included in earnings.
For economies for which earnings data are not available on a per hour worked
basis, BLS makes adjustments in order to approximate compensation per hour
worked. Compensation costs are converted to U.S. dollars using the average
daily exchange rate for the reference year.

Earnings statistics are typically obtained from establishment surveys. Data
on the other components of compensation are typically obtained from periodic
labor cost surveys, censuses of manufacturers, employer confederations,
and other sources.

For the United States, the results and methods used differ somewhat from
those used for other BLS series on U.S. compensation costs. 

The statistics are adjusted, where possible, to account for major differences
in worker coverage, differences in industrial classification systems, and
changes over time in survey coverage. More information on exceptions to these
methods, as well as data sources used, can be found in "Country Notes and Data
Sources" located at www.bls.gov/ilc/#compensation. 

Additional data. Detailed time series tables of compensation costs in U.S.
dollars, national currencies, and annual indexes for 1996-2010 are available
at www.bls.gov/web/ichcc.supp.toc.htm.

The compensation measures in this news release are based on statistics
available to BLS as of October 2011. These measures may be subsequently
revised as data are collected to update compensation measures for
sub-manufacturing industries. Data for sub-manufacturing industries are
available at www.bls.gov/ilc/flshcaeindnaics.htm. 



Last Modified Date: December 21, 2011