International Comparison of Manufacturing Productivity and Unit Labor Costs Trends News Release



For release 10:00 a.m. (EDT) Thursday, October 22, 2009                    USDL-09-1271

Technical Information: (202) 691-5654    ilchelp@bls.gov  www.bls.gov/ilc
Media Contact:         (202) 691-5902    PressOffice@bls.gov

INTERNATIONAL COMPARISONS OF MANUFACTURING PRODUCTIVITY AND 
UNIT LABOR COST TRENDS, 2008

Manufacturing labor productivity decreased in 2008 in 12 of the 17 economies compared by the 
U.S. Department of Laborís Bureau of Labor Statistics. The Republic of Korea and the United 
States had the largest productivity increases (1.2 percent each) among the five economies where 
productivity increased. Singapore had the steepest productivity decline (-6.6 percent). (See 
chart 1.)

For all economies, labor productivity in manufacturing increased less or declined more in 2008 
than the average annual changes over the 2000-2008 period, when almost all of the economies 
studied experienced productivity increases. Average annual growth rates for selected measures 
over various time periods are shown in tables A and B.

The data presented for the United States differ from those appearing in BLS Productivity and 
Costs news releases. (See technical notes.)

PRINTED COPY CONTAINS CHART AT THIS POINT:
Chart 1. Percent change in manufacturing output per hour, 2007-2008

                                                 - 2 -
 
Changes in unit labor costs can be expressed either in national currency units or in U.S. dollars. 
Expressed in national currency units, manufacturing unit labor costs increased in all 17 
economies in 2008. The increase for the United States and for Taiwan (+1.7 percent) was the 
second lowest among the economies compared. Expressed in U.S. dollars, manufacturing unit 
labor costs increased even more in 14 of the economies, because of the weakening dollar. The 
U.S. manufacturing sector improved its labor cost competitiveness in 2008 against all economies 
compared except the Republic of Korea and the United Kingdom, where unit labor cost 
expressed in U.S. dollars declined, because their currencies weakened against the dollar. (See 
chart 2.)

PRINTED COPY CONTAINS CHART AT THIS POINT:
Chart 2. Percent change in manufacturing unit labor costs, 2007-2008

                                                 - 3 -


               Table A. Output per hour, hourly compensation, unit labor costs, and related measures
                                     Manufacturing, 17 countries or areas, 2007-2008
                                                            
                                                     Percent change 
_________________________________________________________________________________________________________________________
                        Output                                           Total   Hourly    Unit Labor Costs
 Country                 per               Total    Employ-  Average    compen-  compen-   National    U.S.   Exchange
 or area                Hour    Output     hours     ment     hours     sation   sation    currency  dollars   rate(1)
_________________________________________________________________________________________________________________________

United States            1.2      -2.7      -3.9      -3.4      -0.5      -1.0       3.0       1.7       1.7        --

Canada                  -2.6      -5.7      -3.2      -2.6      -0.6      -1.1       2.1       4.8       5.6       0.7
Australia               -0.9       1.6       2.6       1.5       1.1       5.3       2.7       3.6       5.4       1.7
Japan                   -0.2      -3.4      -3.2      -1.8      -1.4      -1.4       1.8       2.0      16.2      13.9
Korea, Republic of       1.2       3.1       1.8      -0.3       2.2       3.9       2.0       0.8     -14.8     -15.4
Singapore               -6.6      -4.1       2.6       3.4      -0.8       3.1       0.5       7.5      14.6       6.5
Taiwan                  -0.5      -1.1      -0.6       0.8      -1.4       0.7       1.3       1.7       6.0       4.2

Belgium                  0.5      -0.5      -1.0      -0.3      -0.7       1.9       3.0       2.4      10.0       7.4
Denmark                 -4.5      -1.8       2.7       1.7       1.1       6.3       3.4       8.3      15.8       6.9
France                  -0.8      -2.4      -1.5      -1.5       0.0       1.4       3.0       3.8      11.5       7.4
Germany                 -0.1       0.6       0.7       1.6      -0.9       3.3       2.5       2.7      10.3       7.4
Italy                   -3.4      -4.5      -1.2      -1.2       0.0       1.4       2.6       6.2      14.1       7.4
Netherlands             -1.4      -0.6       0.8       0.5       0.3       4.0       3.3       4.7      12.4       7.4
Norway                   0.7       3.0       2.3       2.5      -0.2       8.0       5.6       4.9       9.0       3.9
Spain                   -0.9      -2.1      -1.2      -0.5      -0.7       3.6       4.8       5.8      13.6       7.4
Sweden                  -3.7      -3.5       0.2      -0.5       0.7       3.2       3.0       6.9       9.7       2.6
United Kingdom           0.3      -2.8      -3.1      -2.9      -0.2      -0.7       2.5       2.2      -5.3      -7.4
_________________________________________________________________________________________________________________________

(1) Value of foreign currency relative to the U.S. dollar. 


Additional data available

Annual indexes of the variables shown in table A are estimated for the time period 1950-2008 
and are available at http://www.bls.gov/ilc/. However, for analytical purposes, the international 
comparisons in this release go back to 1979.

For further information, contact the Division of International Labor Comparisons (ILC), in the 
Office of Productivity and Technology 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.

Subscribe to ILC's e-newsletter Just Out! by e-mailing ILCpr@bls.gov with "subscribe" in the 
subject line.  This e-newsletter will provide you with links to the latest ILC releases, which 
usually occur once or twice per month.

                                                 - 4 -

   
Manufacturing productivity, output, and labor input

In 2008 manufacturing productivity decreased in almost all of the 17 economies compared, in 
contrast to past years and periods, when most economies registered productivity increases. 
Singapore (-6.6 percent) and Denmark (-4.5 percent) experienced the largest productivity 
declines in 2008. The Republic of Korea and the United States led productivity growth in 2008 
with slight increases of 1.2 percent each, but below the average annual increases for both 
countries for all the periods shown in the accompanying tables.  (See tables A and B.)

Manufacturing output decreased in 13 of the 17 economies in 2008.  The declines ranged 
between -0.5 percent in Belgium to -5.7 percent in Canada.  The U.S. output decline of 2.7 
percent was in the middle of this range.  Among the four countries with output growth in 2008, 
the Korean increase of 3.1 percent was the largest; however, this was less than the average 
annual increases in Korean manufacturing output for all previous periods shown in the 
accompanying tables.  (See tables A and B.)

For most economies, declines in 2008 manufacturing output were accompanied by declines in 
employment, as well as by declines in average hours worked. 

In 2008 manufacturing employment decreased in 10 of the 17 economies. The United States 
had the largest decline in employment (-3.4 percent), while Singapore had the largest increase in 
employment (+3.4 percent). Over the 2000-2008 period, the United Kingdom and the United 
States experienced the steepest average annual declines in manufacturing employment (-3.9 and 
-3.0 percent respectively).

In 2008 average hours worked in manufacturing declined in 10 of the 17 economies and 
increased in 5, while France and Italy showed no change in average hours worked. Average 
hours worked fell 0.5 percent in U.S. manufacturing. 

In 2008 total manufacturing hours worked fell in 9, and increased in 8 of the 17 economies 
compared.  The greatest decline in total hours worked, -3.9 percent, occurred in U.S. 
manufacturing, and the largest increase, +2.7 percent, was in Denmark. This contrasts with the 
average annual changes over the 2000-2008 period, when total hours worked in manufacturing 
declined in most of the 17 economies. Singapore (+3.6 percent) and Norway (+0.2 percent) 
were the only two countries that experienced growth in total manufacturing hours worked over 
the 2000-2008 period. 

                                                 - 5 -

Manufacturing hourly compensation and unit labor costs

Total labor compensation in manufacturing increased in 13 of the 17 economies in 2008. The 
largest increases were in Norway (+8.0 percent) and Denmark (+6.3 percent). U. S. 
compensation dropped by 1.0 percent. Total labor compensation in manufacturing also declined 
in Japan, Canada, and the United Kingdom. (See tables A and B.) 

Hourly compensation in manufacturing increased in 2008 in all 17 economies. The largest 
increase was in Norway (+5.6 percent), followed by Spain (+4.8 percent). The U.S. increase of 
3.0 percent in hourly compensation was below its average annual increase since 1979. The 2008 
increases in hourly compensation were smaller than the average annual increases for all 
economies during the 1979-2008 period, for which comparable data are available. (See tables A 
and B.) 

Expressed in national currencies, unit labor costs also increased in all 17 economies in 2008. The 
largest increase occurred in Denmark (+8.3 percent). U.S. and Taiwanese manufacturing had the 
second smallest increase (+1.7 percent each) among the economies compared. However, for the 
United States this increase was larger than the average annual increases in unit labor costs 
between 1979 and 2008.  For most economies, the 2008 increases in unit labor costs were also 
larger than their average annual increases during the 1979-2008 period.

Movements in exchange rates are often the dominant force behind changes in comparative unit 
labor costs and international competitiveness. In 2008, the U.S. dollar weakened against most 
of the currencies being compared. The exceptions were the currencies of Korea and the United 
Kingdom, which depreciated against the dollar. This depreciation of the U.S. dollar against 
most currencies continues a trend that began in 2001. 

As a result of these changes in exchange rates, manufacturing unit labor costs expressed in U.S. 
dollars increased even more in 14 of the economies, while declining in 2 in 2008. The unit labor 
costs of two countries, Korea and the United Kingdom, went from increases to decreases when 
computed on a U.S. dollar basis. Thus, the manufacturing sector in the United States improved 
its unit labor cost competitiveness in 2008 against all economies compared except Korea and the 
United Kingdom.

                                          - 6 -

                Table B. Output per hour, hourly compensation, unit labor costs, and related measures
                                  Manufacturing, 17 countries or areas, 1979-2008
                                                          
                                         Average annual rates of change(1)

_________________________________________________________________________________________________________________________

Country or area           1979-2008     1979-1990     1990-1995     1995-2000     2000-2008     2006-2007     2007-2008
_________________________________________________________________________________________________________________________

                                                  Output per hour

United States                3.9           2.8           3.7           5.6           4.6           4.7           1.2

Canada                       2.3           2.1           3.4           3.8           0.8           2.7          -2.6
Australia                    2.1           2.3           1.3           3.4           1.6           1.9          -0.9
Japan                        3.5           3.8           3.3           3.4           3.2           3.5          -0.2
Korea, Republic of            NA            NA           9.4          10.8           7.4           7.6           1.2
Singapore                     NA            NA           6.9           6.5           0.7          -3.8          -6.6
Taiwan                       5.6           6.2           4.7           5.5           5.2           8.9          -0.5

Belgium                      3.3           4.2           3.1           2.4           2.8           4.4           0.5
Denmark                      2.1           2.2           2.7           1.8           1.8           0.4          -4.5
France                       3.5           3.8           3.4           4.6           2.6           1.2          -0.8
Germany(2)                   3.0           2.1           2.9           3.7           3.7           5.0          -0.1
Italy                        2.1           3.4           3.8           1.4          -0.2           0.5          -3.4
Netherlands                  3.2           3.3           3.7           3.3           2.7           2.7          -1.4
Norway                       1.7           1.9           0.1           1.4           2.7          -0.2           0.7
Spain                        2.4           3.3           3.1           0.8           1.5           2.4          -0.9
Sweden                       4.2           2.1           5.5           6.8           4.8           0.6          -3.7
United Kingdom               3.4           4.1           2.4           2.7           3.6           3.3           0.3



                                                       Output

United States                2.7           2.2           3.6           5.4           1.2           2.9          -2.7

Canada                       1.9           1.9           2.2           6.2          -0.9          -0.9          -5.7
Australia                    1.5           1.6           0.8           2.6           1.1           3.3           1.6
Japan                        2.5           4.7           0.6           1.1           1.5           3.6          -3.4
Korea, Republic of           8.6          10.7           8.2           7.9           6.3           7.2           3.1
Singapore                     NA            NA           8.0           6.7           4.3           5.9          -4.1
Taiwan                       5.9           7.4           4.4           5.8           4.8          10.4          -1.1

Belgium                      1.7           2.6           0.6           2.3           0.8           2.6          -0.5
Denmark                      1.2           1.3           2.1           1.7           0.3           3.6          -1.8
France                       1.4           1.5           0.6           3.4           0.5           0.8          -2.4
Germany(2)                   1.4           1.2          -1.0           2.2           2.6           6.1           0.6
Italy                        1.4           2.6           1.6           1.2          -0.4           2.0          -4.5
Netherlands                  2.2           2.4           2.0           3.3           1.3           3.2          -0.6
Norway                       1.0          -0.5           0.7           1.4           2.9           5.3           3.0
Spain                        2.0           2.1           0.6           5.0           0.8           0.9          -2.1
Sweden                       3.5           1.7           3.8           7.4           3.6           2.3          -3.5
United Kingdom               0.6           0.9           0.4           1.3          -0.3           0.6          -2.8


                                                                                        Continued on next page


                                          - 7 -

              Table B. Output per hour, hourly compensation, unit labor costs, and related measures
                                  Manufacturing, 17 countries or areas, 1979-2008
                                                          
                                         Average annual rates of change(1)

_________________________________________________________________________________________________________________________

Country or area           1979-2008     1979-1990     1990-1995     1995-2000     2000-2008     2006-2007     2007-2008
_________________________________________________________________________________________________________________________

                                                    Total hours

United States               -1.2          -0.6          -0.1          -0.1          -3.2          -1.8          -3.9

Canada                      -0.4          -0.2          -1.1           2.3          -1.7          -3.5          -3.2
Australia                   -0.6          -0.7          -0.5          -0.9          -0.4           1.3           2.6
Japan                       -1.0           0.9          -2.7          -2.2          -1.6           0.2          -3.2
Korea, Republic of            NA            NA          -1.1          -2.6          -0.9          -0.4           1.8
Singapore                     NA            NA           1.0           0.2           3.6          10.2           2.6
Taiwan                       0.3           1.2          -0.3           0.2          -0.4           1.3          -0.6

Belgium                     -1.6          -1.6          -2.4          -0.1          -2.0          -1.7          -1.0
Denmark                     -0.9          -1.0          -0.7          -0.1          -1.5           3.3           2.7
France                      -2.1          -2.2          -2.8          -1.1          -2.0          -0.5          -1.5
Germany(2)                  -1.5          -0.9          -3.8          -1.4          -1.1           1.0           0.7
Italy                       -0.8          -0.8          -2.1          -0.2          -0.2           1.5          -1.2
Netherlands                 -1.0          -0.9          -1.7           0.0          -1.4           0.5           0.8
Norway                      -0.7          -2.3           0.6           0.0           0.2           5.5           2.3
Spain                       -0.4          -1.2          -2.4           4.1          -0.7          -1.4          -1.2
Sweden                      -0.7          -0.4          -1.7           0.5          -1.1           1.8           0.2
United Kingdom              -2.8          -3.1          -1.9          -1.3          -3.8          -2.7          -3.1

                                                     Employment

United States               -1.3          -0.8          -0.5           0.0          -3.0          -1.7          -3.4

Canada                      -0.4          -0.3          -1.5           2.2          -1.6          -3.4          -2.6
Australia                   -1.2          -1.3          -2.3          -1.1          -0.4           1.8           1.5
Japan                       -0.7           1.0          -1.4          -2.1          -1.6           0.5          -1.8
Korea, Republic of            NA            NA          -0.8          -2.5           0.4           0.0          -0.3
Singapore                     NA            NA           0.7          -0.1           3.5           9.9           3.4
Taiwan                       0.9           2.0          -0.3           0.5           0.5           1.4           0.8

Belgium                     -1.5          -1.6          -2.2          -0.6          -1.4          -0.9          -0.3
Denmark                     -0.9          -0.4          -1.2          -1.2          -1.3           1.8           1.7
France                      -1.6          -1.8          -2.5          -0.3          -1.8          -1.4          -1.5
Germany(2)                  -1.1          -0.1          -4.2          -0.8          -0.7           1.2           1.6
Italy                       -0.7          -0.8          -1.9          -0.2           0.0           0.7          -1.2
Netherlands                 -0.9          -0.6          -1.6           0.1          -1.4           0.4           0.5
Norway                      -0.8          -2.2           0.4           0.2           0.0           5.0           2.5
Spain                        0.1          -0.7          -2.0           3.3           0.4          -0.6          -0.5
Sweden                      -1.3          -1.0          -3.5           0.2          -1.3           0.6          -0.5
United Kingdom              -2.8          -2.9          -2.7          -1.2          -3.9          -3.2          -2.9


                                                                                            Continued on next page
 

                                          - 8 -
 
               Table B. Output per hour, hourly compensation, unit labor costs, and related measures
                                  Manufacturing, 17 countries or areas, 1979-2008
                                                          
                                         Average annual rates of change(1)

_________________________________________________________________________________________________________________________

Country or area           1979-2008     1979-1990     1990-1995     1995-2000     2000-2008     2006-2007     2007-2008
_________________________________________________________________________________________________________________________

                                                   Average hours

United States                0.1           0.2           0.4          -0.1          -0.1          -0.1          -0.5

Canada                       0.1           0.1           0.3           0.1          -0.2          -0.1          -0.6
Australia                    0.6           0.6           1.9           0.3           0.0          -0.5           1.1
Japan                       -0.3          -0.1          -1.3          -0.1           0.0          -0.4          -1.4
Korea, Republic of            NA            NA          -0.2          -0.1          -1.3          -0.4           2.2
Singapore                     NA            NA           0.3           0.3           0.1           0.2          -0.8
Taiwan                      -0.6          -0.8           0.0          -0.3          -0.9           0.0          -1.4

Belgium                     -0.1           0.0          -0.2           0.5          -0.6          -0.8          -0.7
Denmark                      0.0          -0.5           0.6           1.1          -0.1           1.4           1.1
France                      -0.4          -0.5          -0.3          -0.8          -0.3           1.0           0.0
Germany(2)                  -0.5          -0.9           0.4          -0.6          -0.4          -0.2          -0.9
Italy                       -0.1           0.1          -0.2           0.0          -0.2           0.8           0.0
Netherlands                 -0.1          -0.2           0.0          -0.1           0.0           0.1           0.3
Norway                       0.0          -0.1           0.2          -0.2           0.2           0.5          -0.2
Spain                       -0.4          -0.5          -0.4           0.8          -1.1          -0.8          -0.7
Sweden                       0.7           0.7           1.9           0.3           0.2           1.2           0.7
United Kingdom               0.1          -0.2           0.8          -0.1           0.1           0.5          -0.2

                                Total labor compensation(3): National currency basis

United States                3.3           4.9           3.3           4.3           0.5           2.5          -1.0

Canada                       4.2           6.5           2.4           5.2           1.6          -0.1          -1.1
Australia                     NA            NA           3.2           3.1           4.7           6.6           5.3
Japan                        1.6           5.5           0.8          -1.1          -1.4          -0.1          -1.4
Korea, Republic of          13.4          19.6          17.6           5.8           7.8           6.0           3.9
Singapore                     NA            NA           8.7           2.4           4.2           9.3           3.1
Taiwan                       7.2          13.5           6.8           3.6           1.6           4.6           0.7

Belgium                      2.7           4.4           1.3           1.9           1.6           3.5           1.9
Denmark                      4.4           7.0           2.3           2.8           3.0           5.9           6.3
France                       3.4           6.7           1.6           1.7           1.3           2.3           1.4
Germany(2)                   2.7           4.6           2.4           1.6           1.2           2.8           3.3
Italy                        6.2          11.6           3.9           2.4           2.7           3.7           1.4
Netherlands                  2.8           3.2           2.7           3.4           2.1           3.7           4.0
Norway                       5.5           6.4           4.1           5.1           5.3          10.5           8.0
Spain                        6.7          10.1           5.5           5.6           3.6           3.5           3.6
Sweden                       5.3           8.8           1.9           5.3           2.8           6.7           3.2
United Kingdom               3.6           7.1           1.5           3.3           0.6           0.5          -0.7

                                                                                           Continued on next page

                                          - 9 - 
 
                Table B. Output per hour, hourly compensation, unit labor costs, and related measures
                                   Manufacturing, 17 countries or areas, 1979-2008
                                                           
                                          Average annual rates of change(1)
 
 _________________________________________________________________________________________________________________________
 
 Country or area           1979-2008     1979-1990     1990-1995     1995-2000     2000-2008     2006-2007     2007-2008
 _________________________________________________________________________________________________________________________
 
                                   Hourly compensation{3}: National currency basis
 
 United States                4.5           5.6           3.4           4.5           3.8           4.3           3.0
 
 Canada                       4.6           6.8           3.6           2.9           3.3           3.5           2.1
 Australia                     NA            NA           3.7           4.0           5.1           5.3           2.7
 Japan                        2.6           4.6           3.6           1.2           0.3          -0.2           1.8
 Korea, Republic of            NA            NA          18.9           8.6           8.8           6.4           2.0
 Singapore                     NA            NA           7.6           2.2           0.6          -0.7           0.5
 Taiwan                       6.9          12.1           7.2           3.4           1.9           3.2           1.3
 
 Belgium                      4.3           6.1           3.8           2.0           3.7           5.3           3.0
 Denmark                      5.3           8.1           2.9           2.9           4.5           2.6           3.4
 France                       5.6           9.1           4.5           2.8           3.4           2.7           3.0
 Germany(2)                   4.3           5.6           6.4           3.1           2.2           1.7           2.5
 Italy                        7.0          12.5           6.1           2.7           2.9           2.2           2.6
 Netherlands                  3.9           4.1           4.5           3.4           3.6           3.2           3.3
 Norway                       6.3           9.0           3.4           5.2           5.1           4.8           5.6
 Spain                        7.1          11.4           8.2           1.4           4.3           4.9           4.8
 Sweden                       6.0           9.1           3.7           4.8           3.9           4.8           3.0
 United Kingdom               6.6          10.5           3.5           4.7           4.5           3.3           2.5
 
                                     Unit labor costs{3}: National currency basis
 
 United States                0.6           2.7          -0.3          -1.0          -0.7          -0.4           1.7
 
 Canada                       2.3           4.6           0.3          -0.9           2.5           0.8           4.8
 Australia                     NA            NA           2.4           0.5           3.5           3.2           3.6
 Japan                       -0.8           0.7           0.3          -2.1          -2.9          -3.6           2.0
 Korea, Republic of           4.5           8.1           8.7          -2.0           1.3          -1.1           0.8
 Singapore                     NA            NA           0.6          -4.1          -0.1           3.2           7.5
 Taiwan                       1.2           5.6           2.3          -2.1          -3.1          -5.2           1.7
 
 Belgium                      1.0           1.8           0.7          -0.4           0.8           0.8           2.4
 Denmark                      3.1           5.7           0.2           1.1           2.7           2.2           8.3
 France                       2.0           5.1           1.0          -1.7           0.8           1.5           3.8
 Germany(2)                   1.3           3.3           3.4          -0.5          -1.4          -3.2           2.7
 Italy                        4.7           8.8           2.2           1.2           3.1           1.7           6.2
 Netherlands                  0.7           0.8           0.7           0.1           0.9           0.5           4.7
 Norway                       4.5           6.9           3.3           3.7           2.3           5.0           4.9
 Spain                        4.6           7.8           4.9           0.5           2.7           2.5           5.8
 Sweden                       1.7           6.9          -1.8          -1.9          -0.8           4.2           6.9
 United Kingdom               3.1           6.1           1.1           1.9           0.9          -0.1           2.2


                                                                                         Continued on next page
   
   
                                         - 10 -
   
                Table B. Output per hour, hourly compensation, unit labor costs, and related measures
                                   Manufacturing, 17 countries or areas, 1979-2008
                                                           
                                          Average annual rates of change(1)
 
 _________________________________________________________________________________________________________________________
 
 Country or area           1979-2008     1979-1990     1990-1995     1995-2000     2000-2008     2006-2007     2007-2008
 _________________________________________________________________________________________________________________________
 
                                        Unit labor costs{3}: U.S. dollar basis
 
 United States                0.6           2.7          -0.3          -1.0          -0.7          -0.4           1.7
 
 Canada                       2.6           4.6          -2.9          -2.4           6.8           6.5           5.6
 Australia                     NA            NA           1.3          -4.2           8.6          15.0           5.4
 Japan                        1.7           4.6           9.4          -4.8          -2.4          -4.8          16.2
 Korea, Republic of           1.6           4.4           6.9          -9.2           1.7           1.6         -14.8
 Singapore                     NA            NA           5.7          -7.8           2.5           8.8          14.6
 Taiwan                       1.7           8.5           2.7          -5.3          -3.2          -6.2           6.0
 
 Belgium                      1.2           0.6           3.3          -7.9           6.9          10.1          10.0
 Denmark                      3.2           4.1           2.2          -6.1           8.9          11.7          15.8
 France                       1.8           2.7           2.8          -8.4           6.9          10.8          11.5
 Germany(2)                   2.5           4.5           5.9          -8.0           4.5           5.7          10.3
 Italy                        3.1           5.2          -3.9          -3.7           9.3          11.0          14.1
 Netherlands                  1.7           1.7           3.3          -7.6           6.9           9.7          12.4
 Norway                       4.1           4.9           3.1          -2.9           8.2          15.0           9.0
 Spain                        2.8           3.8           0.8          -6.6           8.9          11.9          13.6
 Sweden                       0.2           3.8          -5.4          -6.7           3.4          13.8           9.7
 United Kingdom               2.6           4.5          -1.4           1.1           3.5           8.5          -5.3
 
                                                  Exchange rates(4)
 
 United States                 --            --            --            --            --            --            --
 
 Canada                       0.3           0.0          -3.2          -1.6           4.2           5.6           0.7
 Australia                   -0.9          -3.2          -1.1          -4.7           4.9          11.4           1.7
 Japan                        2.6           3.8           9.1          -2.7           0.5          -1.2          13.9
 Korea, Republic of          -2.8          -3.4          -1.7          -7.3           0.4           2.7         -15.4
 Singapore                     NA            NA           5.0          -3.9           2.5           5.4           6.5
 Taiwan                       0.5           2.7           0.3          -3.3          -0.1          -1.1           4.2
 
 Belgium                      0.2          -1.2           2.6          -7.6           6.0           9.1           7.4
 Denmark                      0.1          -1.5           2.0          -7.1           6.0           9.2           6.9
 France                      -0.2          -2.2           1.8          -6.8           6.0           9.1           7.4
 Germany(2)                   1.1           1.1           2.5          -7.5           6.0           9.1           7.4
 Italy                       -1.6          -3.3          -6.0          -4.9           6.0           9.1           7.4
 Netherlands                  1.0           0.9           2.6          -7.6           6.0           9.1           7.4
 Norway                      -0.4          -1.9          -0.3          -6.4           5.7           9.5           3.9
 Spain                       -1.8          -3.7          -3.9          -7.1           6.0           9.1           7.4
 Sweden                      -1.5          -2.9          -3.7          -4.9           4.2           9.1           2.6
 United Kingdom              -0.5          -1.6          -2.4          -0.8           2.6           8.6          -7.4
_________________________________________________________________________________________________________________________
NA=data not available

(1) Rates of change based on the compound rate method.  
(2) Data for years before 1991 pertain to the former West Germany.
(3) Adjusted for employment taxes and government subsidies to estimate the actual cost to employers.
(4) Value of foreign currency relative to the U.S. dollar. 
 

                                                - 11 -

Trade-weighted unit labor costs

BLS constructs indexes of U.S. unit labor cost trends relative to a competitors' index, which is a 
trade-weighted average of unit labor cost trends in the other economies, in order to take account 
of differences in the relative importance of foreign economies to U.S. trade in manufactured 
goods. Relative trade-weighted unit labor cost indexes are calculated on both a national 
currency and a U.S. dollar basis.

In this release, the relative U.S. trade-weighted indexes are estimated against 14 economies for 
which comparable data are available over the period of comparison. Australia and Singapore 
have been omitted because unit labor cost data are not available before 1990. The indexes 
underlying this chart are shown in table C.

Chart 3 begins in 1979, a year in which U.S. manufacturing output reached a business cycle 
peak.

PRINTED COPY CONTAINS CHART AT THIS POINT:
Chart 3. U.S. manufacturing unit labor costs relative to 14(1) other economies, 1979-2008
 
In the chart, the dotted line shows that, on a national currency basis, U.S. unit labor costs 
tended to fall more or increase less than unit labor costs in the other economies from 1979 until 
2008.

The solid line compares the unit labor costs on a U.S. dollar basis. From 1979 to 1985, and again 
from 1995 to 2001, U.S. unit labor costs on a U.S. dollar basis generally rose more or declined 
less than in the other economies, due to the appreciation of the dollar. Since 2001, relative U.S. 
unit labor costs declined with the weakening of the U.S. dollar.


                                         - 12 -

            Table C. U.S. manufacturing unit labor
          costs relative to 14(1) competitors, 1979-2008

             Unit Labor Costs                     Unit Labor Costs
          National Currency Basis                 U.S. Dollar Basis
  Year     Own     Competitors'              Own     Competitors'
          Index       Index       Ratio     Index       Index       Ratio

  1979    100.0       100.0       100.0     100.0       100.0       100.0
  1980    112.7       111.4       101.2     112.7       110.0       102.5
  1981    117.6       120.9        97.3     117.6       108.1       108.8
  1982    127.3       131.2        97.0     127.3       107.4       118.5
  1983    122.7       133.6        91.8     122.7       105.1       116.7
  1984    123.8       133.7        92.6     123.8        98.3       125.9
  1985    126.1       136.2        92.6     126.1        96.5       130.7
  1986    130.0       141.6        91.8     130.0       115.8       112.3
  1987    125.4       145.1        86.4     125.4       132.8        94.4
  1988    126.5       147.8        85.5     126.5       144.9        87.3
  1989    129.5       151.8        85.4     129.5       146.3        88.5
  1990    133.9       158.2        84.7     133.9       160.1        83.7
  1991    137.7       166.4        82.8     137.7       169.3        81.4
  1992    139.0       169.9        81.8     139.0       174.0        79.9
  1993    138.2       170.8        80.9     138.2       166.0        83.3
  1994    134.6       168.1        80.1     134.6       163.0        82.5
  1995    131.7       170.1        77.4     131.7       173.1        76.1
  1996    128.9       172.1        74.9     128.9       169.4        76.1
  1997    126.7       169.8        74.6     126.7       155.5        81.5
  1998    125.7       170.9        73.6     125.7       145.8        86.2
  1999    125.0       167.6        74.6     125.0       145.4        86.0
  2000    125.1       163.5        76.5     125.1       136.6        91.6
  2001    128.4       169.0        76.0     128.4       133.1        96.5
  2002    122.5       169.7        72.2     122.5       135.4        90.5
  2003    124.4       169.5        73.4     124.4       152.3        81.7
  2004    118.1       168.4        70.1     118.1       163.7        72.2
  2005    119.7       167.0        71.7     119.7       167.3        71.6
  2006    116.5       166.1        70.2     116.5       170.2        68.5
  2007    116.2       165.1        70.4     116.2       178.4        65.1
  2008    118.1       170.9        69.1     118.1       190.3        62.1

(1) Australia and Singapore have been omitted from this table because data are not available before 1990.
    
   



                                                 - 13 -

Technical Notes

The comparisons in this release are based on data available to the Bureau of Labor Statistics as of the 
beginning of September 2009 from the national statistical offices of the 17 economies compared.

Definitions. Labor productivity is defined as real output per hour worked. Although the labor 
productivity measure presented in this release relates output to the hours worked of persons 
employed in manufacturing, it does not measure the specific contributions of labor as a single factor 
of production. Rather, it reflects the joint effects of many influences, including new technology, 
capital investment, capacity utilization, energy use, and managerial skills, as well as the skills and 
efforts of the workforce.

Unit labor costs are defined as the cost of labor input required to produce one unit of output. They 
are computed as compensation in nominal terms divided by real output. Unit labor costs can also be 
computed by dividing hourly compensation by output per hour, that is, by labor productivity. 

Methodology. BLS constructs trends of manufacturing labor productivity and unit labor costs from 
three basic aggregate measures: output, total labor hours, and total compensation. The hours and 
compensation measures, as well as the employment measures, refer to employees (wage and salary 
earners) in Belgium and Taiwan. For all other economies, the measures refer to all employed 
persons, including employees, self-employed persons, and unpaid family workers. 

In general, the measures relate to total manufacturing as defined by the International Standard 
Industrial Classification (ISIC). However, the measures for France include parts of mining. Data for the 
United States are in accordance with the North American Industry Classification System (NAICS 97), 
except compensation data before 1987. Canadian data are in accordance with NAICS 97 starting in 
1961.

The data for the most recent years are based on the United Nations System of National Accounts 
1993 (SNA 93). For earlier years, data were compiled according to previously used systems.

To obtain historical time series, BLS may link together data series which were compiled according to 
different accounting systems by national statistical offices.

Output. For most of the economies, the output measures are real value added in manufacturing, 
based on national accounts. However, output for Japan prior to 1970 and for the Netherlands prior to 
1960 are indexes of industrial production. The manufacturing value added measures for the United 
Kingdom are essentially identical to their indexes of industrial production.

Most economies now estimate manufacturing real output using moving price weights, as 
recommended by SNA 93. However, many earlier time periods within the historical real output series 
have been estimated using fixed price weights, with the weights updated periodically (for example, 
every 5 or 10 years). Taiwan still uses fixed price weights to estimate real output.

				          - 14 -

Measures of real output also may differ among economies because of different approaches to 
quality adjustments.

For the United States, the output measure for the manufacturing sector is a chain-weighted index of 
real gross product originating (deflated value added) produced by the Bureau of Economic Analysis 
(BEA) of the U.S. Department of Commerce. For more information on the U.S. measure, see 
"Improved Estimates of Gross Product by Industry for 1947-98," Survey of Current Business, June 
2000, pp. 24-38 and "Gross Domestic Product by Industry for 1947-86. New Estimates Based on the 
North American Industry Classification System," Survey of Current Business, December 2005, pp. 70-
84.

The U.S. manufacturing output series used for international comparisons differs from the 
manufacturing output series that BLS publishes as part of its major sector productivity and costs 
measures for the United States. The international comparisons program uses a value added output 
concept, while the major sector series is on a sectoral output basis. Sectoral output is gross output 
less intra-sector sales and transfers. The U.S. major sector productivity and costs measures can be 
found at http://www.bls.gov/lpc/home.htm. For information on sectoral output, see "Measurement 
of productivity growth in U.S. manufacturing," Monthly Labor Review, July 1995, pp. 13-28.

Value added measures have been used for the international comparisons series because the data 
are more readily available from the economies' national accounts, whereas sectoral output would 
require a complex estimation procedure. Even though BLS has determined that sectoral output is the 
correct concept for U.S. measures of productivity, there are other considerations that may make 
value added a better concept for international comparisons of labor productivity, such as differences 
among economies in the extent of vertical integration of industries.

Labor Input. For the most recent years, the term "hours" refers to hours worked. For some earlier 
years, BLS uses other hours measures. 

For the United States, the employment and hours data series beginning with 1987 are taken from the 
NAICS-based manufacturing all-employed series published by BLS as part of the major sector 
productivity and cost measures. For the period before 1987, these series are linked to NAICS-based, 
employees-only data from the Current Employment Statistics (CES) program. 

For most other economies, recent years' aggregate hours series are obtained from national statistical 
offices, usually from national accounts. However, for some earlier years, BLS calculates the aggregate 
hours series using employment figures published with the national accounts, or other 
comprehensive employment series, and data on average hours worked.

Compensation (Labor Cost). The compensation measures are from national accounts. Compensation 
includes employer expenditures for legally required insurance programs and contractual and private 
benefit plans, in addition to all payments made in cash or in kind directly to employees. When data 
for the self-employed are not available, total compensation is estimated by assuming the same 
average compensation for the self-employed as for employees.

                                          - 15 -

Labor cost is defined as compensation plus employment taxes minus employment subsidies, i.e. the 
cost to employers of using labor. For most economies, labor cost is the same as compensation. 
However, for Australia, Canada, France, Singapore, and Sweden, compensation is increased to 
account for important taxes on payroll or employment. For the United Kingdom, compensation is 
reduced between 1967 and 1991 to account for subsidies.

Data for Germany. German data prior to 1991 pertain to the former West Germany. The data series 
are linked in 1991.

Data for Australia. Australian data are published by fiscal years, which run from July 1 through June 
30. The Australian Bureau of Statistics provides unpublished calendar-year data for real value added, 
employment, and hours worked. For compensation, BLS estimates calendar-year series using two-
year moving averages of the data for fiscal years. Manufacturing compensation data are not available 
for years prior to 1990.

Data for Recent Years. The measures for recent years may be estimates based on various current 
indicators until national accounts and other preferred statistics become available.

Trade-Weighted Measures. The trade weights used to calculate the relative unit labor cost indexes of 
the United States and the other economies are based on the relative dollar value of U.S. trade in 
manufactured commodities (exports plus imports) with each economy in 2008. The trade data are 
compiled by the U.S. Census Bureau.

The following weights were used for the entire period for which trade-weighted unit labor cost 
measures are produced:

	          Weight			           Weight
				
     Canada	   34.89		     Germany	    11.32
     Japan	   14.92		     Italy	     3.86
     Korea	    5.95		     Netherlands     4.19
     Taiwan	    4.40		     Norway	     0.66
     Belgium	    3.39		     Spain	     1.61
     Denmark	    0.69		     Sweden	     1.32
     France	    5.21		     United Kingdom  7.60


Level Comparisons. The BLS measures are limited to trend comparisons. BLS does not prepare level 
comparisons of manufacturing productivity and unit labor costs because of data limitations and 
technical problems in comparing the levels of manufacturing output among economies. Each 
economy measures manufacturing output in its own currency units. To compare outputs among 
economies, a common unit of measure is needed. Market exchange rates are not suitable as a basis 
for comparing output levels. What is needed are purchasing power parities, which are 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.

Purchasing power parities, for most economies, are available for total gross domestic product (GDP) 
from the Organization for Economic Cooperation and Development (OECD). However, these parities

                                          - 16 -

are derived for expenditures made by consumers, business, and government for goods and services 
- not for value added by industry. Therefore, they do not provide purchasing power parities by 
industry. The parities developed for total GDP are not suitable for each component industry, such as 
manufacturing.

European exchange rates. On Jan. 1, 1999, 11 European countries joined the European Monetary 
Union (EMU). In subsequent years several other European countries became EMU members. The 
euro, the official currency of the EMU, was established at fixed conversion rates to the previous 
national currencies of EMU members. Data on manufacturing value added and labor compensation 
for euro-area countries are now reported in euros. 

In order to maintain historical continuity of data series, data for euro-area countries for years before 
1999 have been converted to euros by applying the fixed euro/national currency conversion rates. 
For countries and years where output, compensation, and exchange rates are converted from 
national currency units into euros, the following fixed conversion rates are used:

1 euro equals:    40.3399 Belgian francs         1936.27 Italian lire
                  6.55957 French francs          2.20371 Netherlands guilders
                  1.95583 German marks           166.386 Spanish pesetas

The currency exchange rates cited in this publication are annual averages of daily buying rates in New 
York City.



Last Modified Date: October 22, 2009