International Comparisons of Hourly Compensation Costs in Manufacturing, 2006
Internet address: http://www.bls.gov/fls USDL: 08-0093
Technical information: (202) 691-5654 For Release: 10:00 A.M. EST
Media contact: (202) 691-5902 Friday, January 25, 2008
INTERNATIONAL COMPARISONS OF HOURLY COMPENSATION
COSTS IN MANUFACTURING, 2006
Average hourly compensation costs in U.S. dollars for production
workers in manufacturing among 33 foreign economies were 82 percent
of the U.S. level in 2006, increasing from 79 percent in 2005,
according to data issued by the Bureau of Labor Statistics, U.S.
Department of Labor. Compensation costs relative to the United
States rose or remained unchanged in 30 of the economies covered in
2006. (See table 1.) For the first time, this news release
contains data for all employees in addition to the series for
production workers. (See discussion on page 6, table B, and table
7.) Both production worker and all employee data are introduced
for the Philippines. The all employee series covers most of the
countries included in the production worker series, but also
introduces Argentina and Slovakia which are not included in the
latter series. A note on China's labor costs appears on page 4 of
this release.
In the United States, hourly compensation costs for production
workers in manufacturing were virtually unchanged at $23.82 in
2006. When measured in national currency terms, trade-weighted
average costs increased 2.6 percent in the combined 33 foreign
economies in 2006. The value of foreign currencies rose 2.0
percent against the U.S. dollar, resulting in a rise in hourly
compensation costs in the foreign economies of 4.7 percent on a
U.S. dollar basis. (See chart 1 and table A.)
Chart 1. Hourly compensation costs in U.S. dollars for
production workers in manufacturing, 1975-2006
PRINTED COPY CONTAINS CHART AT THIS POINT.
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Compensation costs for production workers expressed in U.S.
dollars
This release provides manufacturing compensation data in terms
of both national currencies and U.S. dollars. While data on a
national currency basis show underlying wage and benefit trends
within each country, frequent and sometimes sharp changes in
currency exchange rates can have a large impact on compensation
costs on a U.S. dollar basis. Data on a U.S. dollar basis are
calculated by dividing compensation costs in the national
currency by the exchange rate (expressed as national currency
units per U.S. dollar). Compensation costs on a U.S. dollar
basis are often used as indicators of competitiveness of
manufactured goods in world trade and are the focus of the
following discussion.
Compensation costs for production workers in manufacturing
measured in U.S. dollars continued to rise in 2006 in most of the
foreign economies-with only two countries, Japan and New Zealand,
showing a decrease in costs. In addition, hourly compensation
costs increased by less than one percent in two economies, Taiwan
and Switzerland (0.2 percent and 0.6 percent, respectively). The
rate of compensation increase in a trade-weighted average of the
33 foreign economies was 4.7 percent in 2006, below the 5.6
percent historical average for the series. (See table A and table
3.)
Chart 2. Indexes of hourly compensation costs in U.S. dollars
for production workers in manufacturing, 2006
PRINTED COPY CONTAINS CHART AT THIS POINT.
Although average costs in the United States continued to be
higher than those in most of the economies covered outside of
Europe, 14 of the 20 European countries covered had higher hourly
compensation costs than the United States, in a few cases more
than 40 percent higher. With the value of the euro remaining
relatively stable against the U.S. dollar in 2006 (+0.9 percent),
European labor costs measured in U.S. dollars showed much weaker
growth than in the earlier years of this decade. The only
European countries to have double-digit growth in hourly
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compensation costs on a U.S. dollar basis in 2006 were the Czech
Republic and Poland (12.2 and 10.5 percent, respectively), both
of which also experienced stronger appreciation of their national
currencies against the dollar than the euro did.
Compensation costs in Europe, on average, continued to be
almost $5 higher on a per hour basis than in the United States.
However, there is great variation in the level of compensation
costs among the European countries covered. For example, hourly
compensation costs in Europe ranged from $4.99 in Poland to more
than eight times that level in Norway ($41.05), the highest labor
cost country in these comparisons. (See table 2.)
Outside of Europe, only Canada and Australia had compensation
costs higher than the United States when measured in U.S.
dollars. In 2006, the lowest compensation costs relative to the
United States were in Mexico and the Philippines (12 percent and
4 percent of the U.S. level, respectively).
Annual percent changes in manufacturing compensation costs
measured in U.S. dollars also varied considerably in 2006.
Hourly compensation costs in Brazil, the Republic of Korea, the
Philippines, and Singapore all showed double-digit growth in 2006
(17.8, 15.5, 16.2, and 17.1 percent, respectively), boosted by an
appreciation of their national currencies against the U.S.
dollar. Japan and New Zealand were the only countries in these
comparisons to show a decrease in hourly compensation costs
measured in U.S. dollars (-6.2 and -3.3 percent, respectively),
largely due to the depreciation of the Japanese yen and New
Zealand dollar against the U.S. dollar.
BOX: A note on the measures
The hourly compensation costs measures in this news release
are based on statistics available to BLS as of September 2007. These
measures are prepared specifically for international comparisons of
employer labor costs in manufacturing. The methods used, as well as
the results, differ somewhat from those of other BLS series on U.S.
compensation costs.
See the Technical Notes for further information regarding
definitions, sources, and computation methods, as well as a
description of the trade-weighted measures for economic groups.
The data for some countries may have been revised in later
updates to reflect new or revised data provided to BLS subsequent
to this news release. See International Comparisons of Hourly Compensation
Costs for Production Workers and All Employees in Manufacturing, 22
Manufacturing Industries at http://www.bls.gov/fls/flshcindnaics.htm
for the most recent data.
END OF BOX: A note on the measures
Exchange rates
The trade-weighted 2.0 percent increase in the value of the
currencies of the 33 foreign economies against the U.S. dollar
was the smallest increase since 2002 (0.4 percent), but well
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above the average annual change since 1975 (-3.4 percent). The
currencies of most economies appreciated in 2006, while the
currencies of only seven economies- Mexico, Australia, Japan, New
Zealand, Taiwan, Hungary, and Switzerland- depreciated against
the dollar. (See table 5.)
The movements of the foreign currencies relative to the U.S.
dollar in 2006 had an influence on hourly manufacturing
compensation costs measured in U.S. dollars. Hourly compensation
costs on a national currency basis in the 33 foreign economies
rose 2.6 percent. However, when adjusted for the appreciation of
the foreign currencies against the U.S. dollar, this increase in
costs was magnified to 4.7 percent. The effect that exchange
rate changes can have on hourly compensation costs is
particularly evident when comparing the labor costs of New
Zealand with those of the United States. On a national currency
basis, the increase in hourly compensation costs in New Zealand
(4.9 percent) was greater than the increase in the United States
(0.1 percent). When adjusted for changes in exchange rates,
however, the increase in costs on a U.S. dollar basis was
significantly lower in New Zealand than in the United States
(-3.3 percent versus 0.1 percent).
BOX: China
Acknowledging the importance of China as one of the United
States' largest trading partners, BLS is including data for China in
this release. Due to data limitations, data are presented separately
and only for 2002-2004.
The compensation costs data presented for China are not
directly comparable with the data for other countries found in this
release. For a description of the methods used to construct the 2002
estimate and possible comparability issues, refer to Judith Banister's
August 2005 article in the Monthly Labor Review found on the BLS
website at http://www.bls.gov/opub/mlr/2005/08/art3full.pdf. In general,
the methods used to update the hourly compensation costs data to
2003 and 2004 are the same as the methods used in the Banister
article and are described in a November 2006 article of the Monthly
Labor Review at http://www.bls.gov/opub/mlr/2006/11/art4full.pdf.
China: Hourly Compensation Costs for All Employees in
Manufacturing, 2002-2004
National U.S. Index
Year Currency Dollar (United
Basis Basis States
(Yuan) (US$) =100)
2002 4.73 0.57 3
2003 5.17 0.62 3
2004 5.50 0.67 3
END OF BOX: China
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Table A. Hourly compensation costs, in national currency and in
U.S. dollars, for production workers in manufacturing and exchange
rates (U.S. dollars per national currency unit)
Percent change, 2005-2006
Hourly Hourly
Country compensation, compensation,
or area national Exchange U.S.
currency Rates dollars
Americas
United States 0.1 - 0.1
Brazil 5.2 12.0 17.8
Canada .4 6.9 7.3
Mexico 4.5 -.2 4.3
Asia and Oceania
Australia 5.4 -1.2 4.1
Hong Kong SAR (1) 2.2 .1 2.4
Israel 4.5 .7 5.2
Japan -.9 -5.3 -6.2
Korea, Republic of 7.7 7.3 15.5
New Zealand 4.9 -7.9 -3.3
Philippines 8.1 7.5 16.2
Singapore 11.7 4.8 17.1
Sri Lanka - - -
Taiwan 1.4 -1.2 .2
Europe
Austria 2.8 .9 3.8
Belgium 2.5 .9 3.5
Czech Republic 5.8 6.0 12.2
Denmark 2.0 .9 2.9
Finland 4.4 .9 5.4
France 2.8 .9 3.8
Germany 1.7 .9 2.6
Greece 4.2 .9 5.2
Hungary 8.2 -5.1 2.7
Ireland 6.5 .9 7.5
Italy 2.5 .9 3.5
Luxembourg .8 .9 1.7
Netherlands .7 .9 1.7
Norway 4.3 .5 4.8
Poland 6.0 4.3 10.5
Portugal 4.2 .9 5.2
Spain 4.2 .9 5.1
Sweden 3.0 1.3 4.4
Switzerland 1.1 -.6 .6
United Kingdom 4.0 1.3 5.3
Trade-weighted measures (2)
All foreign economies 2.6 2.0 4.7
OECD (3) 2.3 1.9 4.2
Europe 2.9 .9 3.9
Asian NIEs (4) 5.8 3.4 9.5
1 Hong Kong Special Administrative Region of China.
2 The 2005-2006 percent changes for the trade-weighted measures are
based upon the changes for the countries or areas for which 2006 data
are available.
3 Organization for Economic Cooperation and Development.
4 Asian NIEs refer to Hong Kong SAR, Republic of Korea, Singapore, and Taiwan.
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Compensation costs for all employees
For the first time, this news release contains hourly compensation
costs data for all employees in manufacturing in addition to the data
for production workers. The all employee series begins with data for
1996. Production workers generally include those employees who are
engaged in fabricating, assembly, and related activities. All
employees include production workers as well as all others employed
full or part time in an establishment. (See the technical notes
beginning on page 9 for more detailed definitions of production
workers and all employees.) The all employee series includes data
for Argentina and Slovakia, two countries not covered by the
production worker hourly compensation costs. Hong Kong SAR, Sri
Lanka, Greece, and Luxembourg are not included in the all employee
series as comparable data are not available.
As the final column in Table B shows, hourly compensation costs
for all employees are higher than those for production workers in
each economy covered by the two series, generally ranging from 10
percent to 25 percent higher than production worker hourly
compensation costs. The difference between the two series depends
not only upon the higher compensation of non-production workers than
production workers, but also on the relative employment levels of the
two worker groups; typically the larger the portion of all employees
accounted for by production workers, the smaller the gap in
compensation costs.
In the United States, hourly compensation costs for all employees
in manufacturing were $29.60 in 2006, 24 percent higher than
production worker compensation costs. Only 7 of the 28 foreign
economies covered by both the production worker and all employee
hourly compensation costs series had a larger difference between the
compensation levels of the two groups than the United States.
Although Australia was the only non-European economy to have
higher hourly compensation costs than the United States in 2006 for
all employees when measured in U.S. dollars ($30.10), 12 of 18
European countries had higher compensation costs than the United
States. The hourly compensation costs of both the new countries in
the series, Argentina and Slovakia, were 22 percent of the United
States level.
Since high labor costs countries such as Denmark, the Netherlands,
Norway, and Sweden have smaller than average gaps between production
worker and all employee hourly compensation costs, the range of
European compensation costs narrowed when measured on an all
employees basis (21 percent to 172 percent of the United States level
for production workers versus 21 percent to 156 percent of the United
States level for all employees).
Measuring compensation costs on an all employees basis changes the
position of some countries relative to the United States. For
example, production worker compensation costs in Italy were 5 percent
higher than in the United States for 2006. However, the gap between
production worker and all employee hourly compensation costs is much
lower in Italy than in the United States (15 percent versus 24
percent in 2006), so when compensation costs are measured on all
employee basis, Italy's costs are about 3 percent lower than the
United States.
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Table B. Hourly Compensation Costs of Production Workers and All Employees
in Manufacturing, 2006
Country Production All Production All All Employees
or Area Workers Employees Workers Employees (Production
(US=100) (US=100) (US$) (US$) Workers =100)
Americas
United States 100 100 23.82 29.60 124
Argentina - 22 - 6.57 -
Brazil 21 20 4.91 5.90 120
Canada 108 98 25.74 29.00 113
Mexico 12 13 2.75 3.72 135
Asia and Oceania
Australia 110 102 26.14 30.10 115
Hong Kong SAR (1) 24 - 5.78 - -
Israel 54 49 12.98 14.37 111
Japan 85 82 20.20 24.40 121
Korea, Republic of 62 57 14.72 16.87 115
New Zealand 61 54 14.47 16.08 111
Philippines 4 5 1.07 1.36 127
Singapore 36 46 8.55 13.55 158
Sri Lanka - - - - -
Taiwan 27 27 6.43 7.95 124
Europe
Austria 128 124 30.46 36.70 120
Belgium 134 123 31.85 36.35 114
Czech Republic 28 - 6.77 - -
Denmark 149 129 35.45 38.21 108
Finland 126 119 29.90 35.26 118
France 105 114 24.90 33.73 135
Germany 144 139 34.21 41.04 120
Greece 68 - 16.10 - -
Hungary 26 28 6.29 8.39 133
Ireland 109 105 25.96 30.99 119
Italy 105 97 25.07 28.71 115
Luxembourg 116 - 27.74 - -
Netherlands 136 119 32.34 35.34 109
Norway 172 156 41.05 46.31 113
Poland 21 21 4.99 6.26 125
Portugal 32 32 7.65 9.54 125
Slovakia - 22 - 6.53 -
Spain 79 74 18.83 22.05 117
Sweden 133 116 31.80 34.21 108
Switzerland 129 121 30.67 35.68 116
United Kingdom 114 114 27.10 33.71 124
1 Hong Kong Special Administrative Region of China.
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Additional data available
In addition to the compensation cost measures covered in this news
release, supplementary tables are available for comparative levels of
hourly compensation costs, hourly direct pay, pay for time worked,
and the structure of compensation for production workers in
manufacturing for all years from 1975 through 2006, and for all
employees in manufacturing for all years from 1996 to 2006. Data
also are available for national currency hourly compensation and
exchange rates in the supplementary tables (http://www.bls.gov/fls).
BLS also computes comparative measures for 22 component
manufacturing industries. Data for the component industries are not
included in this release; in general, the data limitations for the
component industries are greater than for total manufacturing. Data
are available via the Internet (http://www.bls.gov/fls). This series
is updated several times per year as data become available. The data
for component industries currently are available on a North American
Industry Classification System (NAICS) basis from 1992 to 2005.
For further information, contact the Office of Productivity and
Technology by phone at 202-691-5654, by e-mail at flshc@bls.gov, or
by mail at Bureau of Labor Statistics, 2 Massachusetts Avenue, NE,
Room 2150, Washington, DC 20212.
Information in this release will be made available to sensory
impaired individuals upon request. Voice phone: 202-691-5200; TDD
message referral phone: 1-800-877-8339.
This material is in the public domain and, with appropriate
credit, may be reproduced without permission. It may be translated
into foreign languages without permission, with a separate credit for
the translation.
Last Modified Date: January 25, 2008
Bureau of Labor Statistics
