Q2 2014: Annual growth in labour costs up to 1.2% in both eurozone and EU28

Hourly labour costs¹ rose by 1.2% in both the eurozone² (EA18) and the EU28² in the second quarter of 2014, compared with the same quarter of the previous year. In the first quarter of 2014³, hourly labour costs increased by 0.6% and 1.0% respectively. These figures are published by Eurostat, the statistical office of the European Union.

The two main components of labour costs are wages and salaries and non-wage costs. In the euro area, wages and salaries per hour worked grew by 1.2% and the non-wage component by 1.0%, in the second quarter of 2014 compared with the same quarter of the previous year. In the first quarter of 2014 the annual changes were +1.0% and -0.6% respectively. In the EU28, hourly wages & salaries rose by 1.2% and the non-wage component by 1.1% for the second quarter of 2014, compared with +1.4% and -0.2% respectively for the first quarter of 2014.

Breakdown by economic activity

In the second quarter of 2014 compared with the same quarter of the previous year, hourly labour costs in the eurozone rose by 2.5% in industry, by 0.7% in construction, by 0.9% in services and by 0.6% in the (mainly) non-business economy. In the EU-28, labour costs per hour grew by 2.8% in industry, by 0.4% in construction, by 0.9% in services and by 0.7% in the (mainly) non-business economy.

Member states

Among the member states for which data are available for the second quarter of 2014, the highest annual increases in hourly labour costs for the whole economy were registered in Estonia (+7.3%), Slovakia (+6.0%), Latvia (+5.9%), Lithuania (+5.1%) and Romania (+5.0%). Decreases were recorded in Cyprus (-3.9%) and Ireland (-0.4%).

*     Not working day adjusted

1. The Labour Cost Index is a short-term indicator showing the development of hourly labour costs incurred by employers. It is calculated dividing the labour cost in national currency by the number of hours worked. Therefore, the development of both variables, labour costs and hours worked, affects the evolution of the index.

The quarterly changes in hourly employers’ costs are measured for total labour costs and the main components: wages and salaries; and labour costs other than wages and salaries (non-wage costs). Total labour costs (TOT) cover wage and non-wage costs less subsidies. They do not include vocational training costs or other expenditures such as recruitment costs, spending on working clothes, etc.

Wage and salary costs (WAG) include direct remuneration, bonuses, and allowances paid by an employer in cash or in kind to an employee in return for work done, payments to employees saving schemes, payments for days not worked and remuneration in kind such as food, drink, fuel, company cars, etc.

Labour costs other than wages and salaries (OTH - non-wage costs) include the employers’ social contributions plus employment taxes regarded as labour costs less subsidies intended to refund part or all of the employer’s cost of direct remuneration.

Eurostat publishes Labour Cost Index data for NACE Rev. 2 sections B to S. The aggregate is referred to as "Whole economy" for the sake of simplification, even if agriculture, activities of households as employers and activities of extraterritorial organisations are excluded. For more breakdowns and further definitions click here.

The eurozone (EA-18) includes Belgium, Germany, Estonia, Ireland, Greece, Spain, France, Italy, Cyprus, Luxembourg, Latvia, Malta, the Netherlands, Austria, Portugal, Slovenia, Slovakia and Finland.

The European Union (EU28) includes Belgium (BE), Bulgaria (BG), the Czech Republic (CZ), Denmark (DK), Germany (DE), Estonia (EE), Ireland (IE), Greece (EL), Spain (ES), France (FR), Croatia (HR), Italy (IT), Cyprus (CY), Latvia (LV), Lithuania (LT), Luxembourg (LU), Hungary (HU), Malta (MT), the Netherlands (NL), Austria (AT), Poland (PL), Portugal (PT), Romania (RO), Slovenia (SI), Slovakia (SK), Finland (FI), Sweden (SE) and the United Kingdom (UK).

3. Compared with News Release 93/2014 of 17 June 2014, annual growth rates for the total economy for the first quarter of 2014 were revised from +0.9% to +0.6% for the EA18 and from +1.2% to +1.0% for the EU28.

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