Second quarter of 2016 annual growth in labour costs down to 1.0% in euro area down to 1.4% in EU28 | WPN World People News

Hourly labour costs rose by 1.0% in the euro area (EA19) and by 1.4% the EU28 in the second quarter of 2016, compared with the same quarter of the previous year. In the first quarter of 2016, hourly labour costs increased by 1.6% in both zones. These figures are published by Eurostat, the statistical office of the European Union.

The two main components of labour costs are wages & salaries and non-wage costs. In the euro area, wages & salaries per hour worked grew by 0.9% and the non-wage component by 1.4%, in the second quarter of 2016 compared with the same quarter of the previous year. In the first quarter of 2016, the annual changes were +1.7% and +1.5% respectively. In the EU28, hourly wages & salaries rose by 1.3% and the non-wage component by 1.6% in the second quarter of 2016. In the first quarter of 2016, annual changes were +1.6% for both components.

Breakdown by economic activity

In the second quarter of 2016 compared with the same quarter of the previous year, hourly labour costs in the euro area rose by 0.9% in industry, by 1.5% in construction, by 0.9% in services and by 1.1% in the (mainly) nonbusiness economy. In the EU28, labour costs per hour grew by 1.1% in industry, by 3.1% in construction, by 1.2% in services and by 1.6% in the (mainly) non-business economy.

Member States

In the second quarter of 2016, the highest annual increases in hourly labour costs for the whole economy were registered in Romania (+12.0%), Latvia (+9.5%), Bulgaria (+7.3%) and Lithuania (+6.6%). Decreases were recorded in Finland (-2.0%), Italy and Luxembourg (both -1.1%).

Geographical information

The euro area (EA19) includes Belgium, Germany, Estonia, Ireland, Greece, Spain, France, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Austria, Portugal, Slovenia, Slovakia and Finland. The European Union (EU28) includes Belgium, Bulgaria, the Czech Republic, Denmark, Germany, Estonia, Ireland, Greece, Spain, France, Croatia, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Hungary, Malta, the Netherlands, Austria, Poland, Portugal, Romania, Slovenia, Slovakia, Finland, Sweden and the United Kingdom.

Methods and definitions

The Labour Cost Index is a short-term indicator showing the development of hourly labour costs incurred by employers, in nominal terms, that is without adjusting for price developments. It is calculated dividing the labour cost in national currency by the number of hours worked. Therefore, the development of variables, labour costs and hours worked, affect the evolution of the index (base year = 2012).

The quarterly changes in hourly employers’ costs are measured for total labour costs and its main components: wages and salaries; and non-wage costs (labour costs other than wages and salaries). 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.

Revisions and time table

The Labour Cost Index data are subject to revision, in particular for the latest quarters, when new source data become available.

Compared with News Release 121/2016 of 17 June 2016, the annual growth rate for the total economy for the first quarter of 2016 has been revised from +1.7% to +1.6% for both the EA19 and the EU28.

source: European Commission