High wage country

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As a high-wage country ( English high-wage country ) are countries where labor costs are significantly higher than the average of other countries. The opposite is the low-wage country .

General

The benchmark is the economic indicator of labor costs. These differ from state to state for comparable employment , so that they can be the cause of labor migration . With the destination principle (or with a minimum wage ), a high-wage country protects on the one hand its acquired productivity and prosperity , on the other hand it gives the low-wage countries the opportunity to follow suit through wage convergence . Because labor migration means that in the low-wage workers just are, and in high-wage an excess supply of labor - that is unemployment - is created. This results in a leveling trend in labor costs (rising in low-wage countries, falling in high-wage countries).

Even if in some branches of the economy only the minimum wage is paid, the term high-wage country applies if the total hourly labor costs in a country are significantly higher than the average in other countries.

economic aspects

In March 1776, the economist Adam Smith assumed that foreign trade is worthwhile when a good can be produced more cheaply in one country than abroad; from this he developed the theory of absolute cost advantages in his work The Prosperity of Nations . Smith only looked at labor costs, so a country with higher labor costs can import certain products from another country where the labor costs for those products are lower. David Ricardo went one step further in 1817 and considered trade to be advantageous even if one of the countries can offer all products cheaper ( comparative cost advantage ).

The classification of different labor costs makes use of the so-called Atlas method and is based on the amount of generated gross national income ( english income gross national , GNI) per capita ( per capita income ). The GNI has taken the place of the gross national product (GNP) previously used in the UN's national accounting system of 1993 . It contains all income earned by residents , regardless of whether this was done in Germany or abroad. As long as the high labor costs are justified by high labor productivity , they do not represent a competitive disadvantage compared to other countries. Adjusted for purchasing power, some small countries led worldwide in 2017 , which also frequently show statistical irregularities. These include Qatar (US $ 128,060 GNI per capita), Macau (96,570), Singapore (90,570), Brunei (83,760), Kuwait (83,310), United Arab Emirates (74,410) and Luxembourg (72,690), before Switzerland was the first land-based state follows (65.610).

Globalization also means that parts of the value chain are relocated from high-wage countries to relatively poor, low-wage countries (e.g. body construction in the automotive industry ), provided that the qualifications of the local workforce and the (industrial) infrastructure permit this. If production is carried out in a high-wage country, the longer production time is accompanied by high labor costs and, in addition, higher overheads . This already results in major price disadvantages that are hardly accepted by the market. As a high-wage country poor in raw materials, Germany can only maintain and increase its competitiveness if it quickly and comprehensively succeeds in selling large quantities of product innovations that are suitable for the global market using economically efficient and ecologically optimal processes at a profit. This requires great efforts in research and development ( innovative ability ) with the aim of patenting .

In 2004 Paul Samuelson showed how technological progress in low-wage countries can damage industrialized countries . If, for example, high-wage countries finance investments in low-wage countries, then this , according to Paul Krugman , reduces the reserves for building up a capital stock in their own country. As a result, there is less capital for each worker , so that the marginal product of labor - and therefore the wage share - will be lower than it was before investment.

International statistics

Typical high-wage countries in terms of labor costs worldwide (in euros per person / hour):

country 2007 2017
EU total 22.80 26.80
Norway 40.19 51.00
Belgium 35.84 39.60
Switzerland 32.70 58.13
Denmark 32.81 42.50
Germany 32.70 34.10
Finland 30.01 32.70
France 32.26 36.00
Austria 29.90 34.10
Luxembourg 30.68 37.60
Sweden 34.53 38.30
Netherlands 31.34 34.80
Ireland 26.87 31.00
United States 22.57 33.96
United Kingdom 27.19 25.70
Canada 23.38 27.98

The average of the 44 countries measured showed labor costs of € 19.71 / hour (2017). For countries outside the euro zone , the comparison is impaired by currency effects. The international comparison of labor costs shows not only enormous differences in the level, but also in their components. Denmark ranks second for direct pay, while it ranks eleventh for non-wage costs . West Germany, on the other hand, occupies a leading position in terms of both direct pay and non-wage costs with fifth and fourth place. The further a country is in northwestern Europe, the higher the labor costs. The high German unit labor costs show that productivity was not high enough to offset the disadvantage of high labor costs.

In 2013, the German automotive industry led the European automotive industry with labor costs of € 48.40, followed by Sweden (€ 47.30), France (€ 46.70), Italy (€ 29.70), and Spain (€ 26.70) or England (€ 24.50).

See also

Web links

Wiktionary: High wage country  - explanations of meanings, word origins, synonyms, translations

Individual evidence

  1. ↑ Heiner Flassbeck, 50 Simple Things You Should Know About Our Economy , 2006, p. 81
  2. ↑ Eckhard Jesse / Armin Mitter, The Design of German Unity: History, Politics, Society , 1992, p. 296
  3. ↑ Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations , 1776/1978, pp. 64 f.
  4. ↑ David Ricardo, The Principles of Political Economy and Taxation , 1817, pp. 184 ff.
  5. ^ Paul JJ Welfens, Fundamentals of Economic Policy , 2008, p. 533
  6. ↑ Erich Staudt (Ed.), Structural Change and Career Planning , 1998, p. 40
  7. ^ Paul Samuelson, Where Ricardo and Mill Rebut and Confirrm Arguments of Mainstream Economists Supporting Globalization , in: Journal of Economic Perspectives vol 18, 2004, pp. 135-146
  8. ^ Paul R. Krugman / Maurice Obstfeld, Internationale Wirtschaft: Theory and Politics of Foreign Trade , 2009, p. 228
  9. ↑ Institut der Deutschen Wirtschaft (Christoph Schröder), Industrial Labor Costs in International Comparison , 3/2016, p. 44
  10. ↑ Eurostat , press release 60/2018 of 9 April 2018, labor costs in the EU , p. 3
  11. ↑ Institute of the German Economy (Christoph Schröder), Industrial Labor Costs in International Comparison , 3/2016, p. 46
  12. ^ Institute of the German Economy (Christoph Schröder), Unit Labor Costs in International Comparison , vol. 44, 2017, p. 80
  13. ↑ Statista the statistics portal, hourly labor costs in the automotive industry in selected European countries in 2005 and 2013 (in euros) , 2019