Labor costs
The wage costs are the sum of all wage-related expenses that are paid by employers to or for employees in a certain period of time.
The calculation method is important when collecting wage costs, because this can result in different results. Usually the absolute hourly wage costs are calculated. They can also be calculated per head. However, the unit labor costs are more meaningful , as they do not relate the labor costs to the number of hours worked or the number of employees, but to the output generated, such as the number and value of the products manufactured. Non-wage labor costs represent a subset of wage costs.
In Germany , as in other industrialized nations, wage costs are often blamed as the reason for the poor situation on the labor market , especially the high unemployment . They are too high in an international comparison and make Germany unattractive as a location. The many times lower wage costs in Eastern European and Southeast Asian countries are a strong competitive advantage for them (which, however, did not rule out severe financial crises in these countries in particular). In particular, if productivity in these countries is not proportional to wage costs, but shows relatively good results, companies can emigrate from the industrialized nations. It is noticeable, however, that the bulk of investments, especially direct investments , take place within the advanced industrialized countries and only to a lesser extent benefit developing countries. The International Monetary Fund even comes to the conclusion that capital is flowing “in the wrong direction”, that is from “South” to “North”. In terms of labor costs, one should have expected the opposite direction.
International comparison
The figure shows the wages ( national accounts ) per employee (for wage costs) and the (nominal) gross domestic product per employee (for labor productivity ). The average values for the years 2000 to 2004 were calculated. For the sake of comparability, the values were converted into euros and standardized to BRD values = 100. In the Eastern European countries productivity is well below that of Germany, but the wages per capita are even more below the FRG value, so that as a result - measured in terms of wage costs alone - the Eastern European countries are more competitive. It is noticeable that the two main competitors from the triad, the USA and Japan, are less competitive after this result, since they have higher labor productivity but even higher wage costs.
According to a press release from the Federal Statistical Office in December 2006, between the year 2000 and the second quarter of 2006 the cost burden on employers for an hour worked has increased less in any member state of the European Union than in Germany. In Germany, calendar and seasonally adjusted labor costs rose by 9.8%, while the increase in the European Union was 22.5%. Both gross wages and ancillary wage costs contributed to this development. The increase in gross wages in the EU was + 22.3%, above the growth in Germany, where it was only 11.7%. The differences in non-wage labor costs are clearer. In the EU, for example, they have risen by + 23.3% since 2000, significantly more than in Germany, where the increase was + 3.5%.
