EMPLOYMENT IN THE MARKET ECONOMY IN ... - Eurostat - Europa

Chapter 3 — Labour costs and value-added
The aim here is, first, to examine the variation in average
labour costs per employee both between sectors and
across the enlarged EU and, secondly, to relate average
labour costs to value-added per person employed, or
productivity.
Industry
Average annual labour costs
In the EU15, annual labour costs per employee in industry
were highest in Belgium, Germany, the Netherlands, Austria
and Sweden in 2001, in all cases, close to or just over
40 thousand euros per employee. They were lowest in
Portugal at only 13 thousand euros per employee. In the
EU15 countries together, they averaged some 35 thousand
euros (30 thousand euros in EU25) (Table 24).
In the new Member States, they were just under half the
EU15 average in terms of euros in Cyprus (on the basis of
the data available for manufacturing), Malta and Slovenia
(in the last, much the same as in Portugal). In the other
new Member States, they were only around a quarter or
less of the EU15 average, again in euro terms. (It should
be noted that the figures adjusted to purchasing power
parity terms would give a better indication of the true cost
of labour.) In Bulgaria and Romania, labour costs were
under 10% of the EU15 average.
Labour costs in manufacturing were much the same or
slightly higher than in industry as a whole, while in mining,
Adjusting labour costs for the self-employed
An allowance needs to be made for the self-employed
when computing labour costs in order both to give an accurate
indication of their scale and to improve the comparability
of the data across sectors of activity and
Member States. The assumption made is that the earnings
of the self-employed are the same as those of employees,
which is the most neutral assumption to make in
the absence of data. The scale of the adjustment, therefore,
varies in proportion to the share of the self-employed
in the work force (ie making no allowance for the
self-employed tends to understate labour costs by a
larger amount the greater the number of self-employed
relative to employees).
The adjustment in question is relatively small in most Member
States in respect of manufacturing where those recorded
as self-employed in the SBS data represented only
around 6% of the work force in the EU15 in 2001. It is, however,
larger in construction where 18% of those in work
were self-employed. The proportion in manufacturing varied,
however, from only around 1% in Luxembourg to 17%
in Italy. In the new Member States, it varied from under
0.5% in Latvia, Slovakia and Hungary (in the last two reflecting
the incomplete data on small firms) to 10% in the
Czech Republic. In market services, on the other hand, the
adjustment required is much larger since some 16% of the
total in the work force in the EU15 were self-employed in
2001 according to the SBS. This proportion varied from
only around 6% in France to 23% in Spain and 45% in Italy.
In the new Member States and candidate countries it varied
between 1% in Latvia to 28% in the Czech Republic,
though in most countries, it was under 10%, apart from in
Malta (25%). It was also high in Bulgaria (32%), while in Romania,
it was 10%.
Unit labour costs — and the share of labour in value-added
— can, therefore, be estimated by the equation:
(Total employed/Employees) x (Labour costs/Value-added)
which can be rearranged as:
(Labour costs/Employees)/(Value-added/Total employed)
which is equivalent to the ratio of average labour costs per
employee to labour productivity, expressed in terms of the
number employed rather than hours worked.
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