Monthly Bulletin April 2008 - European Central Bank - Europa

ECONOMIC
AND MONETARY
DEVELOPMENTS
Prices and
costs
however, pointing to a likely increase in labour
cost growth in 2008.
Chart 22 Selected labour cost indicators
The annual growth rate of hourly labour costs
was 2.7% in the fourth quarter of 2007, up
slightly from the rates of growth recorded
earlier in the year. This increase comes mainly
from a rise in the annual growth rate of wage
costs, while the growth rate of other labour
costs (mainly social security contributions)
moderated somewhat. The annual growth rate of
compensation per employee likewise increased,
to 2.5% in the last quarter of 2007. Combined
with a further slowdown in productivity, this led
to a noticeable rise in unit labour cost growth to
2.0% in the fourth quarter of 2007.
The aggregate figure for compensation per
employee in 2007 conceals opposing sectoral
developments (see Chart 23). On the one hand,
the average annual growth rate of compensation
per employee in industry recorded a significant
slowdown in 2007 compared with 2006.
(annual percentage changes; quarterly data)
However, alternative data sources (in particular the Eurostat short-term statistics dataset) suggest
that this was driven mainly by a substantial decline in wage growth in the energy sector, while wage
growth dynamics in the manufacturing sector appear to have been comparable to those observed in
2006. On the other hand, the annual growth of compensation per employee in services increased,
reflecting a noticeable increase in wage growth in all market services, as well as some exceptional
developments in the non-market services sector in 2007.
4.0
3.5
3.0
2.5
2.0
1.5
compensation per employee
negotiated wages
hourly labour costs
2002 2003 2004 2005 2006 2007
Sources: Eurostat, national data and ECB calculations.
Note: Data on compensation per employee refer to the euro area
including Cyprus and Malta.
4.0
3.5
3.0
2.5
2.0
1.5
Chart 23 Sectoral labour cost developments
(annual percentage changes; quarterly data)
industry excluding construction, CPE
construction, CPE
market services, CPE
services, CPE
industry excluding construction, hourly LCI
construction, hourly LCI
market services, hourly LCI
5.0
5.0
5.0
5.0
4.0
4.0
4.0
4.0
3.0
3.0
3.0
3.0
2.0
2.0
2.0
2.0
1.0
1.0 1.0
2002 2003 2004 2005 2006 2007
2002 2003 2004 2005 2006 2007
Sources: Eurostat and ECB calculations.
Note: CPE stands for “compensation per employee” and LCI stands for “labour cost index”.
1.0
ECB
Monthly Bulletin
April 2008
39