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   International Comparisons of Hourly Compensation Costs in Manufacturing News Release For release 10:00 a.m. (EST) Wednesday, December 19, 2012    USDL-12-2460

Technical Information: (202) 691-5654     ilchelp@bls.gov      www.bls.gov/ilc
Media Contact:         (202) 691-5902     PressOffice@bls.gov

INTERNATIONAL COMPARISONS OF HOURLY COMPENSATION COSTS
IN MANUFACTURING, 2011

In comparison with 33 foreign countries covered, U.S. manufacturing hourly 
compensation costs in 2011 ranked approximately in the middle at $35.53, the 
U.S. Bureau of Labor Statistics reported today (see chart 1). In addition to 
Australia, Canada, Italy, and Japan, countries with higher hourly compensation 
costs were primarily in northern and western Europe. Countries with lower 
hourly compensation costs were primarily in southern and eastern Europe, Asia, 
and Latin America.

Between 1997 and 2011, compensation costs in manufacturing as a percent of 
U.S. costs (see table 1) increased or remained the same in all economies 
compared except Taiwan, improving U.S. cost competitiveness.

Chart 1. Hourly compensation costs in manufacturing, U.S. dollars, 2011

PDF CONTAINS CHART AT THIS POINT.


Changes in a country's compensation costs in U.S. dollars are roughly 
equivalent to the change in compensation costs in a country's national 
currency plus the change in the value of the country's currency relative 
to the U.S. dollar. This relationship is illustrated in chart 2, where 
the bars in the right panel for each country can be summed to equal the 
bars in the left panel. In 2011, most countries had increases in hourly 
compensation costs in national currency combined with larger appreciations 
in national currency relative to the U.S. dollar, resulting in increases 
in U.S. dollar-denominated hourly compensation costs. Only Greece experienced
a decrease in U.S. dollar hourly compensation costs.

Chart 2. Annual percent change in hourly compensation costs in 
         manufacturing and exchange rates, 2010-2011

PDF CONTAINS CHART AT THIS POINT.


Chart 3. Benefit components of hourly compensation costs as a percent 
         of total compensation, 2011

PDF CONTAINS CHART AT THIS POINT.


Chart 3 shows the benefit components of manufacturing employers' compensation 
costs as a percent of total costs. (See table 3 for data in U.S. dollars.) 
Economies are ordered based on social insurance expenditures as a percent of 
total compensation. In countries with the highest ratio of social insurance 
costs, such as Sweden, Belgium, and Brazil, social insurance makes up 
approximately one-third of total compensation costs. In the United States, 
social insurance costs account for about 24 percent of total compensation, 
while in the Asian countries social insurance is less than 20 percent. 
Directly-paid benefits comprise pay for leave time, bonuses, and pay in kind. 
The percentage of compensation that is directly-paid benefits tends to be 
higher in many European countries (due in large part to leave pay) and in 
Japan (where seasonal bonuses are a large portion of costs). Directly-paid 
benefits are a relatively smaller portion of costs in countries such as the 
United States, Australia, and Canada.

The total benefits portion of compensation costs can be seen by combining 
social insurance with directly-paid benefits. Total benefits surpass 40 
percent in 15 countries. In contrast, the ratio of benefit costs in the United 
States is about 33 percent. 

Find additional data. 
Detailed time series tables of compensation costs in U.S. dollars, national 
currencies, and annual indexes for 1996-2011 are available at 
www.bls.gov/web/ichcc.supp.toc.htm.

Compensation costs for sub-manufacturing industries are also available at 
www.bls.gov/ilc/ichcccountry.htm and www.bls.gov/ilc/ichccindustry.htm. Data 
tables are available by country and industry.

Go to www.bls.gov/ilc/#compensation for additional information.

Analyze trends with interactive dashboard. 
The time series data tables in Excel include an interactive dashboard that 
displays charts from a custom selection of variables, countries, and time 
periods at www.bls.gov/ilc/dashboards.htm.

Send us your inquiries or feedback. 
We appreciate your inquiries and feedback. Feel free to email ILCHelp@bls.gov 
or call (202) 691-5654.

Subscribe to ILC's e-newsletter. 
The e-newsletter provides links to the latest ILC releases, which usually 
occur once or twice per month. Email ILCPR@bls.gov with "subscribe" in the 
subject line. 

BOX: China and India

BLS has developed estimates of hourly compensation costs for employees in the 
Chinese and Indian manufacturing sectors.(1)(2)  Due to various data gaps and 
methodological issues, compensation costs for China and India are not directly 
comparable to each other or with the data for other countries found in this 
release, and therefore are presented separately. Data are available for China 
through 2008 and for India through 2007.(3)

For China, BLS approximates average hourly compensation costs in manufacturing 
by filling important data gaps for hours worked per year and for benefit 
components of labor compensation. Further, the concepts and coverage of 
Chinese statistics on manufacturing employment and wages often do not follow 
international standards and can be difficult to understand. Largely because of 
these data gaps and challenges, BLS estimates for China cannot be considered 
as robust as the manufacturing statistics for the other countries in this news 
release.

For India, BLS estimates of compensation costs refer to formal manufacturing 
only, rather than to total manufacturing in the country. Unorganized sector 
manufacturing workers account for approximately 80 percent of total 
manufacturing employment in India and earn substantially less than their 
formal sector counterparts. For this reason, employers' average compensation 
costs in formal manufacturing overstate average compensation costs for Indian 
manufacturing as a whole.(4)

Hourly compensation costs in manufacturing for China and India,
       in U.S. dollars, 2003-2008

PDF CONTAINS CHART AT THIS POINT.


(1) For the most recent BLS work on China, see Judith Banister and George 
Cook, "China's employment and compensation costs in manufacturing through 
2008," Monthly Labor Review, March 2011, pp. 39-52, at 
www.bls.gov/opub/mlr/2011/03/art4full.pdf.

(2) For the most recent BLS work on India, see Jessica R. Sincavage, "Labor 
costs in India's organized manufacturing sector," Monthly Labor Review, May 
2010, pp. 3-22, at www.bls.gov/opub/mlr/2010/05/art1full.pdf.

(3) For a discussion of the limitations associated with comparing compensation 
costs for China and India, see Sincavage, "Labor costs in India's organized 
manufacturing sector."

(4) For additional information on employment and compensation costs in China 
and India, see www.bls.gov/ilc/china.htm and www.bls.gov/ilc/india.htm.


END OF BOX: China and India  Table 1. Hourly compensation costs in manufacturing, U.S. dollars,
         and as a percent of costs in the United States

                            Hourly Compensation Costs
                       in U.S. dollars           U.S.=100
                      1997 (1)    2011       1997 (1)   2011
                      
Norway                25.84      64.15       112        181
Switzerland           30.42      60.40       132        170
Belgium               28.92      54.77       125        154
Denmark               23.70      51.67       103        145
Sweden                25.02      49.12       109        138
Germany               29.16      47.38       127        133
Australia             18.93      46.29        82        130
Finland               22.36      44.14        97        124
Austria               24.91      43.16       108        121
Netherlands           22.45      42.26        97        119
France                24.86      42.12       108        119
Ireland               16.69      39.83        72        112
Canada                18.49      36.56        80        103
Italy                 19.76      36.17        86        102
Japan                 21.99      35.71        95        101
United States         23.04      35.53       100        100
United Kingdom        19.30      30.77        84         87
Spain                 13.95      28.44        61         80
New Zealand           12.06      23.38        52         66
Singapore             12.15      22.60        53         64
Greece                11.61      21.78        50         61
Israel                12.28      21.42        53         60
Korea, Republic of     9.22      18.91        40         53
Argentina              7.55      15.91        33         45
Czech Republic         3.25      13.13        14         37
Portugal               6.45      12.91        28         36
Slovakia               2.84      11.77        12         33
Brazil                 7.07      11.65        31         33
Estonia                 NA       10.39        NA         29
Taiwan                 7.04       9.34        31         26
Hungary                3.05       9.17        13         26
Poland                 3.15       8.83        14         25
Mexico                 3.47       6.48        15         18
Philippines            1.28       2.01         6          6

NA=data not available.

(1) With the exception of Estonia, 1997 is the first year 
    data for all countries are available to BLS.  Table 2. Average annual percent change in hourly compensation
         costs in manufacturing and exchange rates

                              1997-2011                   2010-2011
                   National   Exchange    U.S.   National  Exchange    U.S.
                   currency     rate     dollar  currency    rate     dollar
                    change     change    change   change    change    change
                                 (1)      (2)                (1)       (2)

Argentina            16.7       -9.6      5.5      31.4     -5.2      24.5
Singapore             3.3        1.2      4.5       9.1      8.5      18.3
Switzerland           1.4        3.6      5.0       0.4     17.7      18.2
Australia             4.1        2.4      6.6       3.9     12.3      16.7
Brazil                6.9       -3.1      3.6       9.8      5.2      15.6
New Zealand           3.5        1.3      4.8       4.3      9.8      14.5
Czech Republic        6.0        4.3      10.5      4.9      7.9      13.2
Sweden                3.7        1.2      4.9       1.7     11.1      13.0
Japan                 0.5        3.0      3.5       2.1     10.1      12.5
Norway                4.9        1.7      6.7       4.1      7.9      12.3
Taiwan                2.2       -0.1      2.0       4.1      7.2      11.6
Estonia                NA         NA       NA       5.0      5.1      10.4
Slovakia              7.3        3.2     10.7       4.5      5.1       9.8
Israel                4.3       -0.3      4.1       4.6      4.5       9.3
Hungary               8.7       -0.5      8.2       5.6      3.4       9.2
Portugal              3.6        1.4      5.1       3.4      5.1       8.6
Germany               2.0        1.5      3.5       2.9      5.1       8.1
Belgium               3.1        1.5      4.7       2.8      5.1       8.0
Austria               2.4        1.5      4.0       2.7      5.1       7.9
Denmark               4.1        1.5      5.7       2.6      5.1       7.8
Italy                 2.9        1.5      4.4       2.5      5.1       7.7
France                2.3        1.5      3.8       2.5      5.1       7.6
Finland               3.5        1.4      5.0       2.2      5.1       7.4
Philippines           6.1       -2.7      3.3       2.9      4.1       7.2
Netherlands           3.1        1.5      4.6       1.7      5.1       6.9
Spain                 3.7        1.5      5.2       1.5      5.1       6.7
Korea, Republic of    6.4       -1.1      5.3       2.2      4.4       6.7
Poland                6.9        0.7      7.6       4.5      1.8       6.4
United Kingdom        3.5       -0.1      3.4       1.8      3.8       5.7
Canada                2.5        2.4      5.0       1.5      4.2       5.7
Mexico                8.0       -3.2      4.6       3.9      1.6       5.6
Ireland               5.3        1.1      6.4      -1.0      5.1       4.0
United States         3.1        0.0      3.1       2.1      0.0       2.1
Greece                3.8        0.8      4.6      -7.3      5.1      -2.6

NA=data not available.

(1) Exchange rates are value of foreign currency relative to the U.S. dollar.
(2) U.S. dollar changes are approximately equal to national currency changes 
    plus exchange rate changes for each country.  Table 3. Components of hourly compensation costs in manufacturing,
         U.S. dollars, 2011

                             Hourly Compensation Costs
                                                Direct Pay
                                  Social   Directly-   Pay for
                                  Insur-     Paid       Time
                       Total       ance    Benefits    Worked
                                   (1)        (2)        (3)

Norway                 64.15      10.98          53.18(4)
Switzerland            60.40       9.25      11.24      39.92
Belgium                54.77      17.64      11.05      26.07
Denmark                51.67       4.97       7.54      39.15
Sweden                 49.12      16.18       5.13      27.82
Germany                47.38      10.24       9.44      27.70
Australia              46.29       9.25       4.41      32.63
Finland                44.14       9.20       8.51      26.43
Austria                43.16      11.07       9.26      22.82
Netherlands            42.26       8.97       9.01      24.29
France                 42.12      12.61       7.80      21.70
Ireland                39.83       6.39       6.00      27.43
Canada                 36.56       7.49       3.59      25.48
Italy                  36.17      10.47       5.27      20.43
Japan                  35.71       6.46       9.02      20.23
United States          35.53       8.65       3.17      23.70
United Kingdom         30.77       4.73       4.05      21.98
Spain                  28.44       7.22       5.57      15.65
New Zealand            23.38       0.99       2.69      19.70
Singapore              22.60       3.64       3.95      15.00
Greece                 21.78       5.03       4.08      12.66
Israel                 21.42       3.49       1.50      16.42
Korea, Republic of     18.91       3.70          15.21(4)
Argentina              15.91       2.77       2.23      10.92
Czech Republic         13.13       3.59       1.77       7.77
Portugal               12.91       2.54       2.49       7.88
Slovakia               11.77       3.19       2.20       6.38
Brazil                 11.65       3.72       1.66       6.27
Estonia                10.39       2.69       0.98       6.73
Taiwan                  9.34       1.35           8.00(4)
Hungary                 9.17       2.16       1.81       5.20
Poland                  8.83       1.25       2.23       5.35
Mexico                  6.48       1.95           4.53(4)
Philippines             2.01       0.17       0.35       1.49

(1) Social insurance expenditures are legally required, private,
    and contractual social benefit costs, and labor-related
    taxes minus subsidies.
(2) Directly-paid benefits are primarily pay for leave time,
    bonuses, and pay in kind.
(3) Pay for time worked is wages and salaries for time actually
    worked.
(4) Separate measures of directly-paid benefits and pay for time
    worked are not available. Data relate to total direct pay.  TECHNICAL NOTES

The international comparisons of hourly compensation costs in 
manufacturing are prepared to assess differences in employer labor 
costs among countries. BLS compensation data permit more 
meaningful comparisons of employer labor costs than data based 
solely on average earnings. Definitions of average earnings vary 
considerably by country and do not include many items of labor 
cost that frequently make up a large portion of total cost. BLS 
compensation data include nearly all labor costs incurred by 
employers. 

Below is a summary of the concepts used in this release. For more 
detailed information, see www.bls.gov/ilc/ichcctn.pdf.

Definitions. Compensation costs include (1) direct pay (all 
payments made directly to the worker, before payroll deductions of 
any kind) and (2) social insurance expenditures (employer payments 
to secure entitlement to social benefits for employees) and labor-
related taxes (minus subsidies). 

The data relate to all employees in manufacturing, including part-
time and temporary workers. The self-employed, unpaid family 
workers, contract workers, and workers in private households are 
excluded.

Compensation Costs

Pay for Time Worked
* Basic wages
* Piece rate
* Overtime premiums
* Shift, holiday, or night work premiums
* Cost-of-living adjustments
* Bonuses and premiums paid each pay period

Directly-Paid Benefits
* Pay for time not worked (vacations, holidays, and other leave, 
except sick leave)
* Seasonal and irregular bonuses
* Payments in kind
* Allowances for family events, commuting, etc.
* Payments to employees' savings funds

Employer Social Insurance Expenditures and Labor-related Taxes
* Retirement and disability pensions
* Health insurance
* Income guarantee insurance 
* Pay for sick leave
* Life and accident insurance
* Occupational injury and illness compensation 
* Unemployment insurance
* Severance pay 
* Other social insurance expenditures
* Taxes (minus subsidies) on payrolls or employment

Methodology. In general, total compensation for each economy is 
calculated by adjusting earnings series to include items of direct 
pay, social insurance, and labor-related taxes and subsidies not 
included in earnings. For economies for which earnings data are 
not available on a per hour worked basis, BLS makes adjustments in 
order to approximate compensation per hour worked. Compensation 
costs are converted to U.S. dollars using the average daily 
exchange rate for the reference year.

Earnings statistics are typically obtained from annual 
establishment surveys. Data on the other components of 
compensation are typically obtained from periodic labor cost 
surveys, employer confederations, and other sources.

For the United States, the methods and results differ somewhat 
from those of other BLS series on U.S. compensation costs. 

The statistics are adjusted, where possible, to account for major 
differences in worker and survey coverage. More information on 
exceptions to these methods, as well as data sources used, may be 
found in "Country Notes and Data Sources" located at 
www.bls.gov/ilc/ichccsources.pdf. 

The compensation measures in this news release are based on 
statistics available to BLS as of October 2012.
  Last Modified Date:
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