Excellent Cost Structure
In the last ten years, the unit labor costs increased considerably more slowly in Germany than in most similar countries. Since 2004, they have decreased slightly even. This development has lead to a continuous improvement of the competitive situation in the country.
Annual increase of unit labor costs in selected EU countries (average in nominal %, data 1997 to 2007)
Unit labor costs defined as per capita remuneration of an employee relative to the overall economic productivity (GDP per employee) on the basis of the respective national currency.
In the last few years, the unit labor costs in Eastern Germany have decreased continuously in the manufacturing industry in particular (by –8.4% in 2006). Thus, companies in Eastern Germany have distinct advantages over those in Western Germany with respect to unit labor costs. In the manufacturing industry, the unit labor costs were 10.4% lower in Eastern than in Western Germany in 2006.
Unit labor costs in the manufacturing industry (except building trade)
Unit labor costs defined as a per capita remuneration of a German employee relative to the real gross creation of value per employee.
The cost level in Eastern Germany is comparable to that in Spain and Japan. In Western Germany, however, the average labor costs in the manufacturing industry is similar to that in Sweden, Switzerland, Belgium and Norway (IW, 2007).
Sources: Bundesministerium der Finanzen, BMF, 2006; Statistisches Bundesamt, 2007; IWH, 2007; IWH, 2007; IG Metall, 2007; IAB, 2006; BMWi, 2007; BMVBS, 2007.