Hourly compensation costs in manufacturing sector

Compensation costs in U.S. dollars are often used as indicators of competitiveness of manufactured goods in world trade.

Hourly compensation can be defined as:

  • Hourly direct pay (all payments made directly to the worker before payroll deduction of any kind) and
  • Employer social insurance expenditures

According to data recently issued by the U.S. Bureau of Labour Statistics, the average of compensation costs in U.S. dollars for all employees in manufacturing among 32 economies was 85 % of the U.S. level in 2008 (which was 32,26 U.S. dollar) , increasing from 82 %  in 2007.

In 2008 compensation costs (in U.S. dollar) for all employees in manufacturing continued to rise in most of the economies – with an exception of the Republic of Korea and the UK, showing a decrease in costs (-16.2 % and -3.6 %). In these countries the majority of decrease  was due to depreciation of their national currencies.

The strongest growth in hourly compensation costs was seen in the Eastern European countries (26.0 %), Argentina (24.7 %),Israel (23.5 %) and Singapore (19.5 %). On the contrary, the changes in hourly compensation in Canada and Mexico were relatively small.

Probably one of the lowest hourly compensation costs among the countries belonging to major economic players in the global economy nowadays has China. Chinese hourly labour compensation costs in manufacturing were roughly 4 % of those in the USA and about 3 % of those in the Euro Area in 2008. But factors such as gradual global economic recovery, growing demand for manufacturing goods and shortage of labour in China will probably lead to rise in wages in its manufacturing sector in the future.





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