Austria's International Ranking of Unit Labour Costs Remained Unchanged in 2001

Austria currently takes 11th place in an international ranking of unit labour costs. Labour is most expensive in Norway, Germany and Switzerland, where one hour of manufacturing labour costs almost a quarter more than in Austria. In Austrian manufacturing, one hour of work cost € 20.31 in 2001, which was about 4 percent higher than the EU average. The amount was composed of wages costing € 10.65 and non-wage labour costs of € 9.66. With this, non-wage labour costs made up 90.7 percent. In spite of a cut in the contribution by employers to the health insurance scheme for blue-colour workers, it was 0.8 percentage points higher than in 2000, since severance payments, after declining substantially in 2000, were once again on the rise. Non-wage labour costs in Austria are high because a large portion of the annual income is in the form of tax-privileged bonus payments (13th and 14th monthly salaries). If these bonus payments were counted as fixed parts of the wage or salary, non-wage labour costs would make up 63.2 percent for manufacturing. Austria's ranking in terms of unit labour costs changed several times over the course of the 1990s. In the first half of the decade, Austrian industries lost ground due to considerable wage inflation and the schilling's upward revaluation due to the crisis in the European monetary system. After the mid-1990s, a better currency situation and lower wage inflation, with sustained high rates of productivity growth, markedly improved price competition: relative unit labour costs have since been declining on a uniform currency base against the average of trade partners, by well over 2.5 percent p.a. Altogether, Austrian manufacturing has been able to improve its unit wage costs position by a good 10 percent since the early 1990s. In 2001, the cost of an hour of work rose by 3.5 percent; with productivity growth declining to +1.3 percent (as against +7.3 percent in 2000), unit wage costs in Austrian manufacturing went up by 2.1 percent. With unit wage costs rising similarly in competing countries, Austria's relative ranking remained unchanged over the previous year.