In the United States, hourly compensation costs for all employees in manufacturing rose 1.9 percent from the 2006 level to $30.56 in 2007. When measured in national currency terms, trade-weighted average costs increased 3.4 percent in the combined 31 foreign economies in 2007. The value of foreign currencies rose 4.9 percent against the U.S. dollar, resulting in a rise in hourly compensation costs in the foreign economies of 8.5 percent on a U.S. dollar basis. Compensation costs for all employees expressed in U.S. dollars
This release provides manufacturing compensation data in terms of both national currencies and U.S. dollars. While data on a national currency basis show underlying wage and benefit trends within each country, frequent and sometimes sharp changes in currency exchange rates can have a large impact on compensation costs in U.S. dollar terms. Data on a U.S. dollar basis are calculated by dividing compensation costs in the national currency by the exchange rate (expressed as national currency units per U.S. dollar). Compensation costs on a U.S. dollar basis are often used as indicators of competitiveness of manufactured goods in world trade and are the focus of the following discussion.
Compensation costs for all employees in manufacturing measured in U.S. dollars continued to rise in 2007 in most of the foreign economies -with only one country, Japan, showing a decrease in costs (-1.5 percent). Hourly compensation costs in Taiwan increased only marginally, by 0.6 percent. The rate of compensation increase in a trade-weighted average of the 31 foreign economies was 8.5 percent in 2007, more than double the 3.9 percent historical average for the series.
Although average costs in the United States continued to be higher than those in most of the economies covered outside of Europe, 13 of the 19 European countries covered had higher hourly compensation costs than the United States, in most cases more than 20 percent higher. Hourly compensation costs in Denmark, Germany, and Norway were especially high when compared to the United States (56 percent higher, 66 percent higher, and 80 percent higher, respectively). The euro appreciated against the U.S. dollar in 2007 by a considerable amount (+9.1 percent), causing double-digit growth in labor costs measured in U.S. dollars in most European countries. Trade-weighted average hourly compensation costs in the four Eastern European countries in the series grew 23.0 percent when measured in U.S. dollars due in part to double-digit increases in the exchange rates of their national currencies against the U.S. dollar.
Compensation costs in Europe, on average, continued to be almost $9 higher on a per hour basis than in the United States. However, there is great variation in the level of compensation costs among the European countries covered. For example, hourly compensation costs in Europe ranged from $7.69 in Poland to more than seven times that level in Norway ($55.03), the highest labor cost country in these comparisons.
Outside of Europe, only Canada and Australia had compensation costs higher than the United States when measured in U.S. dollars. In 2007, the lowest compensation costs relative to the United States were in Mexico and the Philippines (13 percent and 4 percent of the U.S. level, respectively). In the East Asia ex-Japan economies, the trade-weighted average of hourly compensation costs rose to 43 percent of the U.S. level in 2007, continuing the upward trend seen since 2002, when compensation costs in the region were 32 percent of the U.S. level.
Annual percent changes in manufacturing compensation costs measured in U.S. dollars varied considerably in 2007 among the non-European countries. The only economies outside of Europe that did not show double-digit increases in hourly compensation costs were Canada, Mexico, Japan, and Taiwan. As mentioned above, Japan was the only country in these comparisons to show a decrease in hourly compensation costs measured in U.S. dollars due to both the depreciation of the Japanese yen and a relatively unchanged hourly compensation cost in the national currency of that country. This is the third consecutive year that Japan has had negative growth in hourly compensation costs when measured in U.S. dollars.
The hourly compensation costs measures in this news release are based on statistics available to BLS as of January 2009. These measures are prepared specifically for international comparisons of employer labor costs in manufacturing. The methods used, as well as the results, differ somewhat from those of other BLS series on U.S. compensation costs.
Exchange rates
The trade-weighted 4.9 percent increase in the value of the currencies of the 31 foreign economies against the U.S. dollar was the largest increase since 2004 (5.8 percent). From 1996 to 2002, the trade-weighted value of the currencies against the U.S. dollar weakened, on average, while the opposite has been true from 2003 to 2007. The currencies of all economies appreciated against the U.S. dollar in 2007 with the exception of Argentina, Mexico, Japan, and Taiwan.
The movements of the foreign currencies relative to the U.S. dollar in 2007 had an influence on hourly manufacturing compensation costs measured in U.S. dollars. Hourly compensation costs on a national currency basis in the 31 foreign economies rose 3.4 percent. However, when adjusted for the appreciation of the foreign currencies against the U.S. dollar, this increase in costs was magnified to 8.5 percent. In 2007, changes in both hourly compensation costs and exchange rates moved in the same direction for nearly all countries, so that increases (or decreases) in percent changes in hourly compensation costs in national currency were larger when measured in U.S. dollars. One exception, for example, is Argentina, where hourly compensation costs grew 22.7 percent in the national currency and only 21.4 percent when measured in U.S. dollars due to a 1.1 percent depreciation of the Argentine peso to the U.S. dollar. Compensation costs for production workers
BLS also compiles hourly compensation data for production workers in manufacturing. Production workers generally include those employees who are engaged in fabricating, assembly, and related activities and typically account for a large part of manufacturing employment. All employees include production workers as well as all others employed full or part time in an establishment. The production worker series includes data for Hong Kong SAR, Sri Lanka, Greece, and Luxembourg, four economies not covered by the all employee series. Argentina and Slovakia are not included in the production worker series as comparable data are not available.
Acknowledging the importance of China as one of the United States' largest trading partners, BLS has undertaken the development of estimates of hourly compensation costs for that country. Data for each year in the 2002-2006 period are shown below; the data for 2002, 2003, and 2004 were issued previously. Compensation costs for China are not directly comparable with the data for other countries found in this release and therefore are presented seperately.
