Euro Area Labour Costs Rose by 3.7%

Euro area labour costs rose by 3.7% in the first quarter of 2009, compared with first quarter 2008. The EU27 rose by 1.5%. Delfationary risks appear to be easing, but structural weakness persists in the EU's top heavy production costs.

Total hourly labour costs in the euro area (EA16) rose by 3.7% in nominal terms in the year up to the first quarter of 2009, compared with 4.0% for the previous quarter2. In the EU27, the annual rise was 1.5% up to the first quarter of 20093, compared with 4.5% for the previous quarter2.

The two main components of labour costs are wages and salaries and non-wage costs. In the euro area, wages and salaries grew by 3.6% in the year up to the first quarter of 2009, and non-wage costs by 4.5%, compared with 3.9% and 4.4% respectively for the fourth quarter of 2008.

In the EU27, wages & salaries rose by 1.1% and the non-wage component by 3.1%. For the previous quarter the corresponding rates were 4.5% and 4.6%.

The breakdown by economic activity shows that in the euro area hourly labour costs rose at an annual rate of 6.1% in industry, 3.6% in construction and 2.4% in services up to the first quarter of 2009. In the EU27, labour costs grew by 5.2% in industry and 2.8% in construction, but fell by 0.5% in services.

Source: Eurostat, the Statistical Office of the European Communities.