In 2020, average hourly labor costs in the whole economy (excluding agriculture and public administration) were estimated to be €28.5 in the EU and €32.3 in the euro area, up compared to €27.7 and €31.4 respectively in 2019. The lowest was in Bulgaria and the highest in Denmark.
Pursuant to Eurostat, the average hourly labor costs mask significant gaps between the EU Member States, with the lowest hourly labor costs recorded in Bulgaria (€6.5), Romania (€8.1) and Hungary (€9.9), and the highest in Denmark (€45.8), Luxembourg (€42.1) and Belgium (€41.1).
Hourly labor costs in the industry were €28.8 in the EU and €34.8 in the euro area. In construction, they were €25.6 and €29.0 respectively. In services, hourly labor costs were €28.2 in the EU and €31.1 in the euro area. In the mainly non-business economy (excluding public administration), they were €29.7 and €33.1 respectively.
The two main components of labor costs are wages & salaries and non-wage costs (e.g. employers' social contributions). The share of non-wage costs in total labor costs for the whole economy was 24.5% in the EU and 25.0% in the euro area.
Between 2019 and 2020, hourly labor costs at the whole economy level expressed in € rose by 3.1% in the EU and by 2.9% in the euro area.
Within the euro area, hourly labor costs increased in all Member States except Malta (-4.7%), Cyprus, and Ireland (-2.7% each). The largest increases were recorded in Portugal (+8.6%), Lithuania (+7.5%), and Slovakia (+7.0%), the smallest in Luxembourg (+0.5%), Finland (+0.7%) and the Netherlands (+0.8%).
For the Member States outside the euro area, the hourly labor costs expressed in national currency increased in all Member States in 2020 except in Croatia (-1.0%), with the largest increases recorded in Hungary (+7.9%), Bulgaria (+7.8%), Czechia (+7.4%) and Romania (+7.2%). They increased least in Sweden (+1.1%) and Denmark (+2.0%).
In 2020, most Member States introduced a number of support schemes to alleviate the impact of the COVID-19 pandemics on enterprises and employees. They mainly consisted of short-term work arrangements and temporary lay-offs fully or partly compensated by the government. Those schemes were generally recorded as subsidies (or tax allowances) recorded with a negative sign in the non-wage component of labor costs.
In general, the number of hours actually worked decreased more than wages while taxes fewer subsidies fell, thus limiting the impact on the hourly labor costs.
