Many high wage agreements have caused labor costs to rise. Germany ranks high in comparison to other EU countries – but in the top country, an hour’s work costs much more on average.
Labor costs in Germany rose significantly again last year – but not nearly as much as in Croatia, Poland or Hungary. In Germany, the increase in the private sector was 5.0 percent, according to a study by the Institute for Macroeconomics and Business Cycle Research (IMK) of the Hans Böckler Foundation, which has close ties to the trade unions. According to the study, labor costs for an hour’s work in Germany last year averaged 41.90 euros.
Labor costs are all costs that a company incurs for one hour of work by an employee. In addition to wages and salaries, this also includes non-wage labor costs such as social security contributions, travel allowances, and Christmas and vacation bonuses.
Luxembourg at the top, Bulgaria at the bottom of the EU ranking
According to the IMK, Germany has the fifth highest labor costs among EU member states. Luxembourg is at the top with 53.60 euros per hour, followed by Denmark (50 euros) and Belgium (46.90 euros). On average, an hour’s work is cheapest for companies in Hungary (13.30 euros), Romania (10.80 euros) and Bulgaria (9.20 euros). The EU average is 31.60 euros – that is 5.6 percent more than in the previous year.
The IMK assesses the currently rather high rates of increase in Germany as “relatively unproblematic”. Without significant increases in wages, the high inflation in 2022 and 2023 would otherwise have severely damaged purchasing power for a longer period of time, said Sebastian Dullien, scientific director of the IMK. He expects further significant wage increases. These are necessary to get demand going again in the long term.
In EU countries such as Poland, Hungary, Romania, Croatia and Bulgaria, the annual growth rates are much higher than in Germany. In Hungary and Romania, it was 17.3 percent in 2023, in Poland 12.1 percent and in the holiday destination Croatia 13.9 percent.
Source: Stern
