Home > Browse by Title > International Comparisons of Hourly Compensation Costs in Manufacturing

Full text of 2002 : Text File, USDL: 03-507

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

Internet address: http://www.bls.gov/fls USDL: 03-507
Technical information: (202) 691-5654 For Release: 10:00 A.M. EDT
Media contact: (202) 691-5902 Friday, September 26, 2003*

*INFORMATION IN THIS RELEASE WAS UPDATED ON MAY 19, 2004.
SEE HTTP://WWW.BLS.GOV/FLS/HCOMPREPORT.HTM.

INTERNATIONAL COMPARISONS OF HOURLY COMPENSATION COSTS
FOR PRODUCTION WORKERS IN MANUFACTURING, 2002

Average hourly compensation costs in U.S. dollars for production workers
in manufacturing in 29 foreign economies remained at 66 percent of the U.S.
level in 2002, according to the Bureau of Labor Statistics, U.S. Department of
Labor. Although overall compensation costs relative to the United States
remained the same in 2002 as in 2001, costs in Europe rose from 90 to 95
percent of the U.S. level, while relative costs declined in Canada and Japan.
(See table 1.)

In the United States, hourly compensation costs for production workers in
manufacturing increased 3.5 percent in 2002, to $21.33. Average costs in the
United States were higher than those in the economies covered outside Europe,
but seven of the European countries had higher hourly compensation costs than
did the United States. Trade-weighted average costs increased 2.9 percent in
the combined 29 foreign economies in 2002, when measured in national currency
terms. With the trade-weighted value of the foreign currencies in 2002
remaining nearly at 2001 levels, hourly compensation costs measured in U.S.
dollars rose 2.8 percent in the foreign economies during 2002. A strong euro
in 2002 drove European costs measured in U.S. dollars up 9.1 percent, but slow
compensation cost growth and weak currencies in Canada and Japan offset the
European increases. (See chart 1 and table A.)

Chart 1. Hourly compensation costs in U.S. dollars for
production workers in manufacturing, 1975-2002

PRINTED COPY CONTAINS CHART AT THIS POINT.

Compensation costs expressed in U.S. dollars

Compensation costs in U.S. dollars rose strongly in 2002 in most of the
foreign economies, with increases of more than 7 percent in 18 of the 26
economies for which data were available. However, costs in the three largest
U.S. trading partners -- Canada, Japan, and Mexico -- did not rise as quickly as
costs in the United States. In addition, three of the four Asian NIEs had
decreases in compensation costs in 2002. (NIEs are the newly industrializing
economies of Hong Kong SAR, Korea, Singapore, and Taiwan.) As a result, the
rate of compensation increase in a trade-weighted average of the foreign
economies was only 2.8 percent, less than the 3.5 percent increase recorded in
the United States. (See table A.)

Changes over time in compensation costs in U.S. dollars are affected by
the underlying national wage and benefit trends measured in national currencies,
as well as frequent and sometimes sharp changes in currency exchange rates. A
country's compensation costs expressed in U.S. dollars are calculated by
dividing compensation costs in national currency by the exchange rate (expressed
as national currency units per U.S. dollar).

BOX: A NOTE ON THE MEASURES

The hourly compensation measures in this news release are based on statistics
available to BLS as of July 2003. The 2002 compensation statistics are
preliminary measures; for some of the foreign countries, they are based on less
than full-year data. 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.

Total compensation costs include pay for time worked, other direct pay
(including holiday and vacation pay, bonuses, other direct payments, and the
cost of pay in kind), employer expenditures for legally required insurance
programs and contractual and private benefit plans, and, for some countries,
other labor taxes.

Labor cost measures. The compensation measures are computed in national
currency units and are converted into U.S. dollars at prevailing commercial
market currency exchange rates. They are appropriate measures for comparing
levels of employer labor costs, but they do not indicate relative living
standards of workers or the purchasing power of their incomes. Prices of goods
and services vary greatly among countries, and commercial market exchange rates
do not reliably indicate relative differences in prices.

Data limitations. Hourly compensation is partly estimated, and data are
subject to revision in the next update. The comparative level figures are
averages for all manufacturing industries and are not necessarily representative
of all component industries.

See the Technical Notes for further information regarding definitions,
sources, and computation methods and a description of the trade-weighted
measures for economic groups.

END OF BOX (A NOTE ON THE MEASURES)

Table A. Hourly compensation costs, in national currency and in U.S. dollars,
for production workers in manufacturing
and exchange rates (U.S. dollars per national currency unit)

Percent change, 2001-2002

Hourly Hourly
Country compensation, compensation,
or area national Exchange U.S.
currency Rates dollars

Americas
United States 3.5 - 3.5
Brazil 7.5 -19.4 -13.4
Canada 2.8 -1.3 1.4
Mexico 5.7 -3.4 2.1

Asia and Oceania
Australia 10.8 5.2 16.6
Hong Kong SAR 1 -2.2 .0 -2.2
Israel 1.1 -11.2 -10.2
Japan -1.1 -2.9 -4.0
Korea 13.4 3.4 17.3
New Zealand 3.9 10.5 14.9
Singapore -3.9 .1 -3.8
Sri Lanka - - -
Taiwan -3.1 -2.1 -5.1

Europe
Austria 3.0 5.6 8.7
Belgium 2.5 5.6 8.3
Denmark 4.3 5.7 10.2
Finland 2.8 5.6 8.6
France 3.7 5.6 9.5
Germany, former West 2.3 5.6 8.0
Germany 2.2 5.6 7.9
Greece - - -
Ireland 7.6 5.6 13.6
Italy 2.6 5.6 8.4
Luxembourg 3.1 5.6 8.9
Netherlands 4.2 5.6 10.1
Norway 5.1 12.7 18.4
Portugal - - -
Spain 4.8 5.6 10.7
Sweden 3.4 6.4 10.0
Switzerland 1.8 8.5 10.4
United Kingdom 3.7 4.3 8.2

Trade-weighted measures 2,3
All 29 foreign economies 2.9 -.1 2.8
OECD 4 3.4 .6 4.0
less Mexico, Korea 5 2.3 1.2 3.7
Europe 3.4 5.6 9.1
Asian NIEs 2.2 .4 2.8

1 Hong Kong Special Administrative Region of China.
2 Because data for Germany are not available before 1993, data for only
the former West Germany are included in the trade-weighted measures.
3 The 2001-2002 percent changes for the trade-weighted measures are based
upon the changes for the countries or areas for which 2002 data are
available.
4 OECD refers to the Organization for Economic Cooperation and Development.
5 Mexico joined the OECD in 1994, and Korea joined in 1996.

Although European compensation costs on a national currency basis
increased at about the same rate as those in the United States, the strength
of the European currencies in 2002 drove costs in U.S. dollars up more than
9 percent. It was the first time that European costs rose at a faster rate
than costs in the United States since 1995; in that year, European costs
peaked at 27 percent higher than those in the United States. Since then,
European costs have fallen below those in the United States, and in 2002
they were 95 percent of the U.S. level. (See chart 2.)

Compensation trends in Asia in 2002 were very different than those in
Europe. Costs in U.S. dollars in Japan and each of the Asian NIE countries
except Korea declined more than 2 percent. Japanese compensation costs,
which were 13 percent higher than costs in the United States just two years
before, decreased to only 88 percent of the U.S. level in 2002, the lowest
relative level of Japanese costs since 1990. Even though costs declined in
three of the four NIEs, the level of compensation costs in those economies
nevertheless remained at 33 percent of the U.S. level because costs in Korea
increased by 17.3 percent.

Moderate growth in costs in Mexico and Canada, which together comprise
one-third of the trade-weighted compensation cost average, offset much of the
high growth in compensation costs seen in Europe. Following three consecutive
years of double-digit growth, Mexican compensation costs rose only 2.1 percent
in 2002. Canadian costs continued to grow more slowly than those in the United
States, increasing just 1.4 percent. Since 1993, when costs in Canada and the
United States were approximately the same, costs in Canada have grown at a
slower rate than the United States in all but one year, with the result that
Canadian costs are now only 75 percent of U.S. costs.

With the fast growth in hourly compensation costs in Europe, the average
for the 17 European countries in 2002 rose above the $20 level for the first
time in three years. Seven countries had higher compensation costs than the
United States, with the highest costs in Norway and Germany, more than $25 per
hour. Belgium, Denmark, Finland, the Netherlands, and Switzerland were the
other countries where costs were higher than in the United States. (See table
2.)

Chart 2. Indexes of hourly compensation costs in U.S. dollars
for production workers in manufacturing, 2002

PRINTED COPY CONTAINS CHART AT THIS POINT.

Compensation costs expressed in national currencies

For U.S. competitors, compensation costs in national currency in 2002 grew
at the lowest rate since this series began in 1975. The increase of 2.9
percent was a drop of more than 1 percentage point from 2001, when the trade-
weighted average cost increased 4.1 percent for the foreign economies. The
lower rate of growth was due primarily to declining costs in many of the Asian
countries and a slowing of cost growth in Mexico. (See table A and table 4.)

Compared to the previous year, the growth rate of compensation costs in
national currency in 2002 slowed in all of the Asian economies except Korea;
costs in Hong Kong, Japan, Singapore, and Taiwan actually declined from their
2001 levels, with drops of more than 3 percent in Singapore and Taiwan. Cost
growth in the Asian NIEs as a whole remained positive because of the 13.4
percent increase in Korea, the highest increase of any of the foreign economies.
Nevertheless, the 2.2 percent increase in NIEs costs in 2002 was much lower
than the 6.2 percent increase the previous year, and was the lowest rate of
growth in the NIEs since this series began in 1975.

Compensation cost trends in the North American competitors, Canada and
Mexico, also contributed to the slowing growth rate for the 29 foreign economies.
Sluggish cost growth continued in Canada, with a 2.8 percent increase in 2002.
Compensation costs in that country have not grown at a rate of 3 percent or more
since 1992. The rate of growth in Mexico fell by nearly half in 2002, to 5.7
percent. It was the first time since this series began in 1975 that the Mexican
compensation cost growth rate was in the single digits.

Compensation costs in Europe grew at the same rate, 3.4 percent, in 2002 as
in 2001. The rate of growth was moderate (between about 2 and 5 percent) in
most of the countries. The exception was Ireland, where costs grew 7.6 percent,
the fourth consecutive year in which Ireland had the highest rate of growth
among the European countries.

Exchange rates

The trade-weighted value of the currencies of the 29 foreign economies
against the U.S. dollar changed very little between 2001 and 2002. Although the
trade-weighted average did not change much, there were several important
movements in exchange rates that impacted hourly compensation trends in U.S.
dollars. (See table 5.)

In 2002, for the first time in seven years, the European currencies
appreciated against the U.S. dollar, by 5.6 percent. The euro, which accounts
for about 70 percent of the European trade-weighted average, also rose by 5.6
percent. The currency with the largest appreciation was the Norwegian krone
(12.7 percent), while the British pound showed the smallest appreciation (4.3
percent).

In contrast to the currency appreciation in Europe, currencies in each of
the countries with the largest trade weights (Canada, Japan, and Mexico) fell
in value against the U.S. dollar in 2002. The depreciation of the Canadian
dollar (down 1.3 percent), the Japanese yen (down 2.9 percent), and the Mexican
peso (down 3.4 percent) negated the effect of the strong European currencies on
the trade-weighted average for all countries.

BOX: A NOTE ON EUROPEAN EXCHANGE RATES

On January 1, 1999, several European countries joined the European
Monetary Union (EMU): Austria, Belgium, Finland, France, Germany, Ireland, Italy,
Luxembourg, the Netherlands, Portugal, and Spain. Greece joined on January 1,
2001. Currencies of EMU members were established at fixed conversion rates to
the euro, the official currency of the EMU. Exchange rates between the national
currencies of EMU countries and the U.S. dollar are no longer reported; only the
exchange rate between the euro and the U.S. dollar is available.

In this news release, data on hourly compensation costs in national
currency and exchange rates for the EMU countries relate to euros for 1999-2002;
for the years 1975-1998 these data are published in the old national currencies
used in each country before the euro was adopted. Data for all years can be
accessed in the supplementary tables to this news release available at
http://www.bls.gov/fls or upon request. Caution should be exercised when using
these data. The national currency compensation data and exchange rates in the
tables for 1975-1998 are not comparable to the same data for 1999-2002 for the
EMU countries.

In order to include data on trends in national currency compensation
costs and exchange rates for the entire 1975-2002 period, BLS converts national
currency for 1975-1998 to a "euro" basis for calculation. The conversions for
all years 1975-1998 are made using the official fixed conversion rates for 1999
below:

1 euro = 13.7603 Austrian Schillings
= 40.3399 Belgian Francs
= 5.94573 Finnish Markkas
= 6.55957 French Francs
= 1.95583 German Marks
= .787564 Irish Pounds
= 1936.27 Italian Lire
= 40.3399 Luxembourg Francs
= 2.20371 Netherlands Guilders
= 200.482 Portuguese Escudos
= 166.386 Spanish Pesetas

END OF BOX (A NOTE ON EUROPEAN EXCHANGE RATES)

Although several currencies appreciated against the dollar in 2002, most are
well below their values of the mid-1990s, when many currencies peaked. Over the
period 1995-2002, no foreign currency appreciated against the U.S. dollar, and the
rate of depreciation was fairly steep in virtually all economies. In all but
three countries (Canada, Hong Kong, and the United Kingdom), currency values
declined at a rate of more than 3 percent per year during that time period. The
depreciation of the foreign currencies over this time period had a significant
influence on hourly compensation costs measured in U.S. dollars. Since 1995,
hourly compensation costs on a national currency basis in 28 foreign economies
(not including Brazil) rose at a rate of 4.2 percent per year, more than a
percentage point higher than in the United States. When adjusted for a 3.6 percent
per year depreciation of the foreign currencies against the U.S. dollar, however,
those costs only increased at a rate of 0.3 percent per year, nearly 3 percentage
points less than in the United States.

Additional data available

In addition to the compensation cost measures covered in this news release,
data are available for comparative levels of hourly compensation costs, hourly
direct pay, pay for time worked, and the structure of compensation in
manufacturing for all years from 1975 through 2002. Data are also available for
national currency hourly compensation and exchange rates 1975-2002 in the
supplementary tables as well.

BLS also computes comparative measures for 39 component manufacturing
industries. Data through 2001 are available upon request and via the Internet
(http://www.bls.gov/fls). Data for the component industries are not included in
this release; in general, the data limitations for the component industries are
greater than for total manufacturing.

For further information, contact the Office of Productivity and Technology
by phone at 202-691-5654, by e-mail at flshelp@bls.gov, or by mail at Bureau of
Labor Statistics, 2 Massachusetts Avenue, NE, Room 2150, Washington, DC 20212.

Information in this release will be made available to sensory impaired
individuals upon request. Voice phone: 202-691-5200; TDD message referral
phone: 1-800-877-8339.

This material is in the public domain and, with appropriate credit, may be
reproduced without permission. It may be translated into foreign languages
without permission, with a separate credit for the translation.

BOX: REVISED MEASURES

The hourly compensation measures are subject to revision in future updates.
In this update, revisions of particular note were made for the following countries:

For Canada, data beginning in 1999 were revised to include new data on
supplementary labor income.

For Japan, data beginning in 1991 were revised to include new production worker
estimates based on data from the wage structure survey. In addition, data beginning
in 1999 were revised with the incorporation of data from the 2002 labor cost survey.

For Singapore, data beginning in 1997 were revised to incorporate new data on
benefits of employees.

For Germany, data beginning in 1991 were revised to incorporate new data on pay
for time not worked.

END OF BOX (REVISED MEASURES)

INFORMATION IN THIS RELEASE WAS UPDATED ON MAY 19, 2004.
SEE HTTP://WWW.BLS.GOV/FLS/HCOMPREPORT.HTM.

Table 1. Indexes of hourly compensation costs in U.S. dollars for production workers
in manufacturing, 30 countries or areas and selected economic groups, selected years, 1975-2002

Country or area 1975 1980 1985 1990 1995 1999 2000 2001 2002

Americas
United States ......... 100 100 100 100 100 100 100 100 100
Brazil 1 .............. - - - - - 18 18 14 12
Canada ................ 94 88 84 107 94 82 81 77 75
Mexico ................ 23 22 12 11 10 10 11 11 11

Asia and Oceania
Australia ............. 88 86 63 89 90 84 73 65 73
Hong Kong SAR 2 ....... 12 15 13 22 29 29 28 29 27
Israel ................ 35 38 31 57 61 62 65 66 57
Japan ................. 47 56 49 85 138 109 113 95 88
Korea ................. 5 10 9 25 42 38 41 38 43
New Zealand ........... 49 53 34 55 58 48 41 38 42
Singapore ............. 13 15 19 25 43 38 39 37 34
Sri Lanka ............. 4 2 2 2 3 2 2 2 -
Taiwan ................ 6 10 11 26 34 29 30 28 25

Europe
Austria ............... 71 90 58 119 147 114 98 94 99
Belgium ............... 101 133 69 129 161 125 109 102 107
Denmark ............... 99 110 62 121 145 126 109 107 114
Finland ............... 73 84 63 142 141 113 98 96 101
France ................ 71 91 58 104 113 90 79 77 82
Germany, former West... 99 124 73 146 184 141 124 118 123
Germany ............... - - - - 176 135 118 113 118
Greece ................ 27 38 28 45 53 - - - -
Ireland ............... 48 61 46 79 80 71 63 64 71
Italy ................. 73 83 59 117 94 83 71 67 70
Luxembourg ............ 98 117 58 108 136 104 90 84 89
Netherlands ........... 103 122 67 121 140 112 98 96 102
Norway ................ 106 117 80 144 142 128 114 112 128
Portugal .............. 25 21 12 25 31 28 24 - -
Spain ................. 40 60 36 76 74 63 55 53 56
Sweden ................ 113 127 74 140 125 113 102 89 95
Switzerland ........... 96 112 74 140 170 123 108 106 113
United Kingdom ........ 53 77 48 85 80 89 83 78 82

Trade-weighted measures 3,4
All 29 foreign economies - - - - - 74 72 66 66
less Brazil .......... 60 66 51 80 89 75 73 67 67
OECD 5 ................. 66 72 55 86 95 80 77 71 71
less Mexico, Korea 6.. 78 86 67 105 116 97 93 85 85
Europe ................. 79 99 61 115 127 106 94 90 95
Asian NIEs 7 ........... 8 12 13 25 38 34 35 33 33

Dash means data not available.
1 Data for Brazil are not available before 1996.
2 Hong Kong Special Administrative Region of China.
3 Because data for Germany are not available before
1993, data for the former West Germany only are
included in the trade-weighted measures.
4 For description of trade-weighted measures and economic groups,
see the Technical Notes preceding these tables.
5 Organization for Economic Cooperation and Development.
6 Mexico joined the OECD in 1994, and Korea joined in 1996.
7 The Asian NIEs are Hong Kong, Korea, Singapore and Taiwan.

Source: U.S. Department of Labor, Bureau of Labor Statistics, September 2003.

INFORMATION IN THIS RELEASE WAS UPDATED ON MAY 19, 2004.
SEE HTTP://WWW.BLS.GOV/FLS/HCOMPREPORT.HTM.

Table 2. Hourly compensation costs in U.S. dollars for production workers in manufacturing,
30 countries or areas and selected economic groups, selected years, 1975-2002

Country or area 1975 1980 1985 1990 1995 1999 2000 2001 2002

Americas
United States .......... $6.36 $9.87 $13.01 $14.91 $17.19 $19.10 $19.76 $20.60 $21.33
Brazil 1 ............... - - - - - 3.43 3.56 2.97 2.57
Canada ................. 5.96 8.67 10.95 15.95 16.10 15.58 16.04 15.80 16.02
Mexico ................. 1.47 2.21 1.59 1.58 1.65 1.83 2.08 2.33 2.38

Asia and Oceania
Australia .............. 5.62 8.47 8.21 13.24 15.56 15.99 14.47 13.34 15.55
Hong Kong SAR 2 ........ .76 1.51 1.73 3.23 4.91 5.54 5.63 5.96 5.83
Israel ................. 2.25 3.79 4.06 8.55 10.54 11.91 12.86 13.53 12.14
Japan .................. 3.00 5.52 6.34 12.70 23.73 20.83 22.27 19.61 18.83
Korea .................. .32 .96 1.23 3.71 7.29 7.35 8.19 7.82 9.16
New Zealand ............ 3.15 5.22 4.38 8.17 9.91 9.14 8.13 7.74 8.89
Singapore .............. .84 1.49 2.47 3.78 7.33 7.28 7.63 7.56 7.27
Sri Lanka .............. .28 .22 .28 .35 .48 .46 .48 .42 -
Taiwan ................. .38 1.02 1.49 3.90 5.85 5.51 5.85 5.70 5.41

Europe
Austria ................ 4.51 8.88 7.58 17.75 25.32 21.85 19.46 19.38 21.07
Belgium ................ 6.41 13.11 8.97 19.17 27.62 23.92 21.59 21.04 22.79
Denmark ................ 6.28 10.83 8.13 18.04 24.98 24.11 21.49 21.98 24.23
Finland ................ 4.66 8.33 8.25 21.25 24.32 21.55 19.45 19.86 21.56
France ................. 4.52 8.94 7.52 15.49 19.38 17.24 15.70 15.91 17.42
Germany, former West.... 6.29 12.21 9.50 21.81 31.57 26.87 24.42 24.23 26.18
Germany ................ - - - - 30.26 25.73 23.38 23.23 25.08
Greece ................. 1.69 3.73 3.66 6.76 9.06 - - - -
Ireland ................ 3.05 6.03 5.99 11.81 13.78 13.61 12.50 13.28 15.09
Italy .................. 4.67 8.15 7.63 17.45 16.22 15.88 14.01 13.78 14.93
Luxembourg ............. 6.26 11.54 7.49 16.04 23.45 19.79 17.70 17.37 18.91
Netherlands ............ 6.58 12.06 8.75 18.06 24.12 21.45 19.44 19.75 21.74
Norway ................. 6.77 11.59 10.37 21.47 24.38 24.45 22.44 23.13 27.40
Portugal ............... 1.58 2.06 1.53 3.77 5.37 5.35 4.75 - -
Spain .................. 2.53 5.89 4.66 11.38 12.80 12.03 10.78 10.88 12.04
Sweden ................. 7.18 12.51 9.66 20.93 21.44 21.61 20.14 18.35 20.18
Switzerland ............ 6.09 11.09 9.66 20.86 29.30 23.56 21.24 21.84 24.11
United Kingdom ......... 3.37 7.56 6.27 12.70 13.78 17.04 16.45 16.15 17.47

Trade-weighted measures 3,4
All 29 foreign economies - - - - - 14.20 14.15 13.68 14.13
less Brazil........... 3.83 6.51 6.69 11.96 15.34 14.40 14.34 13.88 14.35
OECD 5 ................. 4.18 7.08 7.21 12.83 16.34 15.27 15.17 14.64 15.21
less Mexico, Korea 6.. 4.96 8.45 8.72 15.69 19.91 18.52 18.28 17.59 18.21
Europe ................. 5.03 9.80 7.92 17.19 21.83 20.30 18.60 18.51 20.18
Asian NIEs 7 ........... .51 1.17 1.65 3.72 6.50 6.48 6.95 6.81 7.08

Source: U.S. Department of Labor, Bureau of Labor Statistics, September 2003.

INFORMATION IN THIS RELEASE WAS UPDATED ON MAY 19, 2004.
SEE HTTP://WWW.BLS.GOV/FLS/HCOMPREPORT.HTM.

Table 3. Annual percent change in hourly compensation costs in U.S. dollars for production workers
in manufacturing, 30 countries or areas and selected economic groups, selected periods, 1975-2002

Country or area 1975- 1975- 1980- 1985- 1990- 1995- 2000 2001 2002
2002 1980 1985 1990 1995 2002

Americas
United States .......... 4.6 9.2 5.7 2.8 2.9 3.1 3.5 4.3 3.5
Brazil 1 ............... - - - - - - 3.9 -16.6 -13.4
Canada ................. 3.7 7.8 4.8 7.8 .2 -.1 2.9 -1.5 1.4
Mexico ................. 1.8 8.5 -6.3 -.2 .8 5.4 14.0 11.9 2.1

Asia and Oceania
Australia .............. 3.8 8.6 -.6 10.0 3.3 .0 -9.5 -7.8 16.6
Hong Kong SAR 2 ........ 7.9 14.8 2.8 13.3 8.8 2.5 1.6 6.0 -2.2
Israel ................. 6.4 11.0 1.4 16.1 4.3 2.0 7.9 5.2 -10.2
Japan .................. 7.0 13.0 2.8 14.9 13.3 -3.3 6.9 -11.9 -4.0
Korea .................. 13.2 24.3 5.1 24.6 14.5 3.3 11.5 -4.6 17.3
New Zealand ............ 3.9 10.7 -3.5 13.3 3.9 -1.5 -11.0 -4.9 14.9
Singapore .............. 8.3 12.1 10.6 8.9 14.2 -.1 4.8 -.9 -3.8
Sri Lanka 3 ............ 2.2 -5.0 5.2 4.7 6.4 - 3.5 -12.2 -
Taiwan ................. 10.4 21.9 8.0 21.2 8.5 -1.1 6.1 -2.5 -5.1

Europe
Austria ................ 5.9 14.5 -3.1 18.5 7.4 -2.6 -11.0 -.4 8.7
Belgium ................ 4.8 15.4 -7.3 16.4 7.6 -2.7 -9.7 -2.5 8.3
Denmark ................ 5.1 11.5 -5.6 17.3 6.7 -.4 -10.9 2.3 10.2
Finland ................ 5.8 12.3 -.2 20.8 2.7 -1.7 -9.7 2.1 8.6
France ................. 5.1 14.6 -3.4 15.6 4.6 -1.5 -8.9 1.4 9.5
Germany, former West.... 5.4 14.2 -4.9 18.1 7.7 -2.6 -9.1 -.8 8.0
Germany ................ - - - - - -2.6 -9.1 -.6 7.9
Greece 3 ............... 7.4 17.2 -.4 13.0 6.0 - - - -
Ireland ................ 6.1 14.6 -.1 14.6 3.1 1.3 -8.1 6.2 13.6
Italy .................. 4.4 11.8 -1.3 18.0 -1.4 -1.2 -11.8 -1.6 8.4
Luxembourg ............. 4.2 13.0 -8.3 16.4 7.9 -3.0 -10.5 -1.9 8.9
Netherlands ............ 4.5 12.9 -6.2 15.6 6.0 -1.5 -9.4 1.6 10.1
Norway ................. 5.3 11.4 -2.2 15.7 2.6 1.7 -8.2 3.1 18.4
Portugal 3 ............. 4.5 5.5 -5.8 19.8 7.3 - -11.2 - -
Spain .................. 6.0 18.4 -4.6 19.6 2.4 -.9 -10.4 .9 10.7
Sweden ................. 3.9 11.8 -5.0 16.7 .5 -.9 -6.8 -8.9 10.0
Switzerland ............ 5.2 12.7 -2.7 16.6 7.0 -2.7 -9.8 2.8 10.4
United Kingdom ......... 6.3 17.5 -3.7 15.2 1.6 3.4 -3.5 -1.8 8.2

Trade-weighted measures 4,5
All 29 foreign economies - - - - - - 2.4 -1.0 2.8
less Brazil........... 5.3 12.1 .6 11.7 5.0 .3 2.4 -.8 3.1
less Brazil, Mexico... 5.9 12.8 1.7 13.7 5.7 -.6 .3 -3.1 3.5
OECD 6 ................. 4.9 11.7 -.2 11.3 4.5 .3 2.1 -.9 4.0
less Mexico, Korea 7 . 5.1 11.6 .8 12.8 4.6 -1.0 -.9 -3.3 3.7
Europe ................. 5.4 14.5 -3.9 16.6 4.3 -.7 -8.3 -.3 9.1
Asian NIEs 8 ........... 10.5 19.6 6.9 18.6 11.7 1.0 6.9 -1.7 2.8

Rates of change based on compound rate method.
Dash means data not available.
1 Data for Brazil are not available before 1996.
2 Hong Kong Special Administrative Region of China.
3 1975-2000 for Sri Lanka and Portugal; 1975-98 for Greece.
4 Because data for Germany are not available before
1993, data for the former West Germany only are
included in the trade-weighted measures.
5 Trade-weighted percent changes computed as the trade-weighted
average of the rates of change for the individual countries or areas.
For description of trade-weighted measures and economic groups,
see the Technical Notes preceding these tables.
6 Organization for Economic Cooperation and Development.
7 Mexico joined the OECD in 1994, and Korea joined in 1996.
8 The Asian NIEs are Hong Kong, Korea, Singapore and Taiwan.

Source: U.S. Department of Labor, Bureau of Labor Statistics, September 2003.

INFORMATION IN THIS RELEASE WAS UPDATED ON MAY 19, 2004.
SEE HTTP://WWW.BLS.GOV/FLS/HCOMPREPORT.HTM.

Table 4. Annual percent change in hourly compensation costs in national currency for
production workers in manufacturing, 30 countries or areas and selected economic
groups, selected periods, 1975-2002

Country or area 1975- 1975- 1980- 1985- 1990- 1995- 2000 2001 2002
2002 1980 1985 1990 1995 2002

Americas
United States .......... 4.6 9.2 5.7 2.8 2.9 3.1 3.5 4.3 3.5
Brazil 1 ............... - - - - - - 4.4 7.2 7.5
Canada ................. 5.4 10.8 8.1 4.5 3.5 1.9 2.9 2.7 2.8
Mexico ................. 30.2 22.5 51.8 61.1 18.9 11.8 12.9 10.5 5.7

Asia and Oceania
Australia .............. 7.3 11.6 9.6 7.6 4.4 4.5 .5 3.7 10.8
Hong Kong SAR 2 ........ 9.7 15.0 12.4 13.3 8.6 2.6 2.0 6.1 -2.2
Israel ................. 48.1 68.3 200.9 29.2 13.0 8.9 6.3 8.5 1.1
Japan .................. 3.7 7.0 4.0 4.0 3.9 .8 1.4 -.7 -1.1
Korea .................. 17.2 30.1 13.0 19.5 16.5 10.7 5.9 9.0 13.4
New Zealand ............ 7.7 15.6 10.4 9.3 2.0 3.4 3.1 3.4 3.9
Singapore .............. 7.2 9.8 11.2 4.7 8.7 3.3 6.6 3.0 -3.9
Sri Lanka 3 ............ 12.4 12.7 16.2 13.1 11.7 - 12.8 9.0 -
Taiwan ................. 10.0 20.6 10.2 12.1 8.1 2.7 2.6 5.5 -3.1

Europe
Austria ................ 5.2 7.9 6.4 5.1 4.9 2.7 2.8 2.7 3.0
Belgium ................ 5.4 10.2 6.8 3.8 4.9 2.6 4.2 .5 2.5
Denmark ................ 6.4 11.1 7.2 5.3 4.6 4.6 3.2 5.3 4.3
Finland ................ 8.0 12.6 10.5 9.7 5.5 3.5 4.1 5.3 2.8
France ................. 7.0 14.3 12.3 4.6 2.7 3.2 5.1 4.5 3.7
Germany, former West.... 4.8 7.5 4.7 4.8 5.1 2.6 4.9 2.3 2.3
Germany ................ - - - - - 2.6 4.9 2.5 2.2
Greece 3 ............... 18.3 23.9 26.0 16.2 14.4 - - - -
Ireland ................ 8.5 16.4 13.9 4.9 3.8 5.6 6.0 9.5 7.6
Italy .................. 8.9 18.0 15.9 7.5 4.8 2.1 1.8 1.5 2.6
Luxembourg ............. 4.8 8.0 5.7 3.8 5.2 2.2 3.2 1.2 3.1
Netherlands ............ 4.2 7.6 3.9 2.5 3.3 3.9 4.5 4.8 4.2
Norway ................. 7.0 10.1 9.3 8.5 2.8 5.1 3.6 5.2 5.1
Portugal 3 ............. 13.9 20.7 20.6 15.4 8.4 - 2.5 - -
Spain .................. 10.4 23.8 13.4 7.9 6.6 4.1 3.4 4.1 4.8
Sweden ................. 7.2 12.2 9.5 8.3 4.3 3.6 3.4 2.7 3.4
Switzerland ............ 3.3 3.4 5.0 4.1 3.6 1.2 1.3 2.7 1.8
United Kingdom ......... 7.8 16.5 8.3 8.0 4.2 4.2 3.0 3.4 3.7

Trade-weighted measures 4,5
All 29 foreign economies - - - - - - 4.6 4.1 2.9
less Brazil........... 10.6 14.5 17.2 14.6 7.2 4.2 4.6 4.1 2.8
less Brazil, Mexico... 6.5 12.2 8.2 6.3 5.0 2.8 3.2 2.9 2.3
OECD 6 ................. 10.1 13.5 15.0 14.8 7.0 4.2 4.7 3.9 3.4
less Mexico, Korea 7 . 5.6 10.7 7.5 5.0 3.9 2.3 2.9 2.3 2.3
Europe ................. 6.6 12.4 8.7 5.8 4.4 3.3 3.8 3.4 3.4
Asian NIEs 8 ........... 11.7 20.6 11.6 13.1 11.0 5.4 4.4 6.2 2.2

Source: U.S. Department of Labor, Bureau of Labor Statistics, September 2003.

INFORMATION IN THIS RELEASE WAS UPDATED ON MAY 19, 2004.
SEE HTTP://WWW.BLS.GOV/FLS/HCOMPREPORT.HTM.

Table 5. Annual percent change in exchange rates (U.S. dollars per national currency unit),
30 countries or areas and selected economic groups, selected years, 1975-2002

Country or area 1975- 1975- 1980- 1985- 1990- 1995- 2000 2001 2002
2002 1980 1985 1990 1995 2002

Americas
United States .......... - - - - - - - - -
Brazil 1 ............... - - - - - - -.5 -22.2 -19.4
Canada ................. -1.6 -2.7 -3.1 3.2 -3.2 -1.9 .0 -4.1 -1.3
Mexico ................. -21.8 -11.5 -38.3 -38.0 -15.2 -5.7 1.0 1.3 -3.4

Asia and Oceania
Australia .............. -3.2 -2.7 -9.3 2.2 -1.0 -4.3 -9.9 -11.1 5.2
Hong Kong SAR 2 ........ -1.7 -.1 -8.6 .0 .1 -.1 -.4 -.1 .0
Israel ................. -28.1 -34.1 -66.3 -10.2 -7.7 -6.3 1.5 -3.1 -11.2
Japan .................. 3.2 5.6 -1.1 10.5 9.1 -4.0 5.5 -11.3 -2.9
Korea .................. -3.5 -4.4 -6.9 4.2 -1.7 -6.7 5.2 -12.5 3.4
New Zealand ............ -3.5 -4.3 -12.6 3.7 1.9 -4.8 -13.7 -8.0 10.5
Singapore .............. 1.0 2.1 -.5 3.9 5.1 -3.3 -1.7 -3.8 .1
Sri Lanka 3 ............ -9.1 -15.7 -9.5 -7.5 -4.8 - -8.3 -19.5 -
Taiwan ................. .4 1.1 -2.0 8.2 .3 -3.7 3.4 -7.6 -2.1

Europe
Austria ................ .7 6.1 -9.0 12.8 2.4 -5.1 -13.3 -3.0 5.6
Belgium ................ -.6 4.7 -13.2 12.2 2.5 -5.2 -13.3 -3.0 5.6
Denmark ................ -1.2 .4 -11.9 11.4 2.0 -4.8 -13.7 -2.8 5.7
Finland ................ -2.0 -.3 -9.7 10.1 -2.6 -5.0 -13.3 -3.0 5.6
France ................. -1.8 .3 -14.0 10.5 1.8 -4.6 -13.3 -3.0 5.6
Germany, former West.... .6 6.2 -9.2 12.7 2.5 -5.1 -13.4 -3.0 5.6
Germany ................ - - - - - -5.1 -13.4 -3.0 5.6
Greece 3 ............... -9.2 -5.4 -21.0 -2.7 -7.3 - - - -
Ireland ................ -2.3 -1.5 -12.3 9.2 -.7 -4.1 -13.3 -3.0 5.6
Italy .................. -4.1 -5.3 -14.8 9.8 -6.0 -3.2 -13.3 -3.1 5.6
Luxembourg ............. -.5 4.7 -13.2 12.2 2.5 -5.1 -13.3 -3.0 5.6
Netherlands ............ .3 4.9 -9.8 12.7 2.6 -5.2 -13.3 -3.0 5.6
Norway ................. -1.6 1.1 -10.5 6.6 -.3 -3.2 -11.4 -2.0 12.7
Portugal 3 ............. -8.2 -12.7 -21.9 3.8 -1.0 - -13.4 - -
Spain .................. -4.1 -4.3 -15.9 10.8 -3.9 -4.8 -13.3 -3.1 5.6
Sweden ................. -3.1 -.4 -13.2 7.8 -3.7 -4.3 -9.8 -11.3 6.4
Switzerland ............ 1.9 9.0 -7.4 12.0 3.3 -3.9 -10.9 .1 8.5
United Kingdom ......... -1.4 .9 -11.0 6.6 -2.4 -.7 -6.3 -5.0 4.3

Trade-weighted measures 4,5
All 29 foreign economies - - - - - - -2.1 -5.0 -.1
less Brazil........... -4.0 -1.6 -11.4 .2 -1.8 -3.6 -2.2 -4.7 .3
less Brazil, Mexico... -.5 .6 -5.9 7.0 .6 -3.2 -2.8 -5.8 1.1
OECD 6 ................. -4.0 -1.4 -11.4 -.1 -2.0 -3.7 -2.5 -4.7 .6
less Mexico, Korea 7 . -.4 .9 -6.2 7.5 .6 -3.1 -3.7 -5.5 1.2
Europe ................. -.9 2.1 -11.5 10.2 .0 -3.7 -11.6 -3.6 5.6
Asian NIEs 8 ........... -1.0 -.7 -4.2 4.9 .6 -4.1 2.4 -7.3 .4

Rates of change based on compound rate method.
1 Data for Brazil are not available before 1996.
2 Hong Kong Special Administrative Region of China.
3 1975-2000 for Sri Lanka and Portugal; 1975-98 for Greece.
4 Because data for Germany are not available before
1993, data for the former West Germany only are
included in the trade-weighted measures.
5 Trade-weighted percent changes computed as the trade-weighted
average of the rates of change for the individual countries or areas.
For description of trade-weighted measures and economic groups,
see the Technical Notes preceding these tables.
6 Organization for Economic Cooperation and Development.
7 Mexico joined the OECD in 1994, and Korea joined in 1996.
8 The Asian NIEs are Hong Kong, Korea, Singapore and Taiwan.

Source: U.S. Department of Labor, Bureau of Labor Statistics, September 2003.

INFORMATION IN THIS RELEASE WAS UPDATED ON MAY 19, 2004.
SEE HTTP://WWW.BLS.GOV/FLS/HCOMPREPORT.HTM.

Table 6. Hourly compensation costs in national currency units and exchange rates,
30 countries or areas and selected economic groups, 2002

Country or area Compensation Exchange rates
Costs

Americas
United States ...... 21.33 1.000
Brazil ........... 7.51 2.921
Canada ............. 25.16 1.570
Mexico ............. 23.00 9.663

Asia and Oceania
Australia .......... 28.60 1.839
Hong Kong SAR 1 .... 45.50 7.800
Israel ............. 57.54 4.738
Japan .............. 2357 125.2
Korea .............. 11454 1250
New Zealand ........ 19.13 2.153
Singapore .......... 13.03 1.791
Sri Lanka .......... - -
Taiwan ............. 186.87 34.54

Europe
Austria ............ 22.30 1.058
Belgium ............ 24.11 1.058
Denmark ............ 191.07 7.886
Finland ............ 22.81 1.058
France ............. 18.42 1.058
Germany, former West 27.70 1.058
Germany ............ 26.53 1.058
Greece ............. - -
Ireland ............ 15.96 1.058
Italy .............. 15.79 1.058
Luxembourg ......... 20.01 1.058
Netherlands ........ 22.99 1.058
Norway ............. 218.74 7.984
Portugal ........... - -
Spain .............. 12.74 1.058
Sweden ............. 196.20 9.720
Switzerland ........ 37.54 1.557
United Kingdom ..... 11.64 .6660

Dash means data not available for 2002.
1 Hong Kong Special Administrative Region of China.

Note: National currency units are: United States, dollar; Canada, dollar;
Brazil, real; Mexico, peso; Australia, dollar; Hong Kong, dollar;
Israel, new shekel; Japan, yen; Korea, won; New Zealand, dollar;
Singapore, dollar; Sri Lanka, rupee; Taiwan, dollar; Austria, euro;
Belgium, euro; Denmark, krone; Finland, euro; France, euro; Germany, euro;
Greece, euro; Ireland, euro; Italy, euro; Luxembourg, euro; Netherlands, euro;
Norway, krone; Portugal, euro; Spain, euro; Sweden, krona;
Switzerland, franc; United Kingdom, pound.

Source: U.S. Department of Labor, Bureau of Labor Statistics, September 2003.

INFORMATION IN THIS RELEASE WAS UPDATED ON MAY 19, 2004.
SEE HTTP://WWW.BLS.GOV/FLS/HCOMPREPORT.HTM.

TECHNICAL NOTES

The tables in this news release present international comparisons of hourly
compensation costs for production workers in manufacturing in selected countries
or areas. The total compensation measures are prepared by the Bureau of Labor
Statistics in order to assess international differences in employer labor costs.
Comparisons based on the more readily available average earnings statistics
published by many countries can be very misleading. National definitions of
average earnings differ considerably; average earnings do not include all items
of labor compensation; and the omitted items of compensation frequently
represent a large proportion of total compensation.

The compensation measures are computed in national currency units and are
converted into U.S. dollars at prevailing commercial market currency exchange
rates. The foreign currency exchange rates used in the calculations are the
average daily exchange rates for the reference period. They are appropriate
measures for comparing levels of employer labor costs. They do not indicate
relative living standards of workers or the purchasing power of their income.
Prices of goods and services vary greatly among countries, and commercial market
exchange rates are not reliable indicators of relative differences in prices.

Definitions

Hourly compensation costs include (1) hourly direct pay and (2) employer
social insurance expenditures and other labor taxes. Hourly direct pay includes
all payments made directly to the worker, before payroll deductions of any kind,
consisting of (a) pay for time worked (basic time and piece rates plus overtime
premiums, shift differentials, other premiums and bonuses paid regularly each
pay period, and cost-of-living adjustments) and (b) other direct pay (pay for
time not worked (vacations, holidays, and other leave, except sick leave),
seasonal or irregular bonuses and other special payments, selected social
allowances, and the cost of payments in kind). Social insurance expenditures
and other labor taxes include (c) employer expenditures for legally required
insurance programs and contractual and private benefit plans (retirement and
disability pensions, health insurance, income guarantee insurance and sick
leave, life and accident insurance, occupational injury and illness
compensation, unemployment insurance, and family allowances) and, for some
countries, (d) other labor taxes (other taxes on payrolls or employment (or
reductions to reflect subsidies), even if they do not finance programs that
directly benefit workers, because such taxes are regarded as labor costs). For
consistency, compensation is measured on an hours-worked basis for every
country.

The BLS definition of hourly compensation costs is not the same as the
International Labour Office (ILO) definition of total labor costs. Hourly
compensation costs do not include all items of labor costs. The costs of
recruitment, employee training, and plant facilities and services--such as
cafeterias and medical clinics--are not included because data are not available
for most countries. The labor costs not included account for no more than 4
percent of total labor costs in any country for which the data are available.

Production workers generally include those employees who are engaged in
fabricating, assembly, and related activities; material handling, warehousing,
and shipping; maintenance and repair; janitorial and guard services; auxiliary
production (for example, powerplants); and other services closely related to the
above activities. Working supervisors are generally included; apprentices and
other trainees are generally excluded.

Methods

Total compensation is computed by adjusting each country's average earnings
series for items of direct pay not included in earnings and for employer
expenditures for legally required insurance, contractual and private benefit
plans, and other labor taxes. For the United States and other countries that
measure earnings on an hours-paid basis, the figures are also adjusted in order
to approximate compensation per hour worked.

Earnings statistics are obtained from surveys of employment, hours, and
earnings or from surveys or censuses of manufactures.

Adjustment factors are obtained from periodic labor cost surveys and
interpolated or projected to nonsurvey years on the basis of other information
for most countries. The information used includes tabulations of employer
social security contribution rates provided by the International Social Security
Association, information on contractual and legislated fringe benefit changes
from ILO and national labor bulletins, and statistical series on indirect labor
costs. For other countries, adjustment factors are obtained from surveys or
censuses of manufactures or from reports on fringe-benefit systems and social
security. For the United States, the adjustment factors are special
calculations for international comparisons based on data from several surveys.

The statistics are also adjusted, where necessary, to account for major
differences in worker coverage; differences in industrial classification
systems; and changes over time in survey coverage, sample benchmarks, or
frequency of surveys. Nevertheless, some differences in industrial coverage
remain and, with the exception of the United States, Canada, and several other
countries, the data exclude very small establishments (less than 5 employees in
Japan and less than 10 employees in most European and some other countries).
For the United States, the methods used, as well as the results, differ somewhat
from those for other BLS series on U.S. compensation costs.

Hourly compensation costs are converted to U.S. dollars using the average
daily exchange rate for the reference period. The exchange rates used are
prevailing commercial market exchange rates as published by either the U.S.
Federal Reserve Board or the International Monetary Fund.

For further details on survey sources and on special estimation procedures
for some countries because of incomplete data, see International Comparisons of
Hourly Compensation Costs for Production Workers in Manufacturing, 1995 (Report
909, Bureau of Labor Statistics, September 1996).

Country notes

The following are exceptions to the standard coverage and definitions
explained above:

Australia. Compensation relates to production workers and nonproduction
workers other than those in managerial, executive, professional, and higher
supervisory positions.

Hong Kong SAR. Average of selected manufacturing industries. The industries
covered accounted for about 70 percent of all persons employed in manufacturing
in 1988. Compensation excludes overtime pay. Hong Kong became a Special
Administrative Region (SAR) of China in July 1997.

Austria. Excludes workers in establishments considered handicraft
manufacturers. (All printing and publishing and miscellaneous manufacturing
establishments are classified in handicrafts.) In 1986, handicraft employment
was about 35 percent of all manufacturing employment. Average compensation per
employee was about 10 percent lower in manufacturing including handicrafts than
in manufacturing excluding handicrafts.

Finland. Includes workers in mining and electrical power plants. For
comparability with other countries, compensation excludes some obligatory
training and plant facilities costs; these costs would add 1.6 percent to
average hourly compensation costs in 1994.

Germany. Excludes workers in establishments considered handicraft
manufacturers. In 1990, handicraft employment in the former West Germany was
about 25 percent of all manufacturing employment. Average hourly earnings of
production workers were about 3 percent lower in manufacturing including
handicrafts than in manufacturing excluding handicrafts.

Ireland. Data refer to September for 1975.

Norway. For comparability with other countries, compensation excludes some
obligatory training and plant facilities costs; these costs would add 2.2
percent to average hourly compensation costs in 1994.

Trade-weighted measures

The trade weights used to compute the average compensation cost measures for
selected economic groups are relative importances derived from the sum of U.S.
imports of manufactured products for consumption (customs value) and U.S.
exports of domestic manufactured products (free along side {f.a.s.} value) in
1999 for each country or area and each economic group. See table below.

Share of total U.S. imports and exports
of manufactured products in 1999
(in percent)

Country or area 1999 Country or area 1999
and trade and trade
economic group share economic group share

Brazil 1.5 Greece .1
Canada 21.5 Ireland 1.1
Mexico 11.8 Italy 2.0
Australia 1.0 Luxembourg .1
Hong Kong SAR 1 1.4 Netherlands 1.6
Israel 1.1 Norway .2
Japan 11.8 Portugal .1
Korea 3.4 Spain .7
New Zealand .2 Sweden .8
Singapore 2.2 Switzerland 1.1
Sri Lanka .1 United Kingdom 4.6
Taiwan 3.4 Economic groups:
Austria .4 29 foreign
Belgium 1.3 economies 82.2
Denmark .3 OECD 3 72.5
Finland .3 Europe 22.6
France 2.7 European Union 21.4
Germany 2 5.2 Asian NIEs 10.5

1 Hong Kong Special Administrative Region of China.
2 Former West Germany.
3 Organization for Economic Cooperation and Development.

The trade data used to compute the weights are U.S. Bureau of the Census
statistics of U.S. imports and exports converted to an industrial classification
basis from data initially collected under the Harmonized Tariff Schedule
commodity classification system.

The Organization for Economic Cooperation and Development (OECD) includes
Canada, Mexico, Australia, Japan, Korea, New Zealand, and all European
countries. Europe consists of Austria, Belgium, Denmark, Finland, France,
Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal,
Spain, Sweden, Switzerland, and the United Kingdom. The group labeled "Asian
NIEs" consists of the four newly industrializing economies of Hong Kong SAR,
Korea, Singapore, and Taiwan.

The trade weighted measures relate to all the countries or areas covered in
the series. Data for Germany relate to the former West Germany. Estimates are
computed for missing country data using the average trend in other economies to
estimate the missing data. Trade weighted average percent changes for the 29
foreign economies are computed both including and excluding Brazil, Mexico and
Israel because their rapid rates of inflation and currency changes in several
years distort the trade-weighted averages.

The trade-weighted average rates of change are computed as the trade-weighted
arithmetic average of the rates of change for the individual countries or areas;
the trade-weighted average hourly compensation costs are computed as the trade-
weighted arithmetic average of cost levels for the individual countries or
areas. Rates of change derived from the trade-weighted average hourly
compensation cost levels need not be the same as the trade-weighted average
rates of change.

Data limitations

Because compensation is partly estimated, the statistics should not be
considered as precise measures of comparative compensation costs. In addition,
the figures are subject to revision as the results of new labor cost surveys or
other data used to estimate compensation costs become available.

The comparative level figures in this report are averages for all
manufacturing industries and are not necessarily representative of all component
industries. In the United States and some other countries, such as Japan,
differentials in hourly compensation cost levels by industry are quite wide. In
contrast, other countries, such as Sweden, have narrow differentials.

Labor costs versus labor income

The hourly compensation figures in U.S. dollars shown in the tables provide
comparative measures of employer labor costs; they do not provide intercountry
comparisons of the purchasing power of worker incomes. Prices of goods and
services vary greatly among countries, and the commercial market exchange rates
used to compare employer labor costs do not reliably indicate relative
differences in prices. Purchasing power parities--that is, the number of
foreign currency units required to buy goods and services equivalent to what can
be purchased with one unit of U.S. or other base-country currency--must be used
for meaningful international comparisons of the relative purchasing power of
worker incomes.

Total compensation converted to U.S. dollars at purchasing power parities
would provide one measure for comparing relative real levels of labor income.
It should be noted, however, that total compensation includes employer payments
to funds for the benefit of workers in addition to payments made directly to
workers. (For a few countries, the compensation measures also include taxes or
subsidies on payrolls or employment even if they do not finance programs which
directly benefit workers.) Payments into these funds provide either deferred
income (for example, payments to retirement funds), a type of insurance (for
example, payments to unemployment or health benefit funds), or current social
benefits (for example, family allowances), and the relationship between employer
payments and current or future worker benefits is indirect. On the other hand,
excluding these payments would understate the total value of income derived from
work because they substitute for worker savings or self-insurance to cover
retirement, medical costs, etc.

Total compensation, because it takes account of employer payments into funds
for the benefit of workers, is a broader income concept than either total direct
earnings or direct spendable earnings. An even broader concept would take
account of all social benefits available to workers, including those financed
out of general revenues as well as those financed through employment or payroll
taxes.