Full text of 2006 : Text File, USDL 07-1456
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Internet address: http://www.bls.gov USDL 07-1456
Technical information: (202) 691-5654 For Release: 10:00 A.M. EDT
Media contact: (202) 691-5902 Thursday, September 27, 2007
INTERNATIONAL COMPARISONS OF MANUFACTURING PRODUCTIVITY AND UNIT LABOR
COST TRENDS 2006
Manufacturing labor productivity increased in 2006 in 15 of the 16
economies compared by the U.S. Department of Labor's Bureau of Labor
Statistics. (See chart 1.) The Republic of Korea and Taiwan had the
largest productivity increases (+10.8 and +6.9 percent, respectively).
The U.S. productivity increase of 2.4 percent placed it eleventh among
the 16 economies compared, and was less than the average annual growth
rate since 2000. Canada was the only country with no productivity
growth.
Over the 2000-2006 period, in the 16 economies studied, only Korea,
Sweden, and Taiwan had greater productivity growth than the United
States.
The data presented for the United States differ from those appearing
in BLS Productivity and Costs news releases. (See technical notes.)
Average annual growth rates for selected measures are shown in tables A
and B.
PRINTED COPY CONTAINS CHART AT THIS POINT: Chart 1. Percent change in
manufacturing output per hour, 2005-2006
-2-
Manufacturing unit labor costs, expressed in national currency units,
declined in nine of the economies and increased in seven. The change for
the United States was near the middle of the range, at +0.1 percent.
(See chart 2.)
However, expressed in U.S. dollars, unit labor costs declined in six
of the economies and increased in 10. Declines in the dollar's exchange
rate reversed the direction of movement in three countries. The
reversal was largest for Korea, from a decline in unit labor costs in
national currency of 3.6 percent to an increase in unit labor costs
expressed in U.S. dollars of 3.5 percent. This difference can be
explained by the strong appreciation of the won relative to the U.S.
dollar.
PRINTED COPY CONTAINS CHART AT THIS POINT: Chart 2. Percent change in
manufacturing unit labor costs, 2005-2006
-3-
Table A. Output per hour, hourly compensation, unit labor costs, and related measures
Manufacturing, 16 countries or areas, 2005-2006
Percent change
---------------------------------------------------------------------------------------------------------------
Output Total Hourly Unit Labor Costs
Country per Total Employ- Average compen- compen- National U.S. Exchange
or area Hour Output hours ment hours sation sation currency dollars rate(1)
---------------------------------------------------------------------------------------------------------------
United States 2.4 3.3 0.9 -0.5 1.4 3.4 2.5 0.1 0.1 --
Canada 0.0 -1.3 -1.3 -1.5 0.1 1.3 2.6 2.6 9.6 6.8
Australia 0.3 -1.3 -1.5 -1.2 -0.4 4.9 6.5 6.2 4.9 -1.2
Japan 2.3 4.8 2.5 1.7 0.8 3.0 0.5 -1.8 -7.0 -5.3
Korea, Republic of 10.8 8.4 -2.1 -0.4 -1.7 4.5 6.8 -3.6 3.5 7.3
Taiwan 6.9 7.2 0.3 1.1 -0.8 2.5 2.1 -4.4 -5.6 -1.2
Belgium 2.1 2.5 0.5 -0.4 0.8 2.6 2.1 0.1 1.0 0.9
Denmark 4.0 5.1 1.0 0.2 0.8 3.6 2.5 -1.4 -0.5 0.9
France 3.7 1.6 -2.0 -2.0 0.0 0.5 2.6 -1.0 -0.1 0.9
Germany 6.7 5.5 -1.1 -1.0 -0.1 1.2 2.4 -4.0 -3.1 0.9
Italy 1.4 3.7 2.3 1.2 1.0 4.2 1.8 0.4 1.3 0.9
Netherlands 3.1 2.3 -0.8 -0.8 0.1 2.0 2.8 -0.3 0.6 0.9
Norway 3.3 4.5 1.1 1.3 -0.2 5.7 4.6 1.2 1.7 0.5
Spain 3.8 3.3 -0.5 0.0 -0.5 3.0 3.5 -0.3 0.6 0.9
Sweden 6.5 5.7 -0.8 -0.7 0.0 2.2 3.0 -3.3 -2.0 1.3
United Kingdom 4.5 1.3 -3.1 -2.6 -0.4 3.7 7.0 2.4 3.7 1.3
---------------------------------------------------------------------------------------------------------------
(1) Value of foreign currency relative to the U.S. dollar.
Additional data available
Annual indexes of these variables are estimated for the time period
1950-2006 and are available at the Bureau of Labor Statistics, Division
of Foreign Labor Statistics website at http://www.bls.gov/fls/home.htm.
However, for analytical purposes, the international comparisons in this
release go back to 1979.
For further information, contact the Office of Productivity and
Technology by phone at 202-691-5654, by e-mail at flspr@bls.gov, or by
mail at Bureau of Labor Statistics,
2 Massachusetts Avenue, NE, Room 2150, Washington, DC 20212.
-4-
Manufacturing productivity, output, and labor input
In most of the compared economies manufacturing productivity
increased between 2 and 5 percent in 2006. The United States, with 2.4
percent growth, fell within that interval. However, in Taiwan, Germany,
and Sweden labor productivity grew by over 6 percent, and in Korea by
10.8 percent. Manufacturing productivity increased by only 0.3 percent
in Australia and by 1.4 percent in Italy. Canada is the only economy
that had no manufacturing productivity growth in 2006. (See tables A
and B.)
Manufacturing output increased in 14 of the 16 economies in 2006.
Korea, Sweden, and Taiwan continued to be the leaders in the growth of
output, as they have been for the last decade. In 2006, growth in
manufacturing output in Germany, Norway and Denmark was also noticeably
higher than their average annual rates of increase over the 1979-2006
period. The U.S. increase of 3.3 percent was also above its average
annual increase since 1979 of 2.9 percent.
While 14 of the economies had increases in output in 2006, 9
economies had reductions in total hours worked in manufacturing. The
United Kingdom had the greatest decline (-3.1 percent) in hours in 2006,
followed by Korea (-2.1 percent) and France (-2.0 percent). Total hours
worked increased in the United States by 0.9 percent, and by over 2
percent in Japan and Italy.
Manufacturing employment declined in 10 of the 16 economies in 2006.
The United Kingdom experienced the steepest decline (-2.6 percent),
followed by France (-2.0 percent). The decline was 0.5 percent in the
United States.
Seven of the sixteen economies experienced decreases in average hours
worked in 2006, seven registered increases, and two had no change. This
compares to thirteen economies with declining average annual
manufacturing hours over the 2000-2006 period. Korea and Taiwan had the
greatest declines in average hours worked in 2006, while the United
States had the largest increase of 1.4 percent.
Manufacturing hourly compensation and unit labor costs
Total labor compensation in manufacturing increased in all 16
economies in 2006, from 0.5 percent in France to 5.7 percent in Norway.
For most, the increases were between 2 and 4 percent. Total labor
compensation in U.S. manufacturing increased by 3.4 percent in 2006, and
increased at a 3.6 percent average annual rate over the 1979-2006
period. (See tables A and B.)
Hourly compensation in manufacturing also increased in all 16
economies in 2006. The greatest increases were in the United Kingdom
(7.0 percent), Korea (6.8 percent), and Australia (6.5 percent). Japan
had the lowest rate of increase in 2006 (0.5 percent). The U.S.
increase of 2.5 percent in hourly compensation was below its average
annual increase since 1979. (See tables A and B.)
-5-
Unit labor costs, expressed in national currencies, declined in nine
countries in 2006, and increased in seven. The largest increase
occurred in Australia (+6.2 percent) and the greatest decline was in
Taiwan (-4.4 percent). Unit labor costs were about unchanged in U.S.
manufacturing at +0.1 percent.
Expressed in U.S. dollars, manufacturing unit labor costs increased
in ten economies in 2006, and declined in six. The unit labor costs of
three economies, Korea, the Netherlands, and Spain, went from decreases
to increases when computed on a U.S. dollar basis. This reversal
happened because of the appreciation of their currencies versus the
dollar. Korea, with the greatest currency appreciation, experienced the
greatest reversal, from -3.6 to +3.5 percent.
Movements in exchange rates often are the dominant force behind
changes in comparative unit labor costs and international
competitiveness. In 2006 the U.S. dollar weakened against most of the
currencies being compared. The only exceptions were Japan, Australia,
and Taiwan, where the currencies depreciated against the dollar. This
depreciation of the U.S. dollar against most currencies continues a
trend that began after 2000. In 2006 the dollar fell by 0.9 percent
against the euro, following a decline of 0.1 percent in 2005.
-6-
Table B. Output per hour, hourly compensation, unit labor costs, and related measures
Manufacturing, 16 countries or areas, 1979-2006
Average annual rates of change(1)
--------------------------------------------------------------------------------------------------------
Country or area 1979-2006 1979-1990 1990-1995 1995-2000 2000-2006 2004-2005 2005-2006
--------------------------------------------------------------------------------------------------------
Output per hour
United States 4.0 2.8 3.7 5.5 5.1 3.4 2.4
Canada 2.3 2.1 3.4 3.8 0.5 3.7 0.0
Australia 2.9 2.9 2.9 3.8 2.0 1.0 0.3
Japan 3.6 3.8 3.3 3.4 3.5 4.0 2.3
Korea, Republic of NA NA 9.4 10.8 7.4 6.8 10.8
Taiwan 5.7 6.1 4.7 5.6 6.0 7.2 6.9
Belgium 3.3 4.2 3.1 2.2 2.8 2.8 2.1
Denmark 2.4 2.2 2.7 1.8 3.0 2.0 4.0
France 3.8 3.6 3.8 4.6 3.4 4.3 3.7
Germany (2) 2.9 2.1 2.9 3.7 3.8 5.6 6.7
Italy 1.7 2.8 2.7 0.9 -0.6 -0.1 1.4
Netherlands 3.4 3.4 3.7 3.3 3.1 3.5 3.1
Norway 2.0 1.9 0.1 1.4 4.3 2.4 3.3
Spain 2.5 3.3 3.1 0.8 1.8 0.8 3.8
Sweden 4.8 2.5 5.8 7.2 6.5 6.2 6.5
United Kingdom 3.6 4.1 3.1 2.2 4.4 3.6 4.5
Output
United States 2.9 2.2 3.6 5.4 1.7 2.2 3.3
Canada 2.2 1.9 2.2 6.2 -0.4 0.7 -1.3
Australia 1.4 1.6 0.8 2.6 0.7 0.2 -1.3
Japan 2.6 4.7 0.4 1.2 1.8 2.6 4.8
Korea, Republic of 8.9 10.7 8.2 7.9 6.9 7.1 8.4
Taiwan 6.0 7.4 4.4 5.8 4.9 6.6 7.2
Belgium 1.7 2.6 0.6 2.1 0.6 -0.5 2.5
Denmark 1.4 1.3 2.1 1.7 0.7 1.6 5.1
France 1.6 1.3 0.9 3.5 1.1 1.3 1.6
Germany (2) 1.2 1.2 -1.0 2.2 2.1 3.3 5.5
Italy 1.3 2.6 1.6 0.7 -0.8 -2.5 3.7
Netherlands 2.1 2.4 2.0 3.3 0.7 0.0 2.3
Norway 0.8 -0.5 0.7 1.4 2.6 3.6 4.5
Spain 2.2 2.1 0.6 5.0 1.3 0.3 3.3
Sweden 3.8 1.8 3.8 7.4 4.5 4.1 5.7
United Kingdom 0.6 0.9 0.5 1.3 -0.3 -1.2 1.3
--------------------------------------------------------------------------------------------------------
Continued on next page
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Table B. Output per hour, hourly compensation, unit labor costs, and related measures
Manufacturing, 16 countries or areas, 1979-2006
Average annual rates of change(1)
--------------------------------------------------------------------------------------------------------
Country or area 1979-2006 1979-1990 1990-1995 1995-2000 2000-2006 2004-2005 2005-2006
--------------------------------------------------------------------------------------------------------
Total hours
United States -1.0 -0.6 -0.1 -0.1 -3.2 -1.2 0.9
Canada -0.1 -0.2 -1.2 2.3 -0.9 -2.8 -1.3
Australia -1.4 -1.3 -2.0 -1.2 -1.2 -0.8 -1.5
Japan -1.0 0.8 -2.8 -2.2 -1.6 -1.3 2.5
Korea, Republic of NA NA -1.1 -2.6 -0.5 0.2 -2.1
Taiwan 0.2 1.2 -0.3 0.1 -1.0 -0.6 0.3
Belgium -1.6 -1.6 -2.4 -0.1 -2.1 -3.2 0.5
Denmark -1.0 -1.0 -0.7 -0.1 -2.2 -0.4 1.0
France -2.1 -2.2 -2.8 -1.1 -2.2 -2.8 -2.0
Germany (2) -1.7 -0.9 -3.8 -1.4 -1.7 -2.2 -1.1
Italy -0.4 -0.2 -1.0 -0.2 -0.2 -2.4 2.3
Netherlands -1.2 -1.0 -1.7 0.0 -2.3 -3.3 -0.8
Norway -1.2 -2.3 0.6 0.0 -1.6 1.1 1.1
Spain -0.3 -1.2 -2.4 4.1 -0.5 -0.5 -0.5
Sweden -1.0 -0.7 -1.9 0.3 -1.9 -2.0 -0.8
United Kingdom -2.9 -3.1 -2.6 -0.9 -4.5 -4.6 -3.1
Employment
United States -1.1 -0.8 -0.5 0.0 -3.2 -0.6 -0.5
Canada -0.2 -0.3 -1.5 2.2 -0.8 -1.6 -1.5
Australia -1.4 -1.3 -2.3 -1.1 -1.1 -1.7 -1.2
Japan -0.7 1.0 -1.6 -2.0 -1.9 -0.8 1.7
Korea, Republic of NA NA -0.8 -2.5 0.6 0.9 -0.4
Taiwan 0.8 2.0 -0.3 0.4 0.0 0.4 1.1
Belgium -1.5 -1.6 -2.2 -0.6 -1.5 -0.9 -0.4
Denmark -1.1 -0.4 -1.2 -1.2 -2.2 -2.0 0.2
France -1.6 -1.7 -2.5 -0.3 -1.8 -2.6 -2.0
Germany (2) -1.3 -0.1 -4.2 -0.8 -1.4 -1.7 -1.0
Italy -0.7 -0.8 -1.9 -0.2 0.0 -1.7 1.2
Netherlands -1.1 -0.8 -1.6 0.1 -2.2 -3.0 -0.8
Norway -1.2 -2.2 0.4 0.2 -1.8 0.5 1.3
Spain 0.1 -0.7 -2.0 3.3 0.8 1.0 0.0
Sweden -1.4 -1.0 -3.5 0.0 -1.6 -2.2 -0.7
United Kingdom -2.8 -2.9 -2.4 -1.4 -4.3 -4.5 -2.6
--------------------------------------------------------------------------------------------------------
Continued on next page
-8-
Table B. Output per hour, hourly compensation, unit labor costs, and related measures
Manufacturing, 16 countries or areas, 1979-2006
Average annual rates of change(1)
--------------------------------------------------------------------------------------------------------
Country or area 1979-2006 1979-1990 1990-1995 1995-2000 2000-2006 2004-2005 2005-2006
--------------------------------------------------------------------------------------------------------
Average hours
United States 0.1 0.2 0.4 -0.1 -0.1 -0.6 1.4
Canada 0.1 0.1 0.3 0.1 -0.2 -1.3 0.1
Australia 0.0 0.0 0.3 -0.1 -0.1 0.9 -0.4
Japan -0.3 -0.2 -1.3 -0.2 0.2 -0.5 0.8
Korea, Republic of NA NA -0.2 -0.1 -1.1 -0.6 -1.7
Taiwan -0.6 -0.8 0.0 -0.3 -1.0 -1.0 -0.8
Belgium -0.1 0.0 -0.2 0.5 -0.5 -2.3 0.8
Denmark 0.1 -0.5 0.6 1.1 0.0 1.7 0.8
France -0.5 -0.5 -0.3 -0.8 -0.4 -0.2 0.0
Germany (2) -0.4 -0.9 0.4 -0.6 -0.2 -0.5 -0.1
Italy 0.4 0.6 0.9 0.0 -0.2 -0.7 1.0
Netherlands -0.1 -0.2 0.0 -0.1 -0.1 -0.4 0.1
Norway 0.0 -0.1 0.2 -0.2 0.1 0.6 -0.2
Spain -0.4 -0.5 -0.4 0.8 -1.3 -1.5 -0.5
Sweden 0.4 0.3 1.7 0.2 -0.2 0.2 0.0
United Kingdom -0.1 -0.2 -0.1 0.5 -0.2 -0.1 -0.4
Total labor compensation(3): National currency basis
United States 3.6 4.9 3.4 4.5 0.8 3.0 3.4
Canada 4.5 6.5 2.4 5.2 1.9 0.9 1.3
Australia NA NA 3.2 3.1 3.8 4.1 4.9
Japan 1.9 5.5 0.7 -1.0 -1.3 -0.1 3.0
Korea, Republic of 13.7 19.6 17.6 5.4 7.3 8.2 4.5
Taiwan 7.5 13.5 6.8 3.6 1.1 3.7 2.5
Belgium 2.7 4.4 1.3 1.9 1.4 0.9 2.6
Denmark 4.1 7.0 2.3 2.8 1.6 1.7 3.6
France 3.6 7.3 1.7 1.7 0.3 -3.4 0.5
Germany (2) 2.6 4.6 2.4 1.6 0.3 -1.1 1.2
Italy 6.4 11.4 3.9 2.6 2.7 0.5 4.2
Netherlands 2.7 3.1 2.7 3.4 1.5 -1.4 2.0
Norway 5.0 6.4 4.1 5.1 2.9 5.0 5.7
Spain 6.9 10.1 5.5 5.6 3.3 3.5 3.0
Sweden 5.2 8.4 2.0 5.3 2.0 0.3 2.2
United Kingdom 3.9 7.1 1.5 3.3 0.8 -0.5 3.7
--------------------------------------------------------------------------------------------------------
Continued on next page
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Table B. Output per hour, hourly compensation, unit labor costs, and related measures
Manufacturing, 16 countries or areas, 1979-2006
Average annual rates of change(1)
--------------------------------------------------------------------------------------------------------
Country or area 1979-2006 1979-1990 1990-1995 1995-2000 2000-2006 2004-2005 2005-2006
--------------------------------------------------------------------------------------------------------
Hourly compensation(3): National currency basis
United States 4.7 5.5 3.5 4.7 4.2 4.2 2.5
Canada 4.6 6.8 3.6 2.9 2.9 3.9 2.6
Australia NA NA 5.4 4.3 5.1 5.0 6.5
Japan 2.8 4.6 3.6 1.2 0.4 1.1 0.5
Korea, Republic of NA NA 18.9 8.1 7.8 8.0 6.8
Taiwan 7.3 12.1 7.1 3.4 2.1 4.4 2.1
Belgium 4.3 6.1 3.8 2.0 3.5 4.2 2.1
Denmark 5.2 8.1 2.9 2.9 3.9 2.0 2.5
France 5.9 9.8 4.6 2.8 2.5 -0.6 2.6
Germany (2) 4.4 5.6 6.4 3.1 2.0 1.1 2.4
Italy 6.8 11.6 5.0 2.8 2.9 3.0 1.8
Netherlands 4.0 4.1 4.5 3.4 3.9 2.0 2.8
Norway 6.2 9.0 3.4 5.2 4.6 3.9 4.6
Spain 7.2 11.4 8.2 1.4 3.8 4.1 3.5
Sweden 6.2 9.1 4.0 5.1 3.9 2.3 3.0
United Kingdom 7.0 10.6 4.2 4.2 5.5 4.3 7.0
Unit labor costs(3): National currency basis
United States 0.7 2.6 -0.2 -0.8 -0.8 0.8 0.1
Canada 2.2 4.6 0.3 -0.9 2.3 0.2 2.6
Australia NA NA 2.4 0.5 3.1 4.0 6.2
Japan -0.7 0.8 0.3 -2.2 -3.1 -2.7 -1.8
Korea, Republic of 4.4 8.1 8.7 -2.4 0.4 1.1 -3.6
Taiwan 1.5 5.6 2.3 -2.1 -3.6 -2.7 -4.4
Belgium 1.0 1.8 0.7 -0.2 0.7 1.5 0.1
Denmark 2.7 5.7 0.2 1.1 0.9 0.1 -1.4
France 2.0 5.9 0.7 -1.7 -0.8 -4.7 -1.0
Germany (2) 1.5 3.3 3.4 -0.5 -1.8 -4.2 -4.0
Italy 5.0 8.5 2.3 1.9 3.6 3.1 0.4
Netherlands 0.6 0.7 0.7 0.1 0.7 -1.4 -0.3
Norway 4.2 6.9 3.4 3.7 0.3 1.4 1.2
Spain 4.6 7.8 4.9 0.5 2.0 3.2 -0.3
Sweden 1.3 6.5 -1.7 -1.9 -2.4 -3.6 -3.3
United Kingdom 3.3 6.2 1.0 2.0 1.0 0.7 2.4
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Continued on next page
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Table B. Output per hour, hourly compensation, unit labor costs, and related measures
Manufacturing, 16 countries or areas, 1979-2006
Average annual rates of change(1)
--------------------------------------------------------------------------------------------------------
Country or area 1979-2006 1979-1990 1990-1995 1995-2000 2000-2006 2004-2005 2005-2006
--------------------------------------------------------------------------------------------------------
Unit labor costs(3): U.S. dollar basis
United States 0.7 2.6 -0.2 -0.8 -0.8 0.8 0.1
Canada 2.4 4.6 -2.9 -2.4 7.1 7.6 9.6
Australia NA NA 1.3 -4.2 7.6 7.6 4.9
Japan 1.6 4.6 9.4 -4.8 -4.3 -4.4 -7.0
Korea, Republic of 1.8 4.4 6.9 -9.5 3.2 13.1 3.5
Taiwan 1.8 8.5 2.7 -5.3 -4.2 1.1 -5.6
Belgium 0.6 0.6 3.3 -7.7 6.0 1.5 1.0
Denmark 2.3 4.1 2.2 -6.1 6.2 -0.1 -0.5
France 1.2 3.6 2.5 -8.4 4.4 -4.6 -0.1
Germany (2) 2.1 4.5 5.9 -8.0 3.4 -4.1 -3.1
Italy 2.6 5.0 -3.8 -3.1 9.0 3.2 1.3
Netherlands 1.1 1.6 3.3 -7.6 6.0 -1.3 0.6
Norway 3.3 4.9 3.1 -2.9 5.8 6.1 1.7
Spain 2.0 3.8 0.8 -6.6 7.3 3.3 0.6
Sweden -0.7 3.4 -5.3 -6.7 1.2 -5.2 -2.0
United Kingdom 2.7 4.5 -1.4 1.1 4.4 0.0 3.7
Exchange rates(4)
United States -- -- -- -- -- -- --
Canada 0.1 0.0 -3.2 -1.6 4.6 7.4 6.8
Australia -1.5 -3.2 -1.1 -4.7 4.4 3.6 -1.2
Japan 2.4 3.8 9.1 -2.7 -1.3 -1.8 -5.3
Korea, Republic of -2.5 -3.4 -1.7 -7.3 2.9 11.9 7.3
Taiwan 0.4 2.7 0.3 -3.3 -0.6 3.9 -1.2
Belgium -0.3 -1.2 2.5 -7.6 5.3 0.1 0.9
Denmark -0.5 -1.5 2.0 -7.1 5.3 -0.1 0.9
France -0.8 -2.2 1.8 -6.8 5.3 0.1 0.9
Germany (2) 0.6 1.1 2.5 -7.5 5.3 0.1 0.9
Italy -2.3 -3.3 -6.0 -4.9 5.3 0.1 0.9
Netherlands 0.5 0.9 2.6 -7.6 5.3 0.1 0.9
Norway -0.9 -1.9 -0.3 -6.4 5.5 4.6 0.5
Spain -2.5 -3.7 -3.9 -7.1 5.3 0.1 0.9
Sweden -2.0 -2.9 -3.7 -4.9 3.7 -1.6 1.3
United Kingdom -0.5 -1.6 -2.4 -0.8 3.3 -0.7 1.3
--------------------------------------------------------------------------------------------------------
NA=data not available
(1) Rates of change based on the compound rate method.
(2) Data for years before 1991 pertain to the former West Germany.
(3) Adjusted for employment taxes and government subsidies to estimate the actual cost to employers.
(4) Value of foreign currency relative to the U.S. dollar.
-11-
Trade-weighted unit labor costs
BLS constructs indexes of U.S. unit labor cost trends relative to a
trade-weighted average of unit labor cost trends in the other economies
to take account of differences in the relative importance of foreign
economies to U.S. trade in manufactured goods. Relative trade-weighted
unit labor cost indexes are calculated on both a national currency and a
U.S. dollar basis.
In this release, the relative U.S. trade-weighted indexes are
estimated against 14 economies for which comparable data are available
over the period of comparison; the indexes underlying this chart are
shown in table C.
Chart 3 begins in 1979, a year in which U.S. manufacturing output
reached a business cycle peak.
PRINTED COPY CONTAINS CHART AT THIS POINT: Chart 3. U.S. manufacturing
unit labor costs relative to 14(1) other economies, 1979-2006
In the chart, the dotted line shows that, on a national currency
basis, U.S. unit labor costs tended to fall more or increase less than
unit labor costs in the other economies throughout this period.
The solid line compares the unit labor costs on a U.S. dollar basis.
From 1979 to 1985, and again from 1995 to 2001, U.S. unit labor costs on
a U.S. dollar basis generally rose more or declined less than in the
other economies, due to the appreciation of the dollar. Since 2001,
relative U.S. unit labor costs declined with the weakening of the U.S.
dollar.
-12-
Table C. U.S. manufacturing unit labor
costs relative to 14(1) competitors, 1979-2006
----------------------------------------------------------------
Unit Labor Costs Unit Labor Costs
National Currency Basis U.S. Dollar Basis
Year Own Competitors' Own Competitors'
Index Index Ratio Index Index Ratio
----------------------------------------------------------------
1979 100.0 100.0 100.0 100.0 100.0 100.0
1980 112.7 111.4 101.2 112.7 109.9 102.6
1981 117.6 121.0 97.2 117.6 109.1 107.9
1982 127.4 131.5 96.9 127.4 108.8 117.1
1983 122.7 133.9 91.6 122.7 107.0 114.7
1984 123.8 133.8 92.5 123.8 100.4 123.3
1985 126.2 136.2 92.7 126.2 98.3 128.3
1986 130.1 141.7 91.8 130.1 117.6 110.6
1987 125.4 144.9 86.6 125.4 134.3 93.4
1988 126.4 147.6 85.6 126.4 146.9 86.1
1989 129.4 151.7 85.3 129.4 149.0 86.8
1990 133.2 158.2 84.2 133.2 162.0 82.3
1991 136.7 166.4 82.1 136.7 171.7 79.6
1992 137.8 169.9 81.1 137.8 176.1 78.2
1993 136.7 170.7 80.1 136.7 168.7 81.0
1994 134.1 168.1 79.8 134.1 165.7 80.9
1995 131.6 169.7 77.5 131.6 175.1 75.2
1996 129.1 171.5 75.2 129.1 171.0 75.5
1997 127.1 169.2 75.1 127.1 157.2 80.8
1998 125.7 170.2 73.9 125.7 146.8 85.6
1999 124.4 166.8 74.6 124.4 146.9 84.7
2000 126.2 162.4 77.7 126.2 138.7 91.0
2001 127.7 168.0 76.0 127.7 135.0 94.6
2002 123.9 168.4 73.6 123.9 136.6 90.7
2003 124.7 167.9 74.2 124.7 152.9 81.6
2004 119.1 166.2 71.6 119.1 163.5 72.9
2005 120.0 164.6 72.9 120.0 167.1 71.8
2006 120.1 164.3 73.1 120.1 170.6 70.4
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(1) Australia has been omitted from this table because data are
not available before 1990.-13-
Technical Notes
The comparisons in this release are based on data available to the
Bureau of Labor Statistics as of the end of August 2007 from the
national statistical offices of the 16 economies compared.
Definitions. Labor productivity is defined as real output per hour
worked. Although the labor productivity measure presented in this
release relates output to the hours worked of persons employed in
manufacturing, it does not measure the specific contributions of labor
as a single factor of production. Rather, it reflects the joint effects
of many influences, including new technology, capital investment,
capacity utilization, energy use, and managerial skills, as well as the
skills and efforts of the workforce.
Unit labor costs are defined as the cost of labor input required to
produce one unit of output. They are computed as compensation in nominal
terms divided by real output. Unit labor costs can also be computed by
dividing hourly compensation by output per hour, that is, by labor
productivity.
Methodology. BLS constructs trends of manufacturing labor productivity,
hourly compensation costs, and unit labor costs from three basic
aggregate measures: output, total labor hours, and total compensation.
The hours and compensation measures refer to employees (wage and salary
earners) in Belgium and Taiwan. For all other economies, the measures
refer to all employed persons, including employees, self-employed
persons, and unpaid family workers.
In general, the measures relate to total manufacturing as defined by the
International Standard Industrial Classification (ISIC). However, the
measures for France include parts of mining. Data for the United States
are in accordance with the North American Industry Classification System
(NAICS 97), except compensation data before 1987. Canadian data are in
accordance with NAICS 97 starting in 1961.
The data for the most recent years are based on the United Nations
System of National Accounts 1993 (SNA 93) or its sub-system, the
European System of Integrated National Accounts (ESA 95). For earlier
years, data were compiled according to previously used systems.
To obtain historical time series, BLS may link together data series
which were compiled according to different accounting systems by
national statistical offices.
Output. For most economies, the output measures are real value added in
manufacturing from national accounts. However, output for Japan prior to
1970 and for the Netherlands prior to 1960 are indexes of industrial
production. The manufacturing value added measures for the United
Kingdom are essentially identical to their indexes of industrial
production.
-14-
Most economies now estimate manufacturing real output using moving price
weights, as recommended by SNA 93. However, many earlier time periods
within the historical real output series have been estimated using fixed
price weights, with the weights updated periodically (for example, every
5 or 10 years). Taiwan and Korea still use fixed price weights to
estimate real output.
Measures of real output also may differ among economies because of
different approaches to estimating the prices of high-technology
products like computers and, in general, of products that undergo rapid
quality change.
For the United States, the output measure for the manufacturing sector
is a chain-weighted index of real gross product originating (deflated
value added) produced by the Bureau of Economic Analysis (BEA) of the
U.S. Department of Commerce. For more information on the U.S. measure,
see "Improved Estimates of Gross Product by Industry for 1947-98,"
Survey of Current Business, June 2000, pp. 24-38 and "Gross Domestic
Product by Industry for 1947-86. New Estimates Based on the North
American Industry Classification System," Survey of Current Business,
December 2005, pp. 70-84.
The U.S. output series used for international comparisons differs from
the manufacturing output series that BLS publishes as part of its major
sector productivity and costs measures for the United States. The
international comparisons program uses a value added output concept,
while the major sector series is on a sectoral output basis. Sectoral
output is gross output less intrasector sales and transfers. The U.S.
major sector productivity and costs measures can be found at
http://www.bls.gov/lpc/home.htm. For information on sectoral output, see
"Measurement of productivity growth in U.S. manufacturing," Monthly
Labor Review, July 1995, pp. 13-28.
Value added measures have been used for the international comparisons
series because the data are more readily available from the economies'
national accounts, whereas sectoral output would require a complex
estimation procedure. Even though BLS has determined that sectoral
output is the correct concept for U.S. measures of productivity, there
are other considerations that may make value added a better concept for
international comparisons of labor productivity, such as differences
among economies in the extent of vertical integration of industries.
Labor Input. For all of the economies for the most recent years, the
term "hours" refers to hours worked. For some earlier years, BLS uses
other hours measures.
For the United States, the employment and hours data series beginning
with 1987 are taken from the NAICS-based manufacturing all-employed
series published by BLS as part of the major sector productivity and
cost measures. For the period before 1987, these series are linked to
NAICS-based, employees-only data from the Current Employment Statistics
(CES) program.
For most other economies, recent years' aggregate hours series are
obtained from national statistical offices, usually from national
accounts. However, for some economies and for
-15-
earlier years, BLS calculates the aggregate hours series using
employment figures published with the national accounts, or other
comprehensive employment series, and data on average hours worked.
Compensation (Labor Cost). The compensation measures are from national
accounts data and are in nominal terms. Compensation includes employer
expenditures for legally required insurance programs and contractual and
private benefit plans, in addition to all payments made in cash or in
kind directly to employees. When data for the self-employed are not
available, total compensation is estimated by assuming the same average
compensation for the self-employed as for employees.
Labor cost is defined as compensation plus employment taxes minus
employment subsidies, i.e. the cost to employers of hiring labor. For
most economies, labor cost is the same as compensation. However, for
Australia, Canada, France, and Sweden, compensation is increased to
account for important taxes on payroll or employment. For the United
Kingdom, compensation is reduced between 1967 and 1991 to account for
subsidies.
Data for Germany. German data prior to 1991 pertain to the former West
Germany. The data series are linked in 1991.
Data for Australia. Australian data are published by fiscal years, which
run from July 1 through June 30. The Australian Bureau of Statistics
provides unpublished calendar-year data for real value added,
employment, and hours worked. For compensation, BLS estimates calendar-
year series using two-year moving averages of the data for fiscal years.
Manufacturing compensation data are not available for years prior to
1990.
Data for Recent Years. The measures for recent years may be estimates
based on various current indicators until national accounts and other
statistics become available.
Trade-Weighted Measures. The trade weights used to calculate the
relative unit labor cost indexes of the United States and the other
economies are based on the relative dollar value of U.S. trade in
manufactured commodities (exports plus imports) with each economy in
2005. The trade data are compiled by the U.S. Census Bureau.
The following weights were used for the entire period for which trade-
weighted unit labor cost measures are produced:
-16-
Weight Weight
Canada 36.80 Germany 10.33
Japan 16.59 Italy 3.65
Korea 6.20 Netherlands 3.37
Taiwan 4.89 Norway 0.42
Belgium 2.70 Spain 1.23
Denmark 0.60 Sweden 1.52
France 4.73 United Kingdom 6.97
Level Comparisons. The BLS measures are limited to trend comparisons.
BLS does not prepare level comparisons of manufacturing productivity and
unit labor costs because of data limitations and technical problems in
comparing the levels of manufacturing output among economies. Each
economy measures manufacturing output in its own currency units. To
compare outputs among economies, a common unit of measure is needed.
Market exchange rates are not suitable as a basis for comparing output
levels. What is needed are purchasing power parities, which are the
number of foreign currency units required to buy goods and services
equivalent to what can be bought with one unit of U.S. currency.
Purchasing power parities are available for total gross domestic product
(GDP) from the Organization for Economic Cooperation and Development
(OECD). However, these parities are derived for expenditures made by
consumers, business, and government for goods and services - not for
value added by industry. Therefore, they do not provide purchasing power
parities by industry. The parities developed for total GDP are not
suitable for each component industry, such as manufacturing.
European exchange rates. On Jan. 1, 1999, 11 European countries joined
the European Monetary Union (EMU). In subsequent years they were joined
by Greece and Slovenia. The euro, the official currency of the EMU, was
established at fixed conversion rates to the previous national
currencies of EMU members. Data on manufacturing value added and labor
compensation for euro-area countries are now reported in euros.
In order to maintain historical continuity of data series, data for
euro-area countries for years before 1999 have been converted to euros
by applying the fixed euro/national currency conversion rates. For
countries and years where output, compensation, and exchange rates are
converted from national currency units into euros, the following fixed
conversion rates are used:
1 euro equals: 40.3399 Belgian francs 1936.27 Italian lire
6.55957 French francs 2.20371 Netherlands guilders
1.95583 German marks 166.386 Spanish pesetas
The currency exchange rates cited in this publication are annual
averages of daily buying rates in New York City.