New Eurostat figures on incomes

Friday, December, 2010

According to Eurostat, hourly labour costs in the euro area rose by 0.8% in the year up to the third quarter of 2010, compared with 1.6% for the previous quarter. This is the lowest increase registered since the start of the series in 2000. In the EU27, the annual rise was 1.2% up to the third quarter of 2010, compared with 1.5% for the previous quarter.

The two main components of labour costs are wages & salaries and non-wage costs. In the euro area, wages & salaries per hour worked grew by 0.7% in the year up to the third quarter of 2010, and the non-wage component by 1.2%, compared with 1.5% and 1.9% respectively for the second quarter of 2010.  In the EU27, hourly wages & salaries rose by 1.2% and the non-wage component by 1.1% in the year up to the third quarter of 2010, compared with 1.6% for both components in the previous quarter.

Among the Member States for which data are available for the third quarter of 2010, the highest annual increases in hourly labour costs were registered in Bulgaria (10.2%), Romania (6.3%) and the Czech Republic (5.6%). The largest annual decreases were observed in Greece (-6.6%), Lithuania (-1.7%) and the Netherlands (-1.3%).  No data are available for Ireland.

The EU’s statistical agency has also released figures on GDP per capital in purchasing power standards (PPS).  The PPS is an artificial currency unit that eliminates price level differences between countries. Thus one PPS buys the same volume of goods and services in all countries and allows meaningful volume comparisons of economic indicators across countries.

Top of the table in GDP per capita measured in this way is Luxembourg, which had an average income of more than two-and-a-half times that of the EU27 in 2009.  Next is the Netherlands where GDP per capita was 31% above the EU27 average in that year, followed by Ireland, in which average incomes were 27% higher than the European average in 2009. The corresponding figure for the largest European economy – Germany – was 16% and that for the UK was 12%.  At the bottom of the EU27 table are Bulgaria and Romania, where GDP per capita adjusted for PPS were 44% and 46% lower than the EU27 average in 2009 respectively.  Iceland, which is not a member of the EU, had average incomes of 18% above the EU27 average in 2009.

The figures illustrate that average incomes are still relatively high in Ireland.  However, they have also been falling and the premium in the country’s average income over the EU27 average has declined from 47% in 2007 to 33% in 2008 to the aforementioned 27% in 2009.  It is fair to expect further falls in 2010 and beyond, as the country makes painful adjustments towards greater cost competitiveness, which will be just one component of the National Recovery Plan now underway.

Keep Abreast of PMCA's Perspectives

Subscribe to PMCA's RSS feed and keep up to date with all PMCA's posts, articles and reports. Subscribe to PMCA's feed