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Hourly labour cost at €19.4 in Cyprus

31/03/2023 10:17

n 2022, the average hourly labour costs in the whole economy were estimated to be 30.5 euro in the EU and 34.3 euro in the euro area (19.4 euro in Cyprus), up compared with 29.0 euro and 32.8 euro, respectively, in 2021 (18 euro in Cyprus), according to estimates published by Eurostat.

Labour cost is defined as the total expenditure borne by employers for employing staff, while average hourly labour cost is defined as the total labour cost divided by the corresponding number of hours worked by all employees.

The average hourly labour costs mask significant gaps between EU countries, with the lowest hourly labour costs recorded in Bulgaria (8.2 euro) and Romania (9.5 euro), and the highest in Luxembourg (50.7 euro), Denmark (46.8 euro) and Belgium (43.5 euro).

Hourly labour costs in industry were 30.7 euro in the EU and 36.6 euro in the euro area. In construction, they were 27.3 euro and 30.8 euro, respectively. In services, hourly labour costs were 30.2 euro in the EU and 33.3 euro in the euro area. In the mainly non-business economy (excluding public administration), they were 31.3 euro and 34.8 euro respectively.

In Cyprus, hourly labour costs were 14.8 euro (14.3 euro in 2021) in industry, 16.1 euro in construction (15.5 euro in 2021), 18.7 euro in services (17 euro in 2021) and 28.8 euro in the mainly non-business economy (excluding public administration) compared to 27.3 euro in 2021.

The two main components of labour costs are wages & salaries and non-wage costs (e.g. employers' social contributions).

The share of non-wage costs in total labour costs for the whole economy was 24.8% in the EU and 25.5% in the euro area. The lowest shares of non-wage costs were recorded in Lithuania (5.4%) and Romania (5.3%) and the highest in France (32.0%), Sweden (31.9%) and Italy (27.8%).

In Cyprus this share stood at 19.9%, that is below both the EU and the euro area averages.

In 2022, compared with 2021, hourly labour costs at whole economy level expressed in euros rose by 5.0% in the EU and by 4.7% in the euro area.

Within the euro area, hourly labour costs increased in all Member States. The largest increases were recorded in Lithuania (+13.3%), Ireland (+9.3%) and Estonia (+9.1%). An increase of 8% was recorded in Cyprus.

For EU countries outside the euro area, the hourly labour costs expressed in national currency increased in 2022 in all countries, with the largest increases recorded in Bulgaria (+15.3%), Hungary (+13.9%), Romania (+12.2%) and Poland (+11.7%). They increased the least in Denmark (+2.3%).

In 2022, most EU countries phased out the support schemes introduced in 2020 and extended in 2021 to alleviate the impact of the COVID-19 pandemic on enterprises and employees. They mainly consisted of short-term work arrangements and temporary layoffs fully or partly compensated by government. Those schemes were generally recorded as subsidies (or tax allowances) with a negative sign in the non-wage component of labour costs. Therefore, the phasing out of COVID-related support schemes make a positive contribution to the growth in hourly labour costs.