Labour costs in the Republic are among the lowest in the European Union, according to a report published yesterday by Eurostat, the EU statistical office. Portugal, Greece and Spain are the only member-states where labour is cheaper than in Ireland and Irish labour costs are lower than in the United States.
The report, which is based on 1999 figures, shows that hourly labour costs in the EU range from #7 (£5.51) in Portugal to #27 in Austria. Labour costs in Ireland, at #16.2 per hour, are well below the EU average of #21.5. Direct costs, mainly wages and salaries, account for 84 per cent of labour costs in Ireland. Throughout the EU these costs account for 75 per cent of the total and in the euro-zone, 71 per cent.
The Minister for Finance, Mr McCreevy, who was in Brussels yesterday for a meeting of EU finance ministers, said he had not yet had an opportunity to study the figures. But he claimed that Ireland had one of the lightest tax regimes for lower-paid workers.
Labour costs in the US are, at #17.8 per hour, lower than in the EU but costs in Japan are close to the European level. Germany, Denmark and Austria have the most expensive labour in the EU. Britain, at #19.3 per hour, is close to the EU average.
"Labour costs considerably influence the choices of political, economic and social decision-makers, as they account for some two-thirds of the production costs of goods and services. Moreover, knowledge of labour cost levels is an essential tool in the strategic planning of investment, production, employment policy or wage levels in collective bargaining," said Ms Ana Nobre, the author of the report.
Social security contributions represented 23.0 per cent of costs in the EU and 25.0 per cent of costs in the euro zone, compared to 17.8 per cent in the United States and 15.5 per cent in Japan. Indirect costs include social security expenses, vocational training expenditure, and taxes. If the employer receives any subsidies, these are deducted from the costs. Eurostat used statistics supplied by statistics offices in the 15 EU member-states. The figures are based on data from 1999 on labour costs in industry and services.
