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Average hourly labour costs estimated at €17

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In 2020, average hourly labour costs in Cyprus were estimated to be €17, below the €28.5 averaged in the EU and €32.3 in the euro area, according to figures issued by Eurostat on Wednesday.

Unlike the average in the EU and the Eurozone which recorded a small increase over the previous year, Cyprus’ hourly labour costs for 2020 edged down from €17.5 in 2019.

The figures, which exclude agriculture and public administration, come from data on labour costs levels.

They mask significant gaps between EU member states, with the lowest hourly labour costs recorded in Bulgaria (€6.5), Romania (€8.1) and Hungary (€9.9), and the highest in Denmark (€45.8), Luxembourg (€42.1) and Belgium (€41.1).

Hourly labour costs in industry were €28.8 in the EU and €34.8 in the euro area. In construction, they were €25.6 and €29.0 respectively. In services, hourly labour costs were €28.2 in the EU and €31.1 in the euro area. In the mainly non-business economy (excluding public administration), they were €29.7 and €33.1 respectively.

The two main components of labour costs are wages and 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 24.5 per cent in the EU and 25.0 per cent in the euro area.

Between 2019 and 2020, hourly labour costs at whole economy level expressed in euro rose by 3.1 per cent in the EU and by 2.9 cent in the euro area.

Within the euro area, hourly labour costs increased in all member states except Malta (-4.7 per cent), Cyprus and Ireland (-2.7 per cent each). The largest increases were recorded in Portugal (+8.6 per cent), Lithuania (+7.5 per cent) and Slovakia (+7.0 per cent), the smallest in Luxembourg (+0.5 per cent), Finland (+0.7 per cent) and the Netherlands (+0.8 per cent).

In 2020, most member states introduced a number of support schemes to alleviate the impact of the Covid-19 pandemics on enterprises and employees. They mainly consisted of short-term work arrangements and temporary lay-offs fully or partly compensated by government. Those schemes were generally recorded as subsidies (or tax allowances) recorded with a negative sign in the non-wage component of labour costs.

In general, the number of hours actually worked decreased more than wages while taxes less subsidies fell, thus limiting the impact on the hourly labour costs.

Total labour costs refer to the total expenditure borne by employers in order to employ staff. They cover wage and non-wage costs less subsidies. Non-wage costs include the employers’ social contributions plus employment taxes regarded as labour costs less subsidies intended to refund part or all of employer’s cost of direct remuneration.

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