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Competitive advantages for unit labor costs

11. February 2016

Austrian Business Agency (ABA) reports that According to a recent study published by the Cologne Institute for Economic Research (IW), Austria has a high level of competitiveness in manufacturing industry, in particular with respect to unit labor costs. Accordingly, Austria offers advantages compared with many other industrialized nations, the Eurozone and also Germany. “Austria is more favorably positioned than Germany” when it comes to unit labor costs, said IW economist Christoph Schröder in an interview with the Austrian Press Agency.

In Germany, productivity is higher than the other industrialized countries examined in the study, and also higher than in Austria. Nevertheless, the economist wrote that “France and Austria were similarly productive to Germany, whereas the other countries were significantly behind: the United Kingdom and Canada by close to one-fifth, Spain, Japan and Italy by almost 40 percent.” However, the high productivity in Germany is not sufficient “to compensate for the disadvantage of high wage costs.”

Concerning unit labor costs in manufacturing industry, the level in Austria is put at 88, or twelve percent lower than the unit labor costs in Germany (100), according to the institute. Unit labor costs in the Eurozone were set at an average of 97. Italy ranks at the top, with unit labor costs of 110, whereas these costs in the USA are 25 percent lower than in Germany.