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U.S. manufacturing hourly compensation costs in 2010 lower than in 13 countries



Manufacturing hourly compensation costs in the United States in 2010 were
lower than in several northern and western European countries, Australia,
and Canada, but higher than in the United Kingdom and 19 countries in
southern and eastern Europe, Asia, and South America, the U.S. Bureau of
Labor Statistics reported today (see chart 1). U.S. hourly compensation
costs rose about 2 percent from the previous year to $34.74 (see table 2).

From 1997 to 2010, U.S. compensation cost competitiveness in manufacturing
improved relative to all but five countries covered: Brazil, Germany, Japan,
the Philippines, and Taiwan (see table 1).

Chart 1. Hourly compensation costs in manufacturing, U.S. dollars, 2010


Changes in a country’s compensation costs in U.S. dollars are roughly
equivalent to the change in compensation costs in a country’s national
currency plus the change in the value of the country’s currency relative
to the U.S. dollar. This relationship is illustrated in chart 2, where
the bars in the right panel for each country can be summed to equal the
bars in the left panel. In 2010, many European countries had modest
increases or declines in hourly compensation costs in national currency
combined with larger depreciations in national currency relative to the
U.S. dollar, resulting in declines in U.S. dollar-denominated hourly
compensation costs. In contrast, all countries outside Europe saw
increases in U.S. dollar hourly compensation costs much higher than in
the United States.

Chart 2. Annual percent change in hourly compensation costs in
         manufacturing and exchange rates, 2009-2010


Chart 3. Benefit components of hourly compensation costs as a percent
         of total compensation, 2010


Chart 3 shows the benefit components of manufacturing employers’
compensation costs as a percent of total costs. (See table 3 for data
in U.S. dollars.) Economies are ordered based on social insurance
expenditures as a percent of total compensation. In countries with the
highest ratio of social insurance costs, such as Sweden, Belgium, and
Brazil, social insurance makes up approximately one-third of total
compensation costs. In the United States, social insurance costs account
for about 24 percent of total compensation, while in the Asian countries
social insurance is less than 20 percent.

Directly-paid benefits comprise pay for leave time, bonuses, and pay in
kind. The percentage of compensation that is directly-paid benefits tends
to be higher in many European countries (due in large part to leave pay)
and in Japan (where seasonal bonuses are a large portion of costs).
Directly-paid benefits are a relatively smaller portion of costs in
countries such as the United States, Australia, and Canada. 

The total benefits portion of compensation costs can be seen by
combining social insurance with directly-paid benefits. Total benefits
surpass 40 percent in 15 countries. In contrast, the ratio of benefit
costs in the United States is about 33 percent. 

Analyze trends with interactive dashboard. 
The Excel version of the data tables includes an interactive dashboard
that displays charts from a custom selection of variables, countries,
and time periods at www.bls.gov/ilc/#compensation.

Find additional data. 
Detailed time series tables of compensation costs in U.S. dollars,
national currencies, and annual indexes for 1996-2010 are available at

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BOX: China and India

BLS has developed estimates of hourly compensation costs for employees
in the Chinese and Indian manufacturing sectors.(1)(2) Due to various
data gaps and methodological issues, compensation costs for China and
India are not directly comparable to each other or with the data for
other countries found in this release, and therefore are presented
separately.3 Data are available for China through 2008 and for India
through 2007.(3)

For China, BLS approximates average hourly compensation costs in
manufacturing by filling important data gaps for hours worked per year
and for benefit components of labor compensation. Further, the concepts
and coverage of Chinese statistics on manufacturing employment and wages
often do not follow international standards and can be difficult to
understand. Largely because of these data gaps and challenges, BLS
estimates for China cannot be considered as robust as the manufacturing
statistics for the other countries in this news release. 

For India, BLS estimates of compensation costs refer to organized (or
formal) manufacturing only, rather than to total manufacturing in the
country. Unorganized sector manufacturing workers account for
approximately 80 percent of total manufacturing employment in India
and earn substantially less than their organized sector counterparts.
For this reason, employers’ average compensation costs in organized
manufacturing overstate average compensation costs for Indian
manufacturing as a whole.(4)

Hourly compensation costs in manufacturing for China and India,
       in U.S. dollars, 2003-2008


(1) For the most recent BLS work on China, see Judith Banister and
George Cook, "China’s employment and compensation costs in manufacturing
through 2008," Monthly Labor Review, March 2011, pp. 39-52, at

(2) For the most recent BLS work on India, see Jessica R. Sincavage,
"Labor costs in India’s organized manufacturing sector," Monthly Labor
Review, May 2010, pp. 3-22, at www.bls.gov/opub/mlr/2010/05/art1full.pdf.

(3) For a discussion of the limitations associated with comparing
compensation costs for China and India, see Sincavage, "Labor costs in
India’s organized manufacturing sector."

(4) For additional information on employment and compensation costs in
China and India, see www.bls.gov/ilc/china.htm and www.bls.gov/ilc/india.htm.

END OF BOX: China and India

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