Labour costs in Germany rose much more sharply over the past year than in years past, especially in the service sector, according to a new study.
Overall, labour costs per hour worked in the private sector increased in 2022 by an annual average of 6.4% to €40 ($44), according to a study published on Thursday by the Institute for Macroeconomics and Business Cycle Research (IMK) of the trade union-affiliated Hans Böckler Foundation.
Rising labour costs in Germany slightly outpaced the EU as a whole, where labour costs increased by 5.4%.
The analysis found Germany's labour costs rank sixth among the EU's 27 countries, behind Luxembourg (€50.40), Denmark (€48.40), Belgium (€43.30), Sweden (€43.20) and France (€41.10). Labour costs were lowest in Bulgaria at an average of €8 per hour.
In Germany's service sector, which historically has relatively low labour costs, wages rose significantly higher. The IMK study found labour costs rose 7.2% in 2022, likely driven in part by an increase in the country's minimum wage.
According to the study, unit labour costs - which take into account worker productivity gain - rose by 3.8% in Germany in 2022, more than in the eurozone, where costs increased by an average of 3.3%.
"That is not, however, a cause for concern" because Germany's relative competitive position has not changed as a result, said the authors of the study, Ulrike Stein and Alexander Herzog-Stein.
Over the past three years, unit labour costs in Germany have risen by just 2.4%, slightly slower than in the eurozone. The study also found that unit labour costs in Germany have only risen by an annual average of 1.4% since 2000, more slowly than in other large European countries.
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