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Luxembourg has some of the highest hourly labour costs in the European Union, according to Eurostat data published on Friday.
Labour costs are calculated based on wages and non-wage costs, for example employers’ social contributions. When combining these, Eurostat calculates that it costs an average €50.7 per hour to employ a person in Luxembourg.
That’s up from €35.3 in 2012 – a whopping 43% increase. But despite these high rates, disparities between sectors remain.
Services had the highest labour cost (€55.3), followed by non-business (excluding public administration but including health, education, entertainment) with €52.6, business economy (€50.4), industry (€44) and construction (€32.4).
There are also significant gaps between EU countries, with the lowest hourly costs recorded in Bulgaria (€8.2) and Romania (€9.5), and the highest in Luxembourg (€50.7), Denmark (€46.8) and Belgium (€43.5).
In 2022, the average hourly labour costs in the EU was estimated to be €30.5, up compared to €29 in 2021. Norway has an hourly cost of €55.6, but the country is only in the European Economic Area.
But the numbers need to be taken with a grain of salt: 2 in 5 Luxembourgs have had to tighten their belts last year.
While the vast majority of Luxembourgers (79%) believe that their financial situation was good at the end of 2022, more than a third of the population (37%) admit that it has worsened, or even significantly worsened, over the past six months.
According to that same Politmonitor survey, six out of ten respondents are concerned about slipping into greater financial hardship because of recent price developments in Luxembourg.
Large increases in central and eastern Europe
Within the euro area, hourly labour costs increased in all EU Member States. The largest increases were recorded in Lithuania (+13.3%), Ireland (+9.3%) and Estonia (+9.1%). Outside the euro area, the largest variations were recorded in Bulgaria (+15.3%), Hungary (+13.9%), Romania (+12.2%) and Poland (+11.7%). They increased the least in Denmark (+2.3 %).
It should be noted that many EU Member States phased out COVID support schemes introduced in 2020 and extended in 2021, which were generally recorded as tax allowances or subsidies.
Lastly, the the share of non-wage costs in the whole economy was 24.8%, but only 12.3% in Luxembourg. They are the highest in France (32%) and Sweden (31.9%). Besides a person’s salary, high social security contributions for the employer drive up the hourly labour cost.
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