International hourly manufacturing compensation rate costs by country

Information on hourly manufacturing rate compensation costs for international employees in production manufacturing begins with data for 1996.

Typically, production workers generally include those employees who are engaged in fabricating, assembly, and related activities. All employees include production workers as well as all others employed full or part-time in an organization.

Hong Kong SAR, Sri Lanka, Greece, and Luxembourg are not included as comparable data are not available according to the U.S. Department of Labor.

As noted in the last column (see Table 1), hourly compensation costs for all employees are higher than those for production workers in each economy – generally ranging from 10 percent to 25% higher than production worker hourly compensation costs.

The difference between the two series depends not only on higher compensation for non-production workers than production workers, but also on relative employment levels of the two employee groups; typically the larger the portion of all employees accounted for by production workers, the smaller the gap in compensation costs.

In the United States, hourly compensation costs for all employees in manufacturing were $29.60 in 2006, 24% higher than production worker compensation costs. This being said, only 7 of the 28 foreign economies covered by both the production worker and all employee hourly compensation costs had a larger difference between the compensation levels of the two groups than the United States.

Although Australia was the only non-European economy to have higher hourly compensation costs than the United States in 2006 for all employees when measured in U.S. dollars ($30.10), 12 of 18 European countries had higher compensation costs than the United States.

The hourly compensation costs of both the new countries covered, Argentina and Slovakia, were 22 percent of the United States’ level.

Since high labor costs countries such as Denmark, the Netherlands, Norway, and Sweden have smaller than average gaps between production worker and all employee hourly compensation costs, the range of European compensation costs narrowed when measured on an all employees basis (21% to 172% of the United States level for production workers versus 21% to 156% of the United States level for all employees).

According to the U.S. Department of Labor, measuring hourly manufacturing compensation costs on an all employees basis changes the position of some countries relative to the United States.

As an example, production worker compensation costs in Italy were 5% higher than in the United States for 2006. However, the difference between production worker and all employee hourly compensation costs is much lower in Italy than in the United States (15% compared to 24% in 2006), so when compensation costs are measured on all employee basis, Italy’s costs are about 3% lower than the United States. For information on China, click here.

Source: U.S. Dept. of Labor, VentureOutsource.com