Annual growth in labour costs at 4.2% in euro area

In the second quarter of 2020, the quarter when the COVID-19 containment measures were widely in force in the European Union, the hourly labour costs rose by 4.2% in the euro area and by 4.1% in the European Union (EU), compared with the same quarter of the previous year. In the first quarter of 2020, hourly labour costs increased by 3.7% and 3.9% respectively. These figures are published by Eurostat, the statistical office of the European Union.

The two main components of labour costs are wages & salaries and non-wage costs. In the euro area, the cost of wages & salaries per hour worked grew by 5.2% and the non-wage component grew by 0.8% in the second quarter of 2020 compared with the same quarter of the previous year. In the first quarter of 2020, the annual changes were +3.9% for wages & salaries and +3.1% for the non-wage component. In the EU, the costs of hourly wages & salaries increased by +5.3% and the non-wage component rose by +0.1% in the second quarter of 2020. In the first quarter of 2020, annual changes were +4.1% and +3.3% respectively.

In both the EU and the euro area, the increase in hourly wage costs indicates that the decrease in the number of hours worked, due to the COVID-19 crisis, was not fully compensated by a matching decrease in wages. This increase in hourly wage costs was partly compensated by the moderate increase in the non-wage component, due to tax reliefs and subsidies introduced by EU governments to support enterprises affected by the crisis.