Increase labour costs at lowest level in two decades

25/08/2011 15:00

Last year, the labour costs per year of employment increased by 1.4 percent, the smallest increase since 1989. The average annual increase over the past decade was 3.3 percent. Labour costs are composed of wages and social contributions paid by employers. It is important for the Netherlands to keep labour costs down, if it wants to maintain its international competitive position.

Labour costs per year of employment

Labour costs per year of employment

Labour costs in banking rise most rapidly

With 55 percent, labour costs per year of employment have risen most in the sector financial services in the past decade. In banking, average labour costs rose by no less than 62 percent. Labour costs increased the least in the sectors hotels and restaurants (26 percent) and retail trade (29 percent).

Labour costs increase 2000-2010 by sector

Labour costs increase 2000-2010 by sector

Employers’ contributions rise more rapidly

Total labour costs amounted to 300 billion euro in 2010. On average, employers paid 51 thousand euro per year of employment, i.e. 40 thousand euro in gross wage plus 11 thousand euro in employers’ contributions. Over the past decade, gross wages per year of employment did not rise at the same rate as employers’ contributions. Gross wages increased by 34 percent, employers’ contributions by 57 percent. Pension contributions in particular rose substantially. As a result, the share of employers’ contributions in total labour costs has increased in the past decade by 2.6 percentage points to 22 percent.

Labour costs increase, 2000-2010

Labour costs increase, 2000-2010

Real wage increase higher than CAO wage increase

Gross wages per year of employment have increased more rapidly (34 percent) in the past decade than collectively negotiated (CAO) wages (27 percent). An important factor in this respect is the fact that the composition of employees has changed. Employees are older and, on average, have a higher level of education. This implies that they earn higher wages, but this is not reflected in the CAO wage increase. Special allowances and bonuses, etc. paid on top of CAO wages have also increased. Besides, not all wages are collectively bargained. The increase in gross wages was also above the level of inflation, which was 22 percent over the past decade was.

Han van den Berg