Labour costs per hour worked up by 6 percent in 2024

Labour costs per hour worked are the total costs incurred by an employer for an employee divided by the number of productive hours worked by that employee. They include not only gross wages, but also employer costs such as holiday allowance, social insurance contributions, bonuses and secondary employment benefits.

Largest increase in leasing and other business services sector

Labour costs per hour worked increased across all sectors of the economy in 2024. The increase was the largest in the leasing and other business services sector (9.9 percent), where the total number of hours worked also decreased by the most in 2024.

Agriculture, forestry and fishing (8.5 percent) and public administration and public services (7.2 percent) also saw comparatively large increases in labour costs. In these sectors, total labour costs increased by more than the total hours worked. The opposite was true in financial services, which saw the smallest increase at 2.7 percent.

More workers with higher labour costs

Changes in the composition of the labour force will generally affect average labour costs. As the share of older people or people with higher levels of education increases, the average labour cost per hour worked also rises. This is known as the structural effect, and it accounted for 0.4 percentage points of the increase seen in 2024: there were proportionately more workers with higher labour costs in 2024 than there were in 2023.

When we allow for this structural effect resulting from changes in the labour force, the increase in labour costs was 5.5 percent in 2024. This is known as the price of labour.

Structural effect has been limited since 2014

Total labour costs per hour worked increased by 35.1 percent between 2014 and 2024. The price of labour, meanwhile, rose by around 34.6 percent. The strucutural effect therefore accounted for 0.5 percentage points of the increase over that period.

Between 2014 and 2024, labour costs per hour worked increased by the most in the public administration and public services sector (44.8 percent), followed by the information and communications sector (41.8 percent) and the health and social care sector (37.1 percent). The smallest increase was recorded in the real estate sector, at 26.2 percent.

Adjusted for changes in the labour force, the rise in labour costs was the largest in information and communications, followed by public administration and public services. It was the smallest in financial services, where collectively negotiated wages rose by the least over the past decade.

The structural effect was the greatest in agriculture, forestry and fishing (where it accounted for 5.1 percentage points). In that sector, the proportion of older workers and workers with tertiary-level education increased. In the education sector, the opposite was true and the structure effect had the largest negative effect.