PARIS (MNI) – The rise in Eurozone unit labor costs slowed markedly
in 3Q, reflecting both smaller pay increases and a pick-up in
productivity, the OECD estimated Wednesday.
The cost of labor per unit of production edged up 0.1% in 3Q in
seasonally adjusted terms after quarterly gains of 0.6% in 2Q and 0.3%
in 1Q. Labor productivity was up 0.3% in 3Q after stagnating in 2Q,
while labor compensation per unit of input slowed to +0.4% from +0.6% in
2Q and +0.9% in 1Q.
A key component of international competitiveness, unit labor costs
declined in the United States by 0.3% in 3Q, plunged 1.7% in Japan and
jumped 1.3% in the UK. For OECD members as a whole, unit labor costs
fell back 0.3%, the weakest result in nearly two years, after a 0.3%
rise in 2Q.
Among reporting Eurozone countries, 3Q unit labor costs grew
fastest in Estonia (+1.1%) and Belgium (+1.9%), where labor productivity
declined. France led the larger economies (+0.5%), while declines were
registered in Germany (-0.4%) and Spain (-1.3%).
The cyclical slowdown will dampen wage gains, but labor
productivity is likely to fall faster at the outset, as staff reductions
tend to lag declines in output. Eurozone labor costs alone rose by only
0.1% in 3Q after +1.0% in both 2Q and 1Q, Eurostat reported last week.
“Looking ahead, it is likely that the pattern of higher, albeit
still moderate, wage growth will by and large continue in the near
term,” the ECB predicted last week. “The latest surveys point to a
further slowdown in productivity in the coming quarters, which could
drive up growth in unit labor costs.”
Indeed, the OECD expects Eurozone unit labor costs to jump by 1.4%
next year after a 0.8% rebound this year, then slow to +0.4% in 2013.
–Paris newsroom +331 42 71 55 40; e-mail: ssandelius@marketnews.com
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