Hourly labour costs in Malta have lowest component of tax across eurozone

Malta's hourly labour costs remain below the EU average at a rate of €12.30, but the 9% rate of its increase over 2008 was greater than the EU increase of 8.6%.

Malta also has the eurozone's lowest non-wage costs, which puts employers' social contributions and employment taxes at 8.2% of total costs.

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Total Labour Costs cover wage and non-wage costs but do not include vocational training costs or other expenditure such as recruitment costs, or spending on working clothes. Non-wage costs include the employers' social contributions plus employment taxes regarded as labour costs less subsidies intended to refund part or all of the employer's cost of direct remuneration.

In 2012, average hourly labour costs, excluding agriculture and public administration, were estimated to be €23.4 in the EU27 and €28 in the euro area. However, this average masks significant differences between EU Member States, with hourly labour costs ranging from €3.70 in Bulgaria, €4.4 in Romania, €5.80 in Lithuania and €6 in Latvia, to €39 in Sweden, €38.10 in Denmark, €37.20 in Belgium, €34.60 in Luxembourg and €34.20 in France.

Within the business economy, labour costs per hour were highest in industry (€24.20 in the EU27 and €30.30 in the euro area), followed by services (€23.70 and €27.60 respectively) and construction (€21 and €24.30). In the mainly non-business economy (excluding public administration), labour costs per hour were €22.90 in the EU27 and €27.20 in the euro area.

Labour costs are made up of wages & salaries and non-wage costs such as employers' social contributions. The share of non-wage costs in the whole economy was 23.7% in the EU27 and 26.1% in the euro area, varying between 8.2% in Malta and 33.6% in France.

Growth in labour costs

Between 2008 and 2012, hourly labour costs in the whole economy expressed in euro have risen by 8.6% in the EU27 and by 8.7% in the euro area.

Within the euro area, the largest increases were recorded in Austria (+15.5%), Slovakia (+13.8%), Finland (+13.7%) and Belgium (+13.1%), and the smallest in Portugal (+0.4%) and Ireland (+0.8%). The only decrease was observed in Greece (-11.2%).

For Member States outside the euro area, and expressed in national currency, the largest increases in hourly labour costs in the whole economy between 2008 and 2012 were registered in Bulgaria (+42.6%) and Romania (+26.7%), and the smallest in Latvia (+1.3%) and the United Kingdom (+5.2%). The only decrease was observed in Lithuania (-1.4%).