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UNIT LABOUR COSTS - OECD

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French Equivalent: Coût unitaire de la main-d’oeuvre

Definition:
Unit labour costs (ULC) measure the average cost of labour per unit of output and are calculated as the ratio of total labour costs to real output.

Context:
In broad terms, unit labour costs show how much output an economy receives relative to wages, or labour cost per unit of output. ULCs can be calculated as the ratio of labour compensation to real GDP. It is also the equivalent of the ratio between labour compensation per labour input (per hour or per employee) worked and labour productivity .

Unit labour costs (ULCs) represent a direct link between productivity and the cost of labour used in generating output. A rise in an economy’s unit labour costs represents an increased reward for labour’s contribution to output. However, a rise in labour costs higher than the rise in labour productivity may be a threat to an economy's cost competitiveness, if other costs are not adjusted in compensation.

ULCs should not be interpreted as a comprehensive measure of competitiveness, but as a reflection of cost competitiveness. Unit labour cost measures deal exclusively with the cost of labour, which though important, should also be considered in relation to changes in the cost of capital, especially in advanced economies.

(Key Indicators of the Labour Market (KILM): 2001-2002, International Labour Organisation, Geneva, 2002, page 622)

ULC statistics are compiled by a number of OECD Member countries as an indicator of productivity. In some instances the statistics are compiled by national statistical institutes and in others, by other government and non-government bodies.

In 2007 the OECD launched the Organisation's System of Unit Labour Cost Indicators covering all OECD Member countries. This interface provides access to long time series of annual and quarterly Unit Labour Cost (ULC) and related indicators for a wide range of sectors including Total Economy, Industry, Market Services and the Business Sector. Unit Labour Cost data are updated at the end of each quarter and are compiled according to a specific methodology to ensure comparability across OECD Member countries. The Unit Labour Cost annual database also includes time series by sector for Exchange Rate Adjusted Unit Labour Costs, Labour Income Share ratios, Labour Productivity and Labour Compensation.

Source Publication:
OECD, 2007, OECD System of Unit Labour Cost Indicators, OECD, Paris.

Cross References:
Labour productivity
Unit labour cost - Eurostat

Hyperlink:
http://stats.oecd.org/mei/default.asp?rev=3

Version Indicator: OECD

Statistical Theme: Labour statistics - Labour compensation statistics

Created on Tuesday, September 25, 2001

Last updated on Thursday, July 26, 2007