Comparative Manufacturing Productivity and Unit Labor Costs

By Greiner, Mary; Kask, Christopher et al. | Monthly Labor Review, February 1995 | Go to article overview

Comparative Manufacturing Productivity and Unit Labor Costs


Greiner, Mary, Kask, Christopher, Sparks, Christopher, Monthly Labor Review


The U.S. labor productivity growth rate over the 1979-93 period was matched or exceeded by 8 of 12 countries compared: however, U.S. unit labor costs rose less than the trade-weighted average for competitor economies

In 1993, the U.S. manufacturing sector turned in its best labor productivity performance in 16 years. But in a comparison of 12 industrial countries--the United States, Canada, Japan, and 9 Western European nations--productivity in 4 countries grew faster than in the United States. In the 1979-93 period, U.S. manufacturing productivity growth was matched or exceeded by 8 of the 12 countries.

Also in 1993, U.S. manufacturing unit labor costs recorded their best performance in 6 years, holding to their 1992 level. In a comparison of 14 economies--a group that includes Korea and Taiwan in addition to the 12 countries mentioned above--unit labor costs declined in 4 nations in 1993. Over the 1979-93 period, all the economies recorded increases in unit labor costs. Only three economies had lower average increases in this period than the United States. However, when measured on a U.S. dollar basis--to account for relative changes in exchange rates-8 of the 14 economies had average increases that were smaller or about as small as the U.S. increase.

This article examines comparative trends in manufacturing output per hour, unit labor costs, and related measures in 1993, the most recent year for which comparative data are available, and in the overall 1979-93 period. The United States, Canada, Japan, Belgium, Denmark, France, Germany, Italy, the Netherlands, Norway, Sweden, and the United Kingdom are examined.

Trends in unit labor costs in Korea and Taiwan also are discussed. The Bureau of Labor Statistics has not computed productivity measures for Korea and Taiwan because adequate labor input measures have not been developed. Korea and Taiwan are included in the analysis of comparative developments in unit labor costs because, of the economies covered, only Canada, Japan, Germany, and the United Kingdom account for higher proportions of U.S. trade in manufactured goods than Korea or Taiwan. (Data for Germany relate to the former West Germany. For a description of the country measures, see the appendix.

The analysis also includes relative trade-weighted measures of productivity and unit labor costs--that is, the U.S. measure relative to a trade-weighted average for the other economies or selected economies.

This article introduces the use of more comprehensive labor input measures for several countries. In previous reports, the data for the United States and Canada have been based on the number of persons employed in the manufacturing sector and hours worked by employed persons; the employment and hours worked data for the other economies have referred to employees only.

Employed persons include the self-employed, unpaid family workers, and employees who are paid wages or salaries. Beginning with this article, the employment, hours worked, and compensation measures for Japan, France, Germany, Norway, and Sweden also refer to employed persons. (See the box below for an overview of the effect of this change on the measures.) Employment, hours worked, and compensation for the remaining economies continue to be on an employees-only basis. BLS plans to soon complete the conversion to employed-persons-based measures for the remaining economies.

Comparative trends, 1992-93

Productivity. U.S. manufacturing labor productivity (output per hour) grew 3.2 percent in 1993, the largest increase since 1987. All 11 foreign countries also recorded manufacturing productivity increases in 1993. (See table 1.) In most cases, productivity growth improved in 1993 from 1992; only Canada, Belgium, and France posted lower growth rates in 1993.

[TABULAR DATA 1 OMITTED]

The U.S. productivity increase in 1993 was about in the middle of the range of growth rates of the other countries. …

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