Significant Increase in Relative Unit Labour Costs in 2023

In 2023, unit labour costs in the Austrian production of goods rose by 9.7 percent compared to the previous year. This is a significant deterioration in relative unit labour costs, both compared to the weighted average of all trading partners (+3.3 percentage points) and compared to EU trading partners (+1.9 percentage points). Relative unit labour costs also deteriorated compared to the most important trading partner, Germany (+4.6 percentage points). Unit labour costs only improved compared to the Eastern European trading partners. This development compared to the weighted average of trading partners is primarily due to a poorer productivity trend in combination with an unfavourable exchange rate development. Compared to Germany and the Western European countries, on the other hand, the dynamic development of labour costs is the main determinant of the poorer unit labour cost development. Over the last ten years, Austrian unit labour costs in the production of goods have grown 0.4 percentage points p.a. slower than the average for all trading partners, but 0.2 and 0.5 percentage points faster than in Germany and Western Europe respectively. Due to the government aid measures in the wake of the COVID-19 pandemic and the cushioning of high inflation, the data should still be interpreted with caution.