Marked Increase in Relative Unit Labour Costs in 2024

In 2024, unit labour costs in Austrian manufacturing increased by 11.8 per cent year on year. This implies a marked deterioration in relative unit labour costs, both versus the trade-weighted average of all trading partners (+5.3 percentage points) and versus EU trading partners (+4.3 percentage points). Compared with Germany, Austria's main trading partner, relative unit labour costs also worsened (+3.2 percentage points). The development relative to the trade-weighted partner average is driven mainly by weaker productivity performance combined with unfavourable exchange rate movements. Relative to Germany and Western Europe, the deterioration is primarily due to more dynamic growth in compensation of employees. Over the past five years, unit labour costs in domestic manufacturing grew by 0.8 percentage points per year faster than the average of all trading partners, and by 1.5 and 1.7 percentage points faster than in Germany and Western Europe, respectively. Due to government support measures during the COVID-19 pandemic and to cushion high inflation, the results for the past five years should still be interpreted with caution.