Labor costs in Croatia finally started to decline

Labor costs in the eurozone and the European Union increased in the second quarter at a significantly slower pace than in the previous three months, and Croatia is among the countries recording a decline, according to today’s report from the European statistical office.

In the period from April to June, total labor costs per hour in the 17-member eurozone and in the 27 EU countries increased by 0.9 percent compared to the same period last year. In the first three months of this year, they increased by 1.7 percent year-on-year in the eurozone and by two percent in the EU27, Eurostat reported.

Hourly wage costs increased by 1.1 percent in the eurozone and by one percent in the EU27. In the previous quarter, they increased year-on-year by 1.8 percent in the eurozone and by two percent in the EU27.

Contributions from wages have almost stagnated compared to last year, with growth in the eurozone of only 0.1 percent, after a 1.4 percent increase in the previous three months. In the EU27, their growth in the second quarter was only 0.3 percent, after a 2 percent jump in the first three months of 2013.

Among individual sectors, total labor costs per hour in industry increased the most in the second quarter, both in the eurozone and in the EU, by 1.8 and 1.7 percent respectively. In the service sector, they increased by 0.8 percent in the eurozone and by 0.8 percent in the EU. The construction industry follows, with an increase of 0.7 percent in the eurozone and 0.4 percent in the EU.

Among the member countries with available data, Estonia recorded the largest annual increase in total labor costs per hour in the second quarter, at 7.7 percent. This was followed by Lithuania with an increase of 6.5 percent and Romania, where they increased by six percent.

A decline in total labor costs per hour in the second quarter on an annual basis was recorded in Slovenia, by 5.9 percent, in Cyprus, by 4.6 percent, in Croatia, by 0.6 percent, and in Spain, by 0.3 percent.