7th Jul 2020

Western EU countries top the world's list in labour costs

Belgium, Sweden, Germany, Luxemburg and the UK top the world's list as the most expensive countries in which to employ workers, a new survey suggested.

The EU member states from central and eastern Europe have less than a quarter of the labour costs of their western neighbours.

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  • A survey suggests that US companies could transfer their investments from west to east EU countries (Photo: European Commission)

Carried out by Mercer Human Resource Consulting, a specialist in employee benefits, the survey showed the EU as a whole featured 15 percent lower employment costs compared to the US.

However, when the "new" member states are not counted, western European countries were 23 per cent more expensive than the US, according to the agency.

"There are concerns about whether US companies will continue to invest in the EU. Organisations that do invest are likely to favour Eastern European countries", said Mark Sullivan of Mercer, according to The Times

Belgium, Sweden and Germany featured as the EU states with the highest total employment costs - on average and including social benefits, with more than 50,000 euro per worker a year.

On the other hand, countries like Latvia (4,752 euro), Lithuania (5,649 euro) and Poland (8,257 euro) stand at the bottom of the EU list concerning the annual employment costs.

Berlin considers minimum wage

Meanwhile, the German government is considering introducing a minimum wage, in a bid to deal with the increasing trend of companies employing workers from east and central European countries, willing to work for lower salaries.

A series of measures - expected on Wednesday - comes ahead of a vital regional election in the state of North Rhine-Westphalia in May, the Financial Times reports.

Unlike some other EU countries, Germany does not have a set minimum wage, but a list of collective agreements between employers and trade unions.

The newly planned minimum wage provisions are to be introduced in the most vulnerable sectors of the German economy - like slaughterhouses, where employers use cheaper labour from eastern Europe.

Commentators suggest the decision would mark a U-turn for chancellor Gerhard Schröder, who has several times opposed a minimum wage despite requests from his own party's left wing.

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