Labour costs in Luxembourg are the fourth highest in all of the EU according to a recent study by Eurostat.

At an average of 36.6 euros per hour in the whole economy (excluding agriculture and public administration), labour costs in Luxembourg are below those in Sweden (38.0), Belgium (39.2) and Denmark (42.0).

These costs are well above the average of the European Union which lies at 25.4 euros per hour, while the average in the euro area is a bit higher at 29.8 euros.

These averages however mask the significant gaps between EU member states existing to this day, with the countries at the bottom of the list below ten euros per hour, the lowest being Bulgaria (4.4), followed by Romania (5.5), Lithuania (7.3), Latvia (7.5), Hungary (8.3) and Poland (8.6).

Labour costs are made up of salaries on the one hand and non-wage costs such as employers’ social contributions on the other.

Italy only member state to see labour costs decrease

Between 2015 and 2016, hourly labour costs in the whole economy rose by 1.6% in the EU and by 1.4% in the euro area.

While being part of the lower wage bracket, the Baltic countries saw the strongest increase within the euro area at 7.5% in Lithuania, 6.4% in Latvia and 5.6% in Estonia.

For member states outside the euro area, expressed in their national currency, the largest rises in hourly labour costs in the whole economy were registered in Romania (+12.7%) and Bulgaria (+7.8%).

The only decrease in all of the EU was observed in Italy with its wages going down by 0.8%.

Highest labour costs in Luxembourg service sector

Broken down by activity sectors, the highest hourly labour costs in Luxembourg are observed in the service sector at 39.7 euros.

Employers in the mainly non-business sector (including among others education, health, social work, arts, entertainment but excluding public administration) face costs of 37.4 euros on average, followed by 36.5 in the business economy, 31.8 in the industry and finally 25.2 euros in the construction sector.