Where are they highest and lowest? #CanadaFinance

Have you ever wondered how much the cost of employing someone varies across different parts of Europe? The answer is very wide. The maximum-to-minimum ratio is more than five times, showing the level of disparities.

So, where do employers face the highest and lowest labour costs across Europe? What factors contribute to these big differences?

In 2024, the hourly labour cost ranged from €10.6 in Bulgaria to €55.2 in Luxembourg among the EU countries according to Eurostat. The average estimated cost in the EU was €33.5.

The highest labour costs are concentrated in Northern and Western Europe, especially when Iceland and Norway are included alongside EU member states.

All five Nordic countries are above the EU average. Norway, Iceland, and Denmark rank among the top four, each with hourly labour costs exceeding €50.

Besides them, Belgium (€48.2), the Netherlands (€45.2), Austria (€44.5), France (€43.7), and Germany (€43.4) are also among the high-cost countries.

Labour costs in the EU are lowest in Eastern Europe. Bulgaria (€10.6), Romania (€12.5), and Hungary (€14.1) have the lowest rates.

Southern Europe sees moderate costs. But there’s still a big gap compared to the North. Italy (€30.9), Spain (€25.5), Portugal (€18.2), and Greece (€16.7) fall into this group.

Dr. Agnieszka Piasna, senior researcher at the European Trade Union Institute (ETUI) stated that these persistent differences follow a very clear regional pattern, with Central and Eastern European (CEE) and Southern European countries having the lowest labour costs and wage levels.

Dr. Sotiria Theodoropoulou, head of European, economic, employment and social policies unit at ETUI, emphasised that price levels play a key role explaining labour cost disparities. “If costs are expressed in Purchasing Power Standards (PPS), the disparities in labour costs are more limited,” she said.

This can be seen in the data. The maximum-to-minimum ratio among EU countries drops to just over 2 times in PPS, compared to more than 5 times in euros.

The gap in labour costs narrows when measured in PPS. Among EU countries, hourly labour costs range from 19.1 in Bulgaria to 40.3 in Belgium. Norway tops the overall list with 40.7.

Since 2024 PPP conversion rates are not yet available, we used the 2023 rates for actual individual consumption.

Baltics and Balkans countries are still at the bottom but the gap is narrower than in nominal costs.

Labour costs refer to the expenses employers pay for employing workers. In addition to wages and salaries, they also include “non-wage” costs, which are mainly social contributions and employment-related taxes.