Think-tank blasts UK Government for failing workers as value of labour falls behind EU average

Alasdair Clark

New stats have revealed the value of UK labour has fallen behind the Euro average for the first time 

THE Common Weal think-tank has said the UK Government is failing in its duty to ensure the economy works to the benefit of the people after new statistics revealed that the cost of labour per hour has fallen below the EU average.

The figures show a decline in UK hourly labour costs since 2015 in comparison to the rest of the EU where costs have grown since 2004, with the UK dropping below the Euro average for the first time in 2018. 

Source: Eurostat/Common Weal

Analysis by the EU statistics agency Eurostat revealed that the estimated hourly labour costs across every workforce (excluding agriculture and administration) were €25.7 per hour in the UK compared to an average of €26.8 in the EU.  

Eurostat’s figures include costs such as employers’ contributions, including National Insurance and pension contributions, as well as the cost of wages and salaries for workers. 

Responding to the figures, head of research at Common Weal, Dr Craig Dalzell said: “In Scotland, we’re used to seeing our economic performance measured against the UK. One thing rarely done in the UK, however, is an honest comparison of its own performance against its neighbours.

“Governments and economies should work for their people first. In this, the UK is failing.” Dr Craig Dalzell, Common Weal head of research

“This release shows quite plainly why it is important to do so. The last several years have witnessed hourly labour costs drop in the UK whereas almost all of its neighbours elsewhere in the EU have seen them increase.

“That the UK has now dropped below the EU average should be a warning bell that the UK’s economic policies are significantly out of step with what is going on elsewhere. Doubtless, some on the political right will praise this as a sign that the UK is becoming “more competitive” or that it is “good for business” but this will be a hard sell to people who are experiencing another year of rising costs and continued austerity.

“Governments and economies should work for their people first. In this, the UK is failing.”

Elsewhere in the EU, the lowest hourly labour costs are found in Bulgaria (€4.9) and the highest in Denmark (€36.0). The cost of UK wages is also significatly behind comparable countries such as Germany, Ireland, France and the Netherlands.

Romania had the fastest wage growth across the EU, with labour costs up 15 per cent in 2017.

Source: Eurostat


The UK fell below the EU average in every industry sector except construction, where the hourly labour cost was €25.4 in the UK and €23.7 in the EU. 

In industries, such as the production of goods, the EU average labour cost was €27.4 per hour, higher than the UK where it is €24.2 per hour. 

The UK has undergone it’s longest squeeze in wages since the Napoleonic Wars, which ended in 1815, with the Resolution Foundation finding the real terms wage squeeze is set to continue into the next decade, with average wages more than £20 lower than pre-financial crisis by 2022.

Pictures courtesy of Nuno Silva and Eurostat

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