It has long been cheaper to employ workers in the UK than in northern Europe, which is one reason why unemployment is lower here than in those countries. But now British labour looks competitive compared to southern Europe too.
The average hourly cost of employing a worker here was €20.90 last year; in Spain it was €21.10, says the FT’s Sarah O’ Connor. The UK figure barely changed between 2008 and 2013, while Spain’s climbed by 8.7% and the EU average by 10.2%.
The hourly cost figures (from Eurostat) consist of wages and bonuses, plus non-wage costs, such as social-security contributions. The UK’s increasing competitiveness reflects five years of weak pay growth and a slump in sterling against the euro.
The pound slid by 27% between 2007 and 2009 before rebounding, but it has since made up less than half the lost ground. Non-wage expenses are also lower here than in much of the continent.