Wide variation in EU employment costs

A new survey by Mercer Human Resource Consulting shows that employment costs vary considerably across the EU. France is the most esxpensive with Greece the cheapest. And contrary to popular belief, EU employment costs are still over 35 per cent lower than in the US.

At the extremes, costs in the most expensive state are three-and-a-half times those of the cheapest. In between, there are significant cost differences that could influence business investment and labour relations.

The average annual cost of employment in the EU is 34,143 Euros (£23,606). The highest costs are borne by employers in the north European states, with France, Belgium, Sweden and Germany appearing highest in the rankings. Greece, Portugal, Spain and Ireland have the lowest costs. At the extremes, France’s average employment costs are as high as 48,445 Euros (£31,329), while Greece’s are just 13,718 Euros (£8,871).

David Formosa, European Principal at Mercer, said: "The introduction of the Euro has added greater transparency of employment costs across the EU. This will encourage employers to look at pay and benefit strategies on a pan-European basis."

He added: "The ease of moving certain manufacturing and service industries from one state to another means employment costs are becoming more crucial in business investment decisions."

The UK’s employment costs (35, 638 Euros/£23,047) are well below those of other north European states such as France, Belgium and Germany, and are slightly lower than the median cost across all 15 EU states (36,132 Euros/£23,367).

"At a time when the pound is relatively strong against the Euro, UK employment costs remain competitive against many of the other EU states," said Mr Formosa. "UK social security and benefit costs are just a third of the level of those in France and half of those in Germany."

Despite the high cost of benefit provision in the EU, employment costs are still over 35 per cent lower than in the US and some 60 per cent lower than in Japan. Mr Formosa commented: "With employment costs relatively low, the EU can be an attractive place for multinationals to operate. Outside investment is still needed, especially from US companies, to help reduce the EU’s high levels of unemployment."