387 – Statistics for International Comparisons of Economic and Business Performance
International Comparisons of Unit Labor Costs and Manufacturing Competitiveness: Sources, Trends, and Implications
Elizabeth Crofoot
The Conference Board
Unit labor costs (ULCs), defined as compensation per unit of output, are a widely used measure of international cost competitiveness. Trends in ULCs, however, differ widely across countries and, traditionally, have been explained in terms of underlying movements in productivity, compensation, and exchange rates. This paper examines the availability of ULC, productivity, and compensation data used for assessing international competitiveness. Three major data sources are reviewed: The Conference Board International Labor Comparisons (ILC) program, the OECD Structural Analysis Database (STAN), and the EU KLEMS Growth and Productivity Accounts. For each source, the paper derives and compares measures of manufacturing ULCs for overlapping countries. Despite some methodological and computational differences, the three databases yield similar conclusions about changes in competitiveness over time, as well as similar rankings of competitiveness relative to the U.S. Finally, using the ILC database, the paper presents ULC trends and levels for detailed manufacturing industries to shed light on variations in industry cost competitiveness.