13-06-05

115 (E) [Economy]- Money, money, money. Must be funny. In the rich man’s world.

So the Old Europe is shy about the European Draft Constitution, and it showed it in the referenda in France and in Holland. It would be too optimistic to think they voted against the Constitution, they voted out of fear. Three of the EU Founding Fathers (France, Germany, Italy) breached the Maastricht stability pact (requiring state budget deficits not to exceed 3%) and nobody dared or could complain about it. Portugal will hit bottom with 6%, and Greece isn't that much better. The New Europe, Ireland, the UK, they perform much better, not only in terms of state budget deficit, but also in terms of GNP growth. So, what is the problem with Old Europe?

MERCER Human Consulting made a comparative study of labour costs in the EU and the figures reveal a lot. Labour is just too expensive and Belgium is the worst. Is the Belgian employee privileged, does he spend his holidays in the Bahamas and is he sipping Passoa all the time? Forget it, labour costs skyrocket because Belgium has free buses, almost free trains, its sub-performing Walloons, and has to finance a much too elaborated Social Security system. Somebody ought to pay for that, and it's the working part of the population since most taxes are professional-income related.

It might feel good for some to live in a socialist country, the anti-globalist paleo-Marxists and the Champaign-socialists still complain. But the global market doesn't care.


“The survey highlights the competitive advantage that Eastern EU countries have over the West,” said Mark Sullivan, a Worldwide Partner at Mercer. “It is unsurprising that more companies are now moving their operations to Eastern Europe where employment costs are so much lower.

With the strength of the pound and Euro against the dollar, there are concerns about whether US companies will continue to invest in the EU,” said Mr Sullivan. “Organisations that do invest are likely to favour Eastern European countries.


A cross-country comparison of employment costs (in €)

Country

Pay

Social security

Mandatory benefits

Voluntary benefits

Total Pay & benefits

Europe

Belgium

36,527

12,667

-

4,383

53,577

Sweden

36,363

11,891

1,273

3,273

52,800

Germany

40,163

8,274

-

2,008

50,445

Luxembourg

41,581

6,092

-

2,079

49,752

UK

38,901

2,972

-

4,668

46,541

Denmark

45,235

136

-

679

46,050

France

31,544

10,913

1,529

1,893

45,879

Ireland

29,949

3,219

-

5,091

38,259

Netherlands

29,354

3,023

-

2,348

34,725

Italy

22,763

7,257

2,023

228

32,271

Spain

20,605

6,511

-

2,060

29,176

Austria

22,321

4,832

343

1,116

28,612

Finland

20,544

1,953

3,489

205

26,191

Greece

17,654

4,936

-

3,354

25,944

Portugal

14,123

3,354

-

1,412

18,889

Slovenia

13,334

5,164

-

267

18,765

Hungary

7,130

2,388

-

428

9,946

Czech Republic

6,814

2,385

-

341

9,540

Poland

6,495

1,307

65

390

8,257

Estonia

5,687

1,877

-

57

7,621

Slovakia

4,795

1,506

-

240

6,541

Lithuania

4,247

1,317

-

85

5,649

Latvia

3,799

915

-

38

4,752

Other

Japan

36,627

5,183

-

4,029

45,839

USA

28,703

2,196

-

2,296

33,195

China

1,445

851

-

72

2,368

India

1,654

304

-

66

2,024

Summary of terms:

Pay: The average pay for each country is taken as the national average earnings for full-time male employees. It is assumed that this figure includes pay for vacation and public holidays. In some countries, there is either a statutory or customary practice to pay or accrue this pay as a separate item.
Social security: This includes all standard employers' costs for benefit programmes created by governments and financed through government bodies or agencies.
Mandatory benefits: Includes benefits which employers must, by law or national collective agreements, provide – either through their own or through industry-wide financing mechanisms – and ignores changes yet to be implemented.
Voluntary benefits: This is an indication of the average cost of employee benefit plans that employers typically provide in the relevant country. It includes retirement, death, disability, and medical plans. The cost of other benefits is not included – such benefits are not typically provided for all employees, and their cost is relatively minor.
The figures are not adjusted for the differences in the cost of living, productivity, or personal tax between countries. It should be noted that the makeup of each country's economy has an effect on the calculation of national average earnings. In some countries, a substantial low-wage sector can often co-exist alongside other high-wage sectors. The national average figures may therefore not always be a meaningful benchmark when looking at a specific employer or industry sector.

©MERCER Human Consulting, link, article link.

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