Driving forces behind the wage costs differentials in Europe? Productivity is not the whole story.

In 2004 Eurostat began to publish new figures on hourly wage costs for all European countries. These figures are new in several dimensions: It is the first time comparable hourly figures on this schemes are available and they cover a quite important time period, 1995-2004/5, so that not only intra- and inter-countries-comparisons are possible but also a dynamic analysis. Secondly, they are fairly detailed at the sectoral level, so that inter-sectoral comparisons within and between countries are possible. In a German context these statistics are of particular interest because it sheds new light on the ranking of Germany among other countries. Indeed until now it was a broadly accepted view that the German wage costs are of the highest in Europe. The new Eurostat figures but show a more balanced picture: Western European countries constitute a bulk of high wage costs, where Germany takes a rather middle-field position. The Southern and foremost new Eastern countries indeed have much lower wage costs