WEB: CH. 2, Salvatore’s Introduction to International Economics, 3nd Ed.

Unit Labor Costs of Production Workers in Manufacturing in the G-7 Countries,

Selected Years , 1980-2009

The following table gives the index (with 2000=100) of unit labor costs, in terms of national
currencies, in manufacturing in the seven largest industrial countries in the world (the G-7
countries) in 1980, 1985, 1990, 1995, 2000, 2005 and 2009.

Table: Unit Labor Costs of Production Workers in Manufacturing in the G-7 Countries, 1980-2009
Year United States Canada Japan France Germany* Italy United
Kingdom

1980 49.0 42.3 52.4 34.8 44.0 23.0 28.6

1985 64.7 65.5 63.6 62.1 55.5 48.0 42.6
1990 75.4 77.8 77.7 77.7 70.2 70.8 62.0
1995 87.4 92.5 93.8 88.0 90.2 89.3 77.5
2000 100.0 100.0 100.0 100.0 100.0 100.0 100.0
2005 119.7 118.1 100.4 116.0 108.2 124.2 132.2
2009 132.8 120.9 101.6 126.3 117.5 139.8 136.1
% Change
2000-2009 32.8 20.9 1.6 26.3 17.5 39.8 36.1

*Data for 1980, 1985 and 1990 refer to former West Germany.
Source: Department of Labor, Bureau of Labor Statistics, March 2011.

From the table, we see that from 2000 to 2009 unit labor costs of production workers in
manufacturing rose the most in Italy, the United Kingdom, and the United States. Large relative
increases in unit labor costs tend to reduce the international competitiveness of the nation. The
results are different in terms of a common currency (say the U.S. dollar) because exchange rates
changed over time. But unit labor costs in terms of the national currency is one of the most
important underlying or real force at work affecting the international competitiveness of the
nation over time.