Introduction to Unit Labour

We propose ‘embodied unit labour costs’ (EULC) at the country-sector level as a new cost-related competitiveness indicator.

The aim of this study is to provide an overview of sectoral developments in output, employment, unit labour costs, and prices in Malta during the two decades to 2020.

Results – The inter-sector and inter-regional inputs measured by wage costs explain how unit labour costs on average have been pressed down.

4% lower GDP by 2050 in absence of technological progress), increase in unit labour costs (5.

We find that monetary policy transparency has a negative statistically significant impact on inflation persistence, while controlling also for important variables such as GDP growth, interest rates, economic openness and unit labour cost.

The industrial equilibrium is defined as the exchange rate level that equalises real unit labour costs between local producers of manufactured goods and their trading partners.

An international comparison reveals the high level of unit labour costs in German manufacturing.

Finally, and in contrast to much of previous evidence on developed economies, we find that higher productivity or lower unit labour costs are not systematically associated with the probability to enter export markets, but they are positively related to higher export volumes.

Unit labour costs (ULC) have increased much faster in the periphery than in core Eurozone countries since 1995.

Evidence shows that expansionary monetary policy lowers the unemployment rate and these effects are amplified by high GDP growth, investment growth, credit growth, the exchange rate appreciation and unit labour costs below the trend growth (alternatively, positive labour productivity shocks).

Explanations of Italy's and Germany's position within the Eurozone commonly focus on trade ‘competitiveness,’ a concept measured in terms of unit labour costs.

The researcher selected possible economic indicators (Agriculture, Consumer Price Index, Government Expenditure and Unit Labour Cost) through theories and empirical evidences from various researches, covering quarterly period of 2004-2018.

Following the theory of absolute cost advantage, the present study aims to verify the hypothesis that, during 2000-2014, the real effective exchange rates of the United States and German manufacturing sectors vis-a-vis their North American and European partners, respectively, have been governed by the relative vertically integrated unit labour costs.

Overall, in industry and services, the gap (about 30%) in productivity between Southern and Central-Northern regions is almost offset by that in the average wage: unit labour costs are similar.

The paper analyses the driving factors of rising unit labour costs in the manufacturing sector.