Unit Labour Costs in Irish Manufacturing. Quarterly Economic Commentary, Summer 2012

Casey, Eddie (2012) Unit Labour Costs in Irish Manufacturing. Quarterly Economic Commentary, Summer 2012. [Working Paper]

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Abstract

In an economy such as Ireland's which is heavily dependent on exports as a determinant of economic performance, competitiveness is a key variable for consideration. One way of assessing competitiveness is to look at unit labour costs (ULCs), typically calculated as the ratio of compensation per employee to the unit of value added by each employee. This measure is widely used – a long running series on the unit wage costs in Irish manufacturing has been produced by the Central Bank of Ireland (see various Quarterly Bulletins, Table E.4).1 As broad competitiveness developments across all manufacturing firms can often mask very different shifts in underlying manufacturing sectors, this note seeks to estimate the underlying changes in two commonly identified sectors in Irish manufacturing, the 'modern' sector and the 'traditional' sector.

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