The average cost of labor per unit of output, calculated as the ratio of total labor costs to real output. For the euro area, calculated as the ratio of compensation per employee at current prices to value added per person employed. The changes in this ratio are monitored by the central banks because they allow any effects on prices to be derived from shifts in demand. – The percentages shown also take into account exceptional circumstances. In 2009, for example, unit labor costs increased by over five percent compared with the previous year. This was due to the fact that many companies held on to their workforce in 2009 despite production losses in the wake of the global recession following the subprime crisis. However, the workforce produced fewer goods, and thus the labor costs per unit of goods produced rose, as did unit labor costs. – See compensation per capita, labor costs, unemployment rate, fringe benefits, index of collectively agreed earnings, wage drift, wage rigidities, minimum wage unemployment, two-pillar principle. – In the ECB’s Monthly Bulletin, unit labor costs can be found in the annex “Euro area statistics” under the heading “Prices, output, demand and labor markets,” subdivided according to various aspects and also broken down by economic sector; in the section “Developments outside the euro area,” comparisons with other countries can also be found. See also ECB Monthly Bulletin of March 2003, pp. 45 ff; ECB Monthly Bulletin of September 2004, pp. 55 ff (with graphs); ECB Monthly Bulletin of April 2005, pp. 80 ff (comparability of statistics); Deutsche Bundesbank Monthly Bulletin of April 2009, pp. 17 ff (here also problem of minimum wages).
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