Malta was the only country in the EU in the second half of last year to see hourly wage costs decrease when compared to the same period the previous year, Eurostat statistics reveal.

The Labour Cost Index is a short-term indicator showing the development of hourly labour costs incurred by employers, in nominal terms, that is without adjusting for price developments. It is calculated dividing the labour cost in national currency by the number of hours worked.

Hourly labour costs rose by 2.8% in the EU28 in the fourth quarter of 2018, compared with the same quarter of the previous year. In the third quarter of 2018, hourly labour costs increased by 2.6%. These figures are published by Eurostat, the statistical office of the European Union.

The two main components of labour costs are wages & salaries and non-wage costs. In the EU28, the costs of hourly wages & salaries rose by 3.0% and the non-wage component rose by 2.2% in the fourth quarter of 2018. In the third quarter of 2018, annual changes were +2.7% and +2.4% respectively.

For Malta however, it was a different story. In the fourth quarter of last year, Malta saw a 0.5% decrease in nominal hourly labour costs. In terms of wages & salaries it decreased by 0.4% and the non-wage component decreased by 1.7%.  In the third quarter of last year, Malta saw a -0.7% decrease in nominal hourly labour costs, a 0.3% decrease in costs of hourly wages & salaries and a 5.1% decrease in the non-wage component when compared to the same periods the year before.

The statistics provided also show information divided up by economic activity. In the 4th quarter of 2018, industry saw a 1% increase in the cost for wages and salaries. However, the construction sector saw a 1.7% decrease in hourly wage costs and the services sector saw a 1.7% decrease. Malta has been trying to push the services sector for many years.

The Labour Cost Index is a short-term indicator showing the development of hourly labour costs incurred by employers, in nominal terms, that is without adjusting for price developments. It is calculated dividing the labour cost in national currency by the number of hours worked. Therefore, the development of variables, labour costs and hours worked, affect the evolution of the index. The quarterly changes in hourly employers’ costs are measured for total labour costs and its main components are wages and salaries and non-wage costs (labour costs other than wages and salaries). Total labour costs cover wage and non-wage costs less subsidies. They do not include vocational training costs or other expenditures such as recruitment costs, spending on working clothes, etc. Wage and salary costs include direct remuneration, bonuses, and allowances paid by an employer in cash or in kind to an employee in return for work done, payments to employees saving schemes, payments for days not worked and remuneration in kind such as food, drink, fuel, company cars, etc.