S. Korea alone in reporting unit labor cost fall: report

SEOUL, Aug. 17 (Yonhap) -- South Korea is the only country that reported a fall
in unit labor costs among major economies during the first quarter of this year,
apparently due to a wage decline amid a protracted economic slowdown, a report
showed Monday.
According to the report by the Organization for Economic Cooperation and
Development (OECD), South Korea's unit labor costs dropped 0.1 percent during the
January-March quarter compared with the same period a year ago.
The first-quarter figure represented the only negative growth posted by the 27
OECD member countries surveyed. The labor costs of OECD countries grew an average
3.5 percent over the cited period.
South Korea's labor costs also contracted for three straight quarters since the
third quarter of last year, when they declined 5 percent from a year earlier,
according to the report.
Luxembourg came first with the largest labor cost increase of 8.1 percent,
followed by Finland, Italy, Greece, the Netherlands, Belgium and New Zealand with
8 percent, 6 percent, 5.9 percent, 5.6 percent, 5.5 percent and 5.3 percent,
respectively.
Unit labor costs measure the average cost of labor per unit of output. They are
calculated as the ratio of total labor costs to real output.
An increase in unit labor costs indicates that growth in average employee
compensation exceeds growth in labor productivity, which may create pressure on
producer prices, the report explained.
The decline in South Korea could be attributed to a contraction in nominal wages
driven by a protracted economic slump at a time when there seemed to be no marked
productivity improvement during the period, experts say.
South Korea's economy was pummeled by financial turbulence that started last year
in the wake of the collapse of U.S. investment giant Lehman Brothers. This might
have prompted companies to trim payrolls or decrease wages in a belt-tightening
way to survive the crisis, they added.
kokobj@yna.co.kr
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