Thanks for the CB update. Some UK euro news
UK industry fears Europe labour taxes
By Graham Searjeant, Financial Editor
timesonline.co.uk
timesonline.co.uk
FEAR of being trapped in a regime of high labour taxes, low growth and high unemployment is now putting more British manufacturers off the euro than the five economic tests set by Gordon Brown exactly five years ago, a survey of engineering employers has found.
A new comparison of labour costs round Europe shows that add-on costs such as social security taxes have a critical impact on total labour costs and that high social charges are associated with higher rates of unemployment.
Members of the Engineering Employers’ Federation (EEF) said that, alongside what they regard as the unsustainably high sterling-euro exchange rate, the key factors affecting their enthusiasm for the UK entering the eurozone are the poor performance of eurozone economies and the tide of employment and social legislation adding to costs. Half of the 500 members interviewed export a third or more of their output.
Stephen Radley, chief economist of the EEF, said: “We are looking to the Government to concentrate on making the eurozone a really dynamic area. These are the sort of things that would really generate a shift in support for the euro.”
Pan-European comparisons made by Mercer Human Resource Consulting show that the pay of the average male full-time employee varies little between the UK, France, Germany and the Benelux countries.
After adding on social security charges and mandatory or voluntary benefits such as pensions, however, they range from €35,600 (£23,000) in the UK to €48,400 in France. The median average is €36,100.
The UK has lower labour costs extras than any country inside the eurozone, 14 per cent against 27 per cent in Germany, 37 per cent in Spain, 43 per cent in Italy and 46 per cent in France.
These lower social security taxes have allowed UK labour costs to be competitive, even though sterling’s exchange rate against the single currency is relatively high. However, UK national insurance contributions are about to rise.
The Mercer comparisons also show that the countries that levy the least social security taxes on pay tend to have lower unemployment rates, regardless of the level of pay.
Greece, whose average male pay of €9,900 is the European Union’s lowest, has additional social costs of 38 per cent and 10 per cent jobless.
Denmark, whose €36,300 pay is the EU’s highest, has only 5 per cent extras and 4.3 per cent jobless. |
