Labour Costs Versus Labour Market Development. Empirical evidence for Polish, Czech and Hungarian manufacturing industry

Abstract

The paper analyses the relationship between labour costs and employment development in manufacturing industry in Poland, Czech Republic and Hungary. It indicates the need for thorough labour cost analysis in Europe in the context low employment rates among New Member States. The steps taken within the framework of the EU's common employment policy emphasise the crucial role of labour costsin enhancing labour demand.

The question raised in this paper is whether the cost of hiring labour is a significant determinant of employment in Polish, Czech and Hungarian manufacturing and is considered in terms of both relative (unit labour costs) and absolute (labour costs per one employee) measures. The study examines the labour costemployment relationship aiming to find out whether it differs significantly between the three countries and between commodity groups in manufacturing industry within each country