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Real Unit Labour Cost (RULC) relates how much people cost an employer compared to their productive contribution to the business. It thus indicates whether labour cost inflation exceeds productivity growth. In the above table we show the change in RULC for the latest available year compared to the previous year. Where this relates to a year that has not yet been completed, the figures will contain the forecast outcome for the most recent year.
A negative change in RULCG means that labour costs are growing less quickly than labour productivity. This is not necessarily a good omen for job growth or retention, as past increases in labour costs could already have led companies to invest in more productive capital to replace labour. Likewise, a growth in real unit labour costs may not always lead to labour shedding, because a country may have such low unit labour costs compared with other countries that it remains highly competitive as a production base. Comparisons are also more accurate within the eurozone than with other countries outside it, due to exchange rate effects.
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