Hungarian Labour Costs Rose 68% in Five Years. Greek Costs Rose 9%.

Cost per unit of output, not cost per hour

Unit labour cost is what an employer pays in labour for each unit of output produced. It rises when pay grows faster than productivity and falls when productivity grows faster than pay.

That construction is what makes it the standard measure of cost competitiveness. A country whose wages double while output per worker also doubles has unchanged unit labour costs and is no less competitive than before.

Across the EU, unit labour costs in 2025 stood at 119.6 against a 2020 base of 100.

The catching-up group

Hungary records 167.6, Romania 158.9, Bulgaria 157.5 and Lithuania 153.8. Four Member States more than half again above their 2020 level.

These are among the Union's lower-wage economies, and part of what the index is capturing is convergence: wages rising from a low base towards western European levels. That is the intended outcome of economic integration and not in itself a problem.

It becomes a problem when it outpaces productivity, which is what the index measures. A cost increase of 57% over five years requires productivity growth that few economies achieve, and where it has not been matched, the country's exports become more expensive relative to its competitors.

Within a currency union this cannot be corrected by devaluation, which is why the measure sits in the imbalance framework. Hungary and Romania are outside the euro area and retain that option. Bulgaria gave it up on 1 January 2026, when it adopted the euro, and Lithuania, Slovakia and the other euro members among the fast risers no longer have it either.

Greece at the other end

Greece records 108.5, the lowest in the Union — an 8.5% increase over five years against an EU average of 19.6%.

That is the continuation of the internal devaluation Greece went through after 2010, when wages were cut directly because the exchange rate could not be. Greek unit labour costs fell sharply in that period and have grown slowly since.

Read as competitiveness, this is a good result. Read alongside the rest of what this site records about Greece — the Union's second-lowest life satisfaction, its highest migrant over-qualification, a current account deficit of 5.7% of GDP and the most negative investment position in the Union — it is a reminder that cost competitiveness is one variable among many and does not by itself produce a strong economy.

Denmark and the productivity route

Denmark records 111.3, second-lowest, and it arrived there differently. Danish wages are among the highest in the Union and rose substantially over the period; Danish productivity rose with them.

That is the only route to low unit labour cost growth that does not involve suppressing pay, and Denmark is the clearest European example of it. Its current account surplus of 12.5% of GDP and creditor position of 103.3% are consistent with the same picture.

Why the base year matters

A 2020 base is not neutral. 2020 was the pandemic year, in which output collapsed while employment was held in place by short-time work schemes across the Union.

That mechanically raised unit labour costs in 2020 — the denominator fell faster than the numerator — so an index built on that base starts from an inflated level and understates subsequent growth. The comparison between Member States remains sound, because the effect applied to all of them, but the level of the index should not be read as a clean five-year change.