In the third quarter of 2021, the hourly labour costs increased the most this year and in Croatia that increase was the highest registered in the last two years, the EU's statistical office Eurostat said in a report on Thursday, reflecting the situation with the shortage of workers.

In the third quarter of 2021, the hourly labour costs rose by 2.5% in the euro area and by 2.9% in the EU, compared with the same quarter of the previous year.

In Q2 hourly labour costs increased by 0.6% in the EU while they stagnated in the euro area.

Companies are faced with the problem of labour shortages so they are trying to attract and keep workers by increasing their wages and offering additional benefits.

Higher wages and contributions

Labour costs in the EU increased by 2.8% in Q3 year on year whereas in Q2 they virtually stagnated. In the euro area, labour costs increased by 2.3% y-o-y after falling by 0.5% in Q2.

The highest increases were registered in IT and communications (+4.4%), mining (+3.9%) and wholesale and retail and repairs of motor vehicles (+3.4%).

In Q3 the cost of contributions increased by 3.3% in the EU and 3% in the euro area. In Q2 they increased by 2.3% in the EU and 1.2% in the euro area.

The highest increase in contributions was registered in the accommodation and food services sector (+14.2%), entertainment and recreation (+12.9%), the Eurostat report indicated.

Croatia ranked alongside Denmark and the Netherlands

The highest increases in hourly labour costs in Q3 y-o-y were registered in Lithuania (+15.2%), Bulgaria (+13.8%), and Hungary (+10%).

Croatia registered an increase of 4.3%, which is the strongest increase since Q3, 2019. In Q2 hourly labour costs increased in Croatia by 1.3%.

Wage costs increased 4.4% after a 1.3% fall in Q2 while the costs of contributions increased by 4% in Q3 whereas in Q2 they increased by 1.1%.

Croatia ranked alongside Denmark and the Netherlands, Eurostat’s report said.

The weakest increase in hourly labour costs in Q3 was registered in Belgium (+0.7%), whereas the only decrease in hourly labour costs was registered in Greece (-4.6%).