Labour costs rise faster than productivity

Malta's unit labour costs accelerated in the first quarter of this year, increasing by the annual rate of 4.7% compared wit annual growth of 3.5 percent in the previous quarter.

This faster rate of growth was due to a 3.2 percent increase in compensation per employee and a drop of 1.3 percent in measured labour productivity, the Central Bank reported.

"The deterioration in labour market conditions appears to have exerted downward pressure on compensation growth, which eased slightly from the 3.6 percent annual growth rate registered in the previous quarter, while the decline in labour productivity reflected the abrupt slowdown in economic activity," the Bank said in its Quarterly Review.

It said the rise in Malta's unit labour costs was more pronounced than that in the euro area as a whole, where an increase of 3.9 percent was registered, the result of an increase in compensation per employee of 2.8 percent and a decline in labour productivity of 1.1 percent.