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Last Updated:  Tuesday, 4 March, 2003, 11:59 GMT
EU expansion triggers pay contest
By Patrick Bartlett
BBC European business correspondent

Dreher factory in Budapest
Cost is a major factor in investment
The cost of employing a worker in the European Union is more than five times higher than the average in the 12 countries waiting to join the trade bloc, according to official EU figures.

The figures will underline fears in some existing member states that EU enlargement could accelerate the process of companies moving production and jobs to new locations further east.

The most expensive EU country in which to employ a worker is Sweden, where each employee costs an average of 28.5 euros (20; $31) per hour.

The figure includes a worker's salary, but also social security contributions and other taxes paid by the firm.

Belgium vs Bulgaria

Excluding Belgium and Italy, which were not surveyed, the average for existing EU members is 22.7 euros per hour.

That compares with just 1.35 euros in Bulgaria, the cheapest of the candidate countries.

The average labour cost in these countries is just over 4 euros per hour, less than one-fifth of the figure for existing EU states.

Interestingly, two accession countries, Cyprus and Slovenia, already have higher labour costs than the poorest existing EU member, Portugal, at just over 8 euros per hour.

Greece is only slightly dearer.

Investment hopes

The figures help explain the growing attraction of Eastern Europe for investors.

When the 10 new member states join in 2004, products from their factories will gain unrestricted access to what is arguably world's biggest market.

The survey also underlines fears among trade unions and others that many workers in Western Europe risk losing their jobs to cheaper competitors in the enlargement states.

But the process is likely to be slower than many fear, as other factors, such as transport links, and the skills-base of a workforce, can be just as important to businesses.

Moreover, many big manufacturers, especially car companies, have already invested heavily in the East.

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