Key terms
- International competitiveness
- International competitiveness is the ability of a country's firms to sell goods and services against foreign rivals, at home and abroad, on price and on quality.
- Comparative advantage
- A country has a comparative advantage in a good when it can make it at a lower opportunity cost than another country.
Relative unit labour costs compare the labour cost of each unit across countries
Unit labour costs are the full labour costs, including employers' National Insurance and pension contributions, of producing a unit of output. The ONS treats them as a broad measure of international price competitiveness: slower unit labour cost growth generally reflects stronger productivity growth, more moderate pay rises, or both.
To compare countries, put both into one currency and divide: relative unit labour costs = home unit labour cost ÷ foreign unit labour cost × 100. Above 100, each unit costs more in labour at home than abroad.