The Development of Real Unit Labour Costs in the Context of Cyclical Fluctuations in the Economy

The main aim of this paper is to analyse the reaction of real unit labour costs and labour productivity in the EU Member States to cyclical fluctuations in the economy of the EU and in the context of different starting positions for each state. The starting position of the states was determined by the value of gross value added per employee. The used dates were gathered over the period 1996 - 2011 (16 years). The analysis shows that the dynamics of labour productivity is strongly positively determined by the cyclical development of the economy of the EU. On the other hand, the dynamics of real unit labour costs is not significantly affected by cyclical fluctuations. The analysis has found that the states with the lowest average gross value added per worker in the base year have less reaction to cyclical fluctuations from the perspective of the dynamics of the monitored indicators.