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Polish workers cheapest in Europe. By Dawn Smith

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27th Feb 2006
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A new survey by Deloitte shows a huge variation in the cost of employing people in Europe, with the UK being the 7th most expensive location out of 20 EU countries surveyed, and Poland being the cheapest. The UK's average remuneration cost was £30,447 in 2005, an increase of 14% on 2004. Poland's was just over £3,880, with Estonia and Slovenia not far behind at £5,117 and £5,703. Germany was the most expensive place to hire people, with an average remuneration cost of £34,309.

The UK's high wages costs compared to its eastern neighbours will continue to present a competitive challenge to British businesses, says Ashley Unwin, partner in consulting at Deloitte: 'The UK will continue to be exposed to pressures from Eastern Europe in labour intensive industries. Currently, UK companies have located between one fifth and one third of all functions abroad and, as we know from announcements already made, international businesses located in the UK are constantly reviewing the opportunities available in Eastern European markets. Organisations need to keep focused on delivering a high quality skilled workforce in the business areas that matter most if we are to remain competitive.'

Unwin adds: 'If the UK is to remain competitive in the search for investment and wealth creation, employers need to understand the importance of identifying the critical business behaviours that account for 70% of a company's performance and to enhance productivity levels in these areas so that we can give value to businesses for the higher levels of remuneration paid.'

The Deloitte survey also looked at the cost of employer social security as a percentage of total employment costs. Denmark had the lowest percentage, at 1.12%. The UK was fourth in the league table, with 9.53%. Looking the combined costs of tax and employee/employer social security as a percentage of total employment expenses, Ireland had the lowest percentage and the UK was in fifth place.

The survey results can be downloaded from Deloitte's website.

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