Wage-offset calculator: the output gain that cancels labour-cost growth
Enter your labour-cost growth and the labour share of your conversion cost. The calculator returns the extra good output, from the same hours, that keeps conversion cost per good unit flat.
Labour-cost growth: g = W1 ÷ W0 − 1.
Output gain needed: G = s × g. Good output must rise by G (as a share of today's good output) to keep conversion cost per good unit where it was.
Same gain in utilisation points: ΔU = U × s × g.
Alternative, output held flat: paid hours would have to fall by h = g ÷ (1 + g) to keep labour cost per unit flat.
Why: cost per unit before = (L + O) ÷ Q. After the wage rise, with the same hours, it is (L × (1 + g) + O) ÷ Q′. Setting the two equal gives Q′ ÷ Q = (L × (1 + g) + O) ÷ (L + O) = 1 + s × g, where s = L ÷ (L + O).
How to read the result
G is the growth in good output that pays for the wage increase without raising the cost of each good part. It assumes the extra output comes from the same people, the same shifts and the same machines: fewer unplanned stops, shorter changeovers, less scrap. Below G, conversion cost per unit is still rising. Above G, the plant has absorbed the wage increase and gained margin.
ΔU expresses the same gain as utilisation points, the unit most plant teams think in. If a line produces good output at 60% of its theoretical rate over planned time, a 10% output gain is 6 points: from 60% to 66%. The utilisation input can be your OEE or any equivalent measure of good output against theoretical output. For its definition, see manufacturing-metrics.org.
h is the other route: produce the same and pay for fewer hours. It does not depend on s because it only holds labour cost per unit flat. In a funding application the output route reads better. Most calls favour productivity and competitiveness over headcount reduction, and manufacturing vacancy rates in Poland (0.8%), Slovakia (0.7%) and Romania (0.5%) were below the EU's 1.5% in 2025 (Eurostat jvs_a_rate_r2).
Country presets from Eurostat
| Country | 2023 (EUR/h) | 2025 (EUR/h) | g, 2023→25 | G at s = 35% | h (hours route) |
|---|---|---|---|---|---|
| Poland | 13.2 | 17.1 | +29.5% | +10.3% | −22.8% |
| Bulgaria | 8.0 | 10.2 | +27.5% | +9.6% | −21.6% |
| Romania | 9.6 | 12.0 | +25.0% | +8.8% | −20.0% |
| Slovenia | 26.0 | 29.8 | +14.6% | +5.1% | −12.8% |
| Hungary | 13.7 | 15.6 | +13.9% | +4.9% | −12.2% |
| Slovakia | 17.0 | 19.3 | +13.5% | +4.7% | −11.9% |
| Czechia | 18.4 | 20.2 | +9.8% | +3.4% | −8.9% |
| EU-27 | 32.1 | 35.0 | +9.0% | +3.2% | −8.3% |
Source: Eurostat lc_lci_lev (D1_D4_MD5, NACE C, enterprises with 10+ employees), 2023–2025. g, G and h calculated; s = 35% is an illustrative assumption, not a Eurostat figure.
Worked example: Poland
- Labour-cost growthW0 = €13.2/h (2023), W1 = €17.1/h (2025). g = 17.1 ÷ 13.2 − 1 = 0.295, or +29.5% in two years. Annualised: √1.295 − 1 = +13.8% a year.
- Labour shareAssume labour is 35% of conversion cost (s = 0.35). Take your own figure from cost accounts: labour, energy, maintenance, depreciation and overhead over the same period.
- Output gain neededG = 0.35 × 0.295 = 0.103. Good output must rise by 10.3% over two years, about 4.8% a year, to hold conversion cost per good unit flat.
- In utilisation pointsAt U = 60%: ΔU = 60 × 0.103 = 6.2 points, from 60% to 66.2%.
- Hours route, for comparisonh = 0.295 ÷ 1.295 = 0.228. Holding output flat would need 22.8% fewer paid hours.
A sentence for an application: "Manufacturing labour cost in Poland rose 29.5% in 2023–25 (Eurostat lc_lci_lev). With labour at 35% of our conversion cost, we need 10.3% more good output from the same hours to hold unit cost. The project targets X% from the measured baseline." Set X from your own loss data, not from this page.
Assumptions
- Paid hours and headcount stay the same. The gain comes from using those hours better.
- Non-labour conversion costs (O) stay fixed in total when output rises. That holds for depreciation, overhead and most maintenance. It does not hold for energy that scales with output; if energy is a large variable cost, leave the variable part out of O and s.
- Materials are excluded. They scale with output and do not change the offset.
- The extra output can be sold, or it replaces overtime, a shift or subcontracting.
- Your plant's labour-cost growth matches the preset. The presets are national averages; use payroll data when you have it.
Limits
- Eurostat figures are in EUR and include exchange-rate effects. Part of Poland's rise reflects a stronger zloty; growth in PLN is lower. Use local-currency payroll data for a plant decision.
- The formula answers how much gain is needed, not how much is available. Whether 10% more good output is realistic depends on the plant's loss structure, which only measurement shows.
- It is a two-point comparison. It ignores price increases passed to customers and changes in product mix.
- It covers conversion cost only, not total unit cost.
For reference, TeepTrak (publisher of this site, a seller of production-monitoring software) reports that Hutchinson took OEE from 47% to 72%. That is an upper reference from one customer, not a typical or promised result. Measure your own losses before setting a target.
Programme picker, co-financing calculator with cost caps, and the baseline/target indicator table evaluators look for. Excel, no macros.
- Co-financing for factory digitalisation in CEE (all programmes)
- Poland: Dig.IT
- Romania: regional programmes
- Bulgaria: PKIP Industry 4.0
Questions
- Why multiply by the labour share?
- Because only the labour part of conversion cost rose. If labour is 35% of conversion cost and it rose 29.5%, total conversion cost rose 0.35 × 29.5% = 10.3%. Spreading it over 10.3% more good output brings cost per unit back.
- Where do I find the labour share for my plant?
- From cost accounts: labour (wages plus employer charges) divided by labour + energy + maintenance + depreciation + overhead for the same period, excluding materials.
- Can I use the Eurostat preset in a grant application?
- Yes, as context, with the dataset code and years: Eurostat lc_lci_lev, manufacturing, 2023–2025. For the project target, use your own measured baseline.
- Why not simply cut hours?
- The formula shows it too: h = g ÷ (1 + g). Most funding calls favour productivity and competitiveness, and skilled staff are scarce, so the output route is usually both the stronger argument and the realistic one.
Sources
- Eurostat lc_lci_lev, hourly labour cost, manufacturing (2023–2025)
- Eurostat jvs_a_rate_r2, job vacancy rate, manufacturing (2025)
Published by TEEPTRAK SAS, which makes production-monitoring and OEE software, with an office in Bucharest (TEEPTRAK SRL). Figures are sourced on each page. Funding rules change: check the official call documents before you budget.