Statistics Explained

GDP at regional level



Data extracted in March 2023.

Planned article update: September 2024.

Highlights

After the initial impact of the COVID-19 crisis, economic activity rebounded in several EU regions characterised as holiday destinations; in 2021, GDP increased in real terms by more than 15.0 % in Notio Aigaio and Ionia Nisia (both Greece) and Jadranska Hrvatska (Croatia).

Luxembourg was the EU region with the highest level of disposable income per inhabitant (€36 500 in 2020). The next highest ratios were observed in the German regions of Oberbayern (€28 100) and Stuttgart (€25 500), and the Swedish capital region of Stockholm (also €25 500).

Infographic showing EU NUTS 2 regions with the biggest increases in GDP as percentage change in real terms from the year 2020 to 2021.
Source: Eurostat (nama_10r_2gvagr)


The principal focus of cohesion policy in the European Union (EU) is to help less developed regions converge/catch-up. It also aims to support broader socioeconomic priorities such as the European Semester and the European Pillar of Social Rights. Regional accounts are important in this context, as they are used, among other purposes, to decide upon the regional allocation of cohesion policy expenditure. As of 2021, the rules for allocating funding became simpler: they were tailored to locally-led development strategies that continue to take account of gross domestic product (GDP) per inhabitant, alongside information on the socioeconomic and environmental situation (for example, youth unemployment, low levels of educational attainment, the reception and integration of migrants, or climate change).

The COVID-19 crisis severely disrupted production and trade. Lockdowns closed many factories and offices and there were disturbances to international trade. Among other consequences, this led to difficulties concerning the supply of strategic items used in industrial supply chains such as the automotive or electronics industries. At the onset of the pandemic, the European Commission – for the first time – activated a general escape clause in the Stability and Growth Pact. By relaxing budgetary rules/requirements, national governments had more freedom to support their economies and mitigate the pandemic’s socioeconomic consequences. Nevertheless, there was a 5.7 % contraction in the real GDP of the EU between 2019 and 2020.

A rebound followed in 2021 – linked to extensive stimulus programmes, vaccine rollouts, the gradual easing of restrictions and a wave of delayed purchases – almost offsetting the losses recorded a year before: the EU’s GDP grew 5.4 % in real terms. The infographic above shows those EU regions – at NUTS level 2 – that experienced the largest increases in economic activity in 2021. Many of these were popular holiday destinations that had been severely impacted by the pandemic and its associated restrictions, with their latest growth rates often inversely proportional to the decline in activity that was registered in 2020. As the impact of the pandemic dissipated, the attention of policymakers and economists (re)turned to a number of longer-term, structural challenges: population ageing, climate change, weak productivity growth, rising income and wealth inequality, as well as territorial disparities within and among EU Member States. Added to this has been a rapid upturn in prices, as inflation rates rose to levels that had not seen during the last four decades.

This chapter starts with information on regional GDP, the principal aggregate for measuring economic output (presented as absolute values and per inhabitant ratios). Having looked at GDP from the output side, the focus of the second section switches to the income of households: information is presented for primary income (from paid work and self-employment, as well as from interest, dividends and rents) per inhabitant, disposable income per inhabitant, and the compensation of employees per hour worked. The final section looks at labour productivity (or gross value added per person employed), a ratio that may be used to assess patterns/developments of regional competitiveness.

Full article


Regional gross domestic product (GDP)

The EU’s GDP at market prices was €14.5 trillion in 2021, equivalent to an average of €32 400 per inhabitant. These latest figures marked a considerable rebound in economic activity: having fallen in real terms by 5.7 % in 2020, the EU’s GDP increased 5.4 % in 2021. Behind these aggregated figures for the whole of the EU, there were considerable differences in the economic performance of the EU’s regions.

Measuring the size of an economy

The central measure of national accounts, GDP, summarises the economic position of a country or a region. This well-known balance has traditionally been divided by the total number of inhabitants to create a proxy measure for analysing overall living standards, namely GDP per inhabitant.

While GDP continues to be used for monitoring economic developments, playing an important role in economic decision-making, it is complemented by other indicators to inform policy debates on, for example, social and environmental issues. This is because GDP does not take account of externalities such as environmental sustainability or other issues, like income distribution or social inclusion, which are increasingly seen as important drivers for sustainable development and the overall quality of life.

In order to compensate for price level differences between countries, GDP can be converted using conversion factors known as purchasing power parities (PPPs). The use of PPPs, rather than market exchange rates, results in data being denominated in an artificial common currency unit called a purchasing power standard (PPS). In contrast to euro-based (€) series, a series denominated in PPS tends to have a levelling effect, as countries and regions with very high GDP per inhabitant in euro also tend to have relatively high price levels (for example, the cost of living in Luxembourg is generally much higher than the cost of living in Bulgaria).

Regional economic statistics are generally reported in current (or ‘nominal’) terms; in other words, their current value during the particular reference year in question. To make comparisons over time, it is usually more revealing to make use of data in constant price (or real) terms, where a series has been adjusted to take account of price changes. During periods of inflationary pressure – such as the current cost-of-living crisis – series that are presented in current price terms will be higher than constant price series. For example, imagine GDP rose from one year to the next from €100.0 billion to €110.0 billion, while inflation was running at 8.0 %. In constant price terms using the prices of the first year, GDP in the second year would be €101.2 billion. This results in a growth rate of 1.2 % in real terms, compared with a 10.0 % growth rate in nominal terms.

In 2021, higher than average levels of GDP per inhabitant were primarily found in a band of regions that ran from the Nordic Member States, down through Germany and the Benelux countries into Austria and northern Italy. There were also a number of isolated pockets characterised by relatively high regional values for GDP per inhabitant, for example, two out of the three regions in Ireland, specific regions in Spain and France, as well as most of the remaining capital regions.

GDP per inhabitant in Luxembourg was almost 10 times as high as in the French archipelago of Mayotte

Map 1 is based on regional GDP per inhabitant (adjusted for purchasing power and then shown as a percentage of the EU average). The regional distribution of GDP per inhabitant was relatively skewed insofar as less than two fifths of NUTS level 2 regions – or 94 out of 242 regions – reported a level of GDP per inhabitant in 2021 that was equal to or above the EU average (as shown by the teal shades in Map 1). There were 18 NUTS level 2 regions across the EU where GDP per inhabitant was at least 50 % above the EU average – as shown by the darkest shade of teal. Among these relatively ‘wealthy’ regions, the highest level of regional GDP per inhabitant was observed in Luxembourg; its ratio was 2.7 times as high as the EU average. There were four other regions where GDP per inhabitant was more than twice as high as the EU average, three of these were capital regions: Eastern and Midland in Ireland, Région de Bruxelles-Capitale/Brussels Hoofdstedelijk Gewest in Belgium, and Praha in Czechia. Note that some of the economic differences between regions may reflect the (sometimes artificial) administrative boundaries that are used to delineate each region. It is often the case that part of the income generated in ‘wealthy‘ regions – that are hubs of business activity – may be attributed to labour input from commuters who live in surrounding regions where, among other possible advantages, the price of property and cost of living may be lower. Note also that some regions with high levels of GDP are characterised by a strong presence of multinational enterprises. This may distort their levels of economic activity, especially if assets (for example technology patents) are domiciled in a region. Aside from the four capital regions mentioned above, Southern (Ireland) was the only other region in the EU where GDP per inhabitant was more than twice as high as the EU average in 2021; this region is home to a number of the world’s top technology and pharmaceutical businesses.

At the other end of the range, there were 15 NUTS level 2 regions within the EU where GDP per inhabitant was less than 50 % of the EU average in 2021; they are shown by the darkest shade of gold in Map 1. These 15 regions were concentrated in Bulgaria (five regions, the only exception being the capital region of Yugozapaden) and Greece (also five regions). The remainder of this group was composed of three regions from eastern EU Member States – Észak-Alföld in Hungary, Nord-Est in Romania, and Panonska Hrvatska in Croatia – and two of the outermost regions in France, Guyane and Mayotte. The lowest level of regional GDP per inhabitant was recorded in Mayotte, at 28 % of the EU average.

The EU had 10 regions where the overall level of GDP was in excess of €200 billion; together, they accounted for more than one fifth of the EU’s economic output

Across the EU in 2021, there were 10 NUTS level 2 regions where GDP was in excess of €200 billion. Ile-de-France – the capital region of France – had, by far, the largest regional economy (€765 billion of GDP), followed by the northern Italian region of Lombardia (€403 billion) and the southern German region of Oberbayern (€297 billion). There were seven more regions within the EU where GDP was higher than €200 billion: three in Germany (Stuttgart, Düsseldorf and Darmstadt); two in Spain (Comunidad de Madrid and Cataluña); and single regions in France (Rhône-Alpes) and Ireland (Eastern and Midland). Together, these 10 regions with the highest levels of GDP collectively accounted for 21.2 % of the EU’s economic output in 2021. Two alternative measures can be used to demonstrate the concentration of economic activity within the EU: the combined output of the smallest 68 regions (in economic terms) was approximately the same as that of Ile-de-France, while the cumulative output of the smallest 141 regions (again in economic terms) was approximately the same as that recorded in the 10 largest regions.

Map showing GDP per inhabitant in purchasing power standards in the EU and surrounding countries by NUTS 2 regions. Each country region is colour-coded based on the PPS within certain ranges for the year 2022. The EU average is indexed at 100.
Map 1: GDP per inhabitant in purchasing power standards (PPS), 2021
(index in relation to the EU average = 100, by NUTS 2 regions)
Source: Eurostat (nama_10r_2gdp) and (nama_10_pc)

Figure 1 presents information on regional disparities in GDP per inhabitant, comparing the period immediately before the COVID-19 crisis (2019) with the latest information available for 2021. The coefficient of variation is defined, for a particular dataset, as the ratio of the standard deviation divided by the mean; a higher ratio indicates a greater degree of dispersion. In 2021, there were considerable regional disparities for GDP per inhabitant across Hungary and Czechia; they both had coefficients that were greater than 50.0 %. These high values reflected particularly high levels of GDP per inhabitant in capital regions that could be contrasted against the remainder of the territory where GDP per inhabitant was less than the EU average. By contrast, GDP per inhabitant was much more uniformly distributed across the regions of Finland, Austria and Portugal, where the coefficient of variation was below 20.0 %.

The data presented in Figure 1 also permit an analysis over time: this may be used to determine whether the COVID-19 crisis resulted in regional GDP per inhabitant being more or less equitably distributed. In most EU Member States, regional disparities were somewhat lower after the initial impact of the pandemic. The largest falls were observed in Finland, Belgium and Romania, where the coefficient of variation was at least 2.0 percentage points lower in 2021 than in 2019. In Finland and Belgium, this reflected slower or negative developments for GDP per inhabitant in several relatively ‘wealthy’ regions (for example, those regions located around the Belgian capital). In Romania, the picture was somewhat different, insofar as regional divergences narrowed due to faster than average growth in a number of relatively ‘poor’ regions that were ‘catching-up’. Between 2019 and 2021, Czechia and Denmark were the only Member States that recorded an increase in regional disparities for GDP per inhabitant. The coefficient of variation rose at a particularly fast pace in Denmark, up 4.2 percentage points, reflecting a rapid increase of GDP per inhabitant in the capital region of Hovedstaden.

Horizontal bar chart showing regional disparities in GDP per inhabitant as coefficient of variation in percentages by NUTS 2 regions in the EU, individual EU Member States, Norway, Switzerland and Türkiye. Each country has two bars comparing the year 2019 with 2021.
Figure 1: Regional disparities in GDP per inhabitant, 2019 and 2021
(coefficient of variation in %, by NUTS 2 regions)
Source: Eurostat (nama_10r_2gdp)

The urban–rural typology is a classification based on measuring population density and geographical continuity; it is applied to NUTS level 3 regions, identifying predominantly rural regions, intermediate regions and predominantly urban regions. Figure 2 shows predominantly urban regions of the EU had (on average) higher levels of economic development than intermediate or predominantly rural regions. This pattern may be linked to key drivers of economic growth (human and physical capital, technology and natural resources) often being concentrated in urban/built-up areas. While predominantly urban regions tend to have higher standards of living, they often face a number of distinct challenges (such as higher levels of inequality, crime or pollution).

Predominantly urban regions often play a key role in economic development as they act as an economic hub, providing a broad range of opportunities and services to those living in surrounding regions. With this in mind, the European Commission is seeking to strengthen urban–rural linkages with its cohesion policy, promoting integrated territorial development through a coordinated approach that encourages sustainable urban development alongside support for disadvantaged areas.

In 2020, GDP per inhabitant averaged 37 000 PPS across predominantly urban regions of the EU. This was 1.4 times as high as in intermediate regions (26 400 PPS) and 1.6 times as high as in predominantly rural regions (23 200 PPS). Predominantly urban regions consistently recorded a higher level of GDP per inhabitant than predominantly rural regions and they also recorded the highest levels of GDP per inhabitant in all but one of the EU Member States; note that smaller Member States are covered by just one or two of the three classes within the urban–rural typology. Austria was the only exception, as it recorded a higher standard of living in intermediate regions than in predominantly urban regions. This pattern was most apparent in Romania, Hungary and Bulgaria, where the standard of living in predominantly urban regions was 3.2 times as high as in predominantly rural regions. By contrast, there were relatively small differences in living standards between predominantly urban and predominantly rural regions in Spain and Italy.

Scatter chart showing GDP per inhabitant in PPS by urban-rural typology in the EU, individual EU Member States, Switzerland, Norway, Türkiye, Montenegro, Serbia, North Macedonia and Albania. Each country has three scatter plots representing predominantly rural regions, intermediate regions and predominantly urban regions for the year 2020.
Figure 2: GDP per inhabitant, 2020
(in PPS, by urban–rural typology)
Source: Eurostat (urt_10r_3gdp)

Having posted growth rates close to 2.0 % in both 2018 and 2019, the EU’s economic output contracted 5.7 % in 2020, reflecting the direct and indirect impact of the COVID-19 crisis; these rates of change are presented in real terms, in other words the effects of inflation have been removed. To put the data for 2020 into context:

  • it was the first time that the EU’s GDP had fallen since a modest decline of 0.1 % in 2013;
  • the downturn in activity associated with the COVID-19 crisis was larger than the decline recorded at the height of the global financial and economic crisis, as GDP fell 4.3 % in 2009.

Notio Aigaio saw its economic activity rebound in 2021 with the highest rate of GDP growth among EU regions

During the initial stages of the pandemic, restrictions on the movement of people and goods often led to a disproportionately deep recession in popular holiday destinations and/or border regions. However, there was a considerable rebound in economic activity across the EU in 2021, as GDP increased 5.4 %. This pattern was repeated in almost every NUTS level 2 region, with positive rates of change in 224 out of 226 regions for which data are available; note statistics for Poland are only available at a national level. There were 18 regions in the EU where the annual growth rate for GDP was at least 10.0 % (as shown by the darkest shade of blue in Map 2). Several regions characterised by particularly high economic growth rates in 2021 also recorded inversely proportional falls in activity during 2020.

  • This was particularly notable for several of the EU’s most popular tourist destinations: Notio Aigaio, Ionia Nisia and Kriti in Greece; Illes Balears in Spain; Jadranska Hrvatska in Croatia; Malta; and Corse in France.
  • There were also high GDP growth rates in all three regions of Ireland, the three remaining regions of Croatia, two regions in Hungary, as well as Rheinhessen-Pfalz (Germany), Sterea Elláda (Greece), and the archipelago of Åland (Finland).
  • Across NUTS level 2 regions, the highest GDP growth rates in 2021 were recorded in Notio Aigaio (16.7 %), Southern (Ireland; 16.3 %) and Jadranska Hrvatska (16.0 %).

At the other end of the range, there were several northern regions of the EU that recorded modest (but positive) growth rates; this was also the case for a band of regions running from northern Germany into Czechia and Slovakia. There were only two NUTS level 2 regions where GDP fell between 2020 and 2021 (as shown by the lightest shade in Map 2): Prov. Brabant Wallon in Belgium (-2.4 %) and Tirol in Austria (-0.2 %).

Map showing change in GDP as percentage annual change in real terms compared with 2020 in the EU and surrounding countries by NUTS 2 regions. Each country region is colour-coded based on the percentage within certain ranges for the year 2021.
Map 2: Change in GDP, 2021
(%, annual change in real terms compared with 2020, by NUTS 2 regions)
Source: Eurostat (nama_10r_2gvagr) and (nama_10_gdp)

Map 3 provides information on the overall change – between 2019 and 2021 – of regional GDP; it therefore presents an analysis of how GDP recovered (or otherwise) from the impact of the COVID-19 crisis. Note the information presented is once again shown for real rates of change, in other words the effects of inflation have been removed.

There were 142 regions in the EU where the level of economic activity had yet to return to its pre-pandemic level

In 2021, overall economic activity in the EU had almost returned to its pre-pandemic levels; it was 0.6 % lower than in 2019. Regional performance was relatively skewed insofar as GDP had yet to return to pre-pandemic levels in almost two thirds (142 out of 226) of the regions for which data are available; note statistics for Poland are only available at a national level. Among these, there were 26 regions where GDP in 2021 remained more than 5.0 % below its level from 2019 (as shown by the darkest shade of gold in Map 3). These regions were principally located in southern EU Member States, particularly across Italy and the Iberian Peninsula. At the bottom end of the ranking, there were five regions where GDP remained more than 10.0 % below its 2019 level:

  • the popular holiday destinations of Illes Balears (-15.0 %) and Canarias (-13.4 %) in Spain, and Algarve (-13.8 %) in Portugal;
  • Prov. Brabant Wallon (-11.6 %) in Belgium; and
  • Dytiki Makedonia (-10.6 %) in Greece.

By contrast, there were 83 regions across the EU where the level of economic activity was higher in 2021 than it had been in 2019. These regions were principally located in Ireland, Croatia, Hungary, Slovenia and the Baltic Member States, although there were other pockets of growth. Among them, there were four regions where GDP was more than 10.0 % above its 2019 level.

  • All three regions of Ireland – Southern (28.4 %), Eastern and Midland (15.4 %) and Northern and Western (14.1 %) – where GDP continued to grow during the pandemic. Some of the rapid growth in Ireland may be linked to a buoyant pharmaceuticals sector, one of the few sectors in the EU economy that continued to grow during the COVID-19 crisis.
  • The western German region of Rheinhessen-Pfalz (10.5 %), where GDP rebounded very strongly in 2021 having fallen in 2020.

Looking in more detail at annual developments over the period 2019–2021, there were six regions across the EU which recorded continuous GDP growth during the pandemic, with positive rates of change for both 2020 and 2021: all three regions of Ireland, the Romanian capital region of Bucureşti-Ilfov, Vidurio ir vakarų Lietuvos regionas in Lithuania, and Midtjylland in Denmark. At the other end of the range, there were two regions where GDP fell in both 2020 and 2021: Prov. Brabant Wallon in Belgium and Tirol in Austria.

Map showing change in GDP as percentage overall change in real terms compared with 2019 in the EU and surrounding countries by NUTS 2 regions. Each country region is colour-coded based on the percentage within certain ranges for the year 2021.
Map 3: Change in GDP, 2021
(%, overall change in real terms compared with 2019, by NUTS 2 regions)
Source: Eurostat (nama_10r_2gvagr) and (nama_10_gdp)

Income

As noted above, wealth creation in the EU is often concentrated in economic hubs (capital regions and other major urban/metropolitan centres), where part of the output generated may be attributed to commuters living in surrounding regions. As a result, income per inhabitant in these surrounding regions tends to be relatively high when contrasted with their economic output (as measured by GDP per inhabitant).

Primary income per inhabitant

Primary income covers income from paid work and self-employment, as well as from interest, dividends and rents. In 2020, EU primary income per inhabitant averaged 19 500 PPS. The use of data in PPS, rather than in euro (€), takes account of price level differences between countries; the conversion to PPS takes into account the fact that household expenditure is predominantly related to consumption.

Oberbayern had the highest level of primary income per inhabitant

In 2020, there were 24 regions spread across seven different EU Member States where income per inhabitant was at least 26 500 PPS; these are shown by the darkest shade in Map 4. These were concentrated in Germany (16 regions), with the highest income levels predominantly found in western (rather than eastern) regions. Five more regions were in the Benelux countries and the remaining three regions were located in France, Italy and Austria.

At the other end of the range, there were 25 regions spread across eight different EU Member States where primary income per inhabitant was less than 10 750 PPS in 2020 (as shown by the lightest shade in Map 4). Other than two of the French outermost regions – Mayotte and Guyane – these regions were concentrated in Greece or eastern Europe and included:

  • 8 of the 13 regions that compose Greece,
  • five of the six regions that compose Bulgaria (the exception being the capital region of Yugozapaden),
  • four of the eight regions that compose Romania,
  • three regions in Hungary,
  • two regions in Croatia, and
  • one region in Slovakia.

In 2020, primary income per inhabitant ranged from a high of 36 800 PPS in Oberbayern (southern Germany) down to 6 100 PPS in Severozapaden (Bulgaria). As such, the average level of income in Oberbayern was approximately six times as high as the level recorded in Severozapaden. Three more German regions featured at the top of the ranking with the highest levels of primary income per inhabitant – Stuttgart, Hamburg and Darmstadt – followed by Luxembourg. Note that Luxembourg had the highest level of income in euro (€41 700 per inhabitant) – somewhat above the figure recorded for Oberbayern (€39 400 per inhabitant) – although Luxembourg’s relatively high cost of living meant that it ranked fifth when analysing the data in PPS.

Map showing net primary income per inhabitant in PPS in the EU and surrounding countries by NUTS 2 regions. Each country region is colour-coded based on the PPS within certain ranges for the year 2020.
Map 4: Net primary income per inhabitant, 2020
(in purchasing power standards (PPS), by NUTS 2 regions)
Source: Eurostat (nama_10r_2hhinc)

Disposable income per inhabitant

The previous section analysed regional differences in primary income per inhabitant across EU regions. This section focuses on regional income differences within EU Member States. Rather than using net primary income, a more appropriate measure for this purpose is net disposable income, which is calculated by deducting income taxes and net social contributions from primary income while net social benefits and net current transfers are added.

Regional differences in income levels tend to be lower when analysed in terms of disposable (rather than net primary) income, due to the redistributive nature of tax and welfare systems. For example, regions with relatively high levels of income may be expected to pay higher (or a greater share of) taxes and social contributions, whereas regions with higher unemployment, a high share of elderly persons, or a generally more vulnerable population are likely to receive proportionally more unemployment benefits, pensions and other kinds of monetary benefits. As such, the regional distribution of disposable income per inhabitant depends on the inequalities in primary income as well as inequalities in other factors (such as income tax, social benefits and transfer systems, as well as differences in age structure and unemployment rates between regions).

Although Eurostat collects and publishes regional data on net disposable income, it is not recommended to use this information to analyse income differences across the EU; rather, these statistics are used to analyse regional differences within the same EU Member State. This is because most national statistical offices do not compile regional data for social transfers in kind. The latter are goods and services provided by government for free or at prices that are not economically significant; they mainly include education, health and some social security services, as well as housing, cultural or recreational services.

Figure 3 shows annual changes in net disposable income per inhabitant and GDP per inhabitant for 2020; the information shown is based on data in euro (€). The figure confirms the redistributive nature of tax and welfare systems across EU regions insofar as:

  • rates of change for disposable income per inhabitant were usually higher than rates of change for GDP per inhabitant;
  • rates of change for disposable income per inhabitant were usually less dispersed than for GDP per inhabitant.

Disposable income in the EU averaged €17 200 per inhabitant in 2020, while GDP per inhabitant averaged €30 000. There were 17 NUTS level 2 regions that recorded positive rates of change in 2020 for both disposable income per inhabitant and GDP per inhabitant. These regions were principally concentrated in northern or eastern EU Member States: four regions from Poland, three from Bulgaria, two regions each from Denmark, Ireland and Sweden, both regions of Lithuania, a single region from Finland, and Luxembourg. By contrast, there were 85 NUTS level 2 regions that recorded falls for both indicators. This group included every region of Greece, Hungary, Austria and Portugal, as well as the vast majority of regions in Italy (16 out of 21) and Spain (15 out of 19).

Figure 3: Net disposable income per inhabitant and GDP per inhabitant, 2020
(%, annual change in € compared with 2019, by NUTS 2 regions)
Source: Eurostat (nama_10r_2hhinc) and (nama_10r_2gdp)

Compensation of employees

One of the principal areas of interest/concern for many employees is their level of remuneration; this has become an even greater preoccupation during the cost-of-living crisis. Employee compensation is defined (within national accounts) as remuneration, in cash or in kind (such as a company car or vouchers for meals), payable by an employer to an employee in return for work done; it also includes payments linked to social contributions (such as health or pension contributions). The data presented in Figure 4 refer to gross (in other words, before tax) hourly compensation in euro (€).

The highest level of employee compensation was recorded in Luxembourg

In 2020, employees working in the EU received an average gross compensation of €25.2 for each hour that they worked. The highest level of employee compensation was recorded in Luxembourg (€51.3 per hour), while the lowest level was registered in the Bulgarian region of Severen tsentralen (€5.3 per hour). As such, the ratio between the highest and lowest levels of employee compensation was almost 10 : 1.

There were 18 NUTS level 2 regions in the EU where the average level of employee compensation was at least €40.0 per hour in 2020. These 18 regions were concentrated in a cluster of six western EU Member States, the three Benelux countries, Denmark, Germany and France. In five of these, the highest levels of employee compensation were recorded in the capital region: Luxembourg (€51.3 per hour), Région de Bruxelles-Capitale/Brussels Hoofdstedelijk Gewest (Belgium; €49.5), Hovedstaden (Denmark; €47.9), Ile-de-France (France; €46.3), and Noord-Holland (the Netherlands; €43.0). The only exception was Germany, where the highest level of employee compensation was observed in the southern region of Oberbayern (€42.1), while the capital region of Berlin had a somewhat lower average level, at €37.4.

More generally, it was relatively common for capital regions to have notably higher levels of average employee compensation per hour worked. This is unsurprising given the high cost of living in many capitals, while most also play an important role as the location for company headquarters, financial services and national administrations, which tend to offer above average levels of compensation. Capital regions had the highest levels of employee compensation in a majority of the multi-regional EU Member States in 2020: the only exceptions were Oberbayern (Germany; as mentioned above), Sterea Ellada (Greece), País Vasco (Spain) and Provincia Autonoma di Bolzano/Bozen (Italy). In several Member States, the regional distribution of employee compensation was heavily skewed, as the capital was the only region to report a level of compensation that was above the national average. The largest regional variations in employee compensation were observed in Poland and Romania. For example, someone working in the capital regions of Warszawski stoleczny or Bucuresti - Ilfov could expect to earn more than twice as much as an employee working in Warminsko-Mazurskie or Sud - Muntenia (where the lowest levels of compensation in Poland and Romania were recorded). There was a relatively low level of regional variation in the compensation paid to employees across Finland, Denmark and Hungary, as well as Slovenia and Lithuania (note the latter are both composed of just two regions).

Scatter chart showing compensation of employees in euros per hour worked by NUTS 2 regions in the EU, individual EU Member States, Switzerland, Norway and Iceland. Each country has four scatter plots representing lowest region, national average, highest region and other regions for the year 2020.
Figure 4: Compensation of employees, 2020
(€ per hour worked, by NUTS 2 regions)
Source: Eurostat (nama_10r_2lp10) and (nama_10_lp_ulc)

Labour productivity

Labour productivity can be defined as GDP (or gross value added) divided by a measure of labour input, typically the number of persons employed or the total number of hours worked. The information presented in Map 5 is based on labour productivity per hour worked, which reflects, at least to some degree, changes in the structure of the employment market. For instance, the ratio falls if there is a shift from full-time to part-time work, or if working hours are curtailed due to restrictions such as those imposed during the COVID-19 crisis.

High labour productivity may be linked to the efficient use of labour and/or reflect the skills and experience of the labour force. These in turn may result from the specific mix of activities present in each regional economy as some activities: for example, knowledge-intensive industrial activities, business or financial services tend to be characterised by higher levels of labour productivity (as well as higher levels of employee compensation).

In 2020, an average of €42.5 of value was added for each hour worked in the EU. This figure can be used as the basis for deriving a set of nominal labour productivity indices, which are presented relative to the EU average = 100. Labour productivity was not particularly skewed across the EU regions, insofar as 129 (out of 242) NUTS level 2 regions had an index that was equal to or above the EU average, while 113 regions had indices that were below the EU average.

There were 23 regions where regional levels of labour productivity were at least 50 % above the EU average in 2020 (as shown by the darkest shade in Map 5). They were concentrated in western and Nordic regions of the EU:

  • two or more regions from Belgium, Denmark, Germany, Ireland and the Netherlands had labour productivity indices above this threshold;
  • as did the capital regions of the Benelux and Nordic countries, and the capital regions of Ireland and France.

At the top end of the distribution, there were five regions where labour productivity was more than twice as high in 2020 as the EU average: Southern (Ireland; 3.2 times as high), Eastern and Midland (Ireland; 2.3 times), Luxembourg (also 2.3 times), Hovedstaden (Denmark; 2.1 times) and Prov. Brabant Wallon (Belgium; 2.0 times). As already noted, the relatively high levels of GDP or value added in Irish regions may be linked to the presence of multinational enterprises, which may result in high levels of labour productivity (especially when capital assets are domiciled in a region).

At the other end of the range, there were 21 regions where labour productivity was less than 35 % of the EU average in 2020 (as shown by the lightest shade in Map 5). These regions were clustered in eastern EU Member States: nine regions from Poland, five regions from each of Bulgaria and Romania, and one region from Croatia; there was also one region from Greece with an index below this threshold. The lowest levels of labour productivity were recorded in Bulgaria and Romania:

  • five out of the six regions in Bulgaria – the exception being the capital region of Yugozapaden – had labour productivity indices that were less than one quarter of the EU average, with the lowest ratio recorded in Severen tsentralen (19 % of the EU average);
  • Nord-Est in Romania was the only other region in the EU to record a labour productivity ratio that was less than one quarter of the EU average (at 22 %).
Map showing nominal labour productivity as index based on € per hour worked in relation to EU average set at 100 in the EU and surrounding countries by NUTS 2 regions. Each country region is colour-coded within certain ranges for the year 2020.
Map 5: Nominal labour productivity, 2020
(index based on € per hour worked in relation to EU average = 100, by NUTS 2 regions)
Source: Eurostat (nama_10r_2nlp), (nama_10_gdp) and (nama_10_a10_e)

Source data for figures and maps

Excel.jpg Economy at regional level

Data sources

European system of national and regional accounts

The European system of national and regional accounts (ESA 2010) is the latest internationally compatible accounting framework for a systematic and detailed description of the EU economy. ESA 2010 has been implemented since September 2014 and is consistent with worldwide guidelines on national accounting, as set out in the system of national accounts (2008 SNA).

ESA 2010 provides a framework for consistent, comparable, reliable and up-to-date economic statistics for EU Member States. The legal basis for these statistics is Regulation (EU) No 549/2013 of the European Parliament and of the Council of 21 May 2013 on the European system of national and regional accounts in the European Union. ESA 2010 is not restricted to annual national accounting, as it also applies to quarterly and shorter or longer period accounts, as well as to regional accounts. It is harmonised with the concepts and classifications used in many other social and economic statistics (for example, statistics on employment, business or international trade) and as such serves as a central reference for socioeconomic statistics.

Regional data

Statistics from regional economic accounts are presented here for NUTS level 2 regions, although more detailed regional analyses are available for NUTS level 3 regions for GDP, gross value added at basic prices and employment. The data for statistical regions in the EFTA and candidate countries are sometimes unavailable and have been replaced (where appropriate) by national aggregates. Note also that the data for these non-EU countries are sometimes only available for earlier reference periods when compared with those presented for EU regions; all discrepancies are footnoted under maps and figures.

Indicator definitions

Gross domestic product and value added

Gross domestic product (GDP) is a basic measure of the overall size of an economy. As an aggregate measure of production, GDP is equal to the sum of the gross value added of all resident institutional units engaged in production, plus any taxes on products and minus any subsidies on products.

Income

Two types of income are recorded as primary income:

  • primary incomes receivable by virtue of direct participation in the production process, mainly operating surplus and mixed income and the compensation of employees;
  • property incomes receivable by the owner of a financial asset or a tangible non-produced asset in return for providing funds to, or putting the tangible non-produced asset at the disposal of, another institutional unit (interest, dividends, withdrawals from income of quasi-corporations, reinvested earnings of foreign direct investment, rents on land).

Disposable income is the total amount of money that households/individuals have available for spending or saving after subtracting income taxes, contributions and transfers.

Compensation of employees and labour productivity

In national accounts, the compensation of employees is defined as the total remuneration, in cash or in kind, payable by an employer to an employee in return for work done by the latter during an accounting period. It consists of wages and salaries in cash or in kind and employer’s actual and imputed social contributions.

Labour productivity reflects the (average) amount of goods and services produced per member of the labour force or the output per input of labour. It can be measured in a variety of ways. For example, it can be measured by GDP (in terms of purchasing power standards) either relative to the number of employed people or to the total number of hours worked. In both cases, the ratio can subsequently be expressed as an index (relative to the EU average).

Context

With the arrival of a new European Commission, six Commission priorities for 2019–24 were identified, including three with a direct impact on the economy: A European Green Deal, A Europe fit for the digital age and An economy that works for people.

In December 2020, the multiannual financial framework covering the period 2021–2027 was adopted. This provided resources to kick-start the European economy, through boosting the green and digital transitions, and making it fairer, more resilient and more sustainable for future generations. The plan was reinforced by an emergency European Recovery Instrument (also known as Next Generation EU) which provided a plan that was designed to ensure the EU could emerge stronger from the COVID-19 crisis, transforming economies and societies so that they work for everyone, by making Europe healthier, greener, and more digital.

The framework for EU cohesion policy dates back to 1986 and the Single European Act, which sought to enhance regional policies by ensuring balanced development, as well as social, economic and territorial cohesion. The intent of regional policies is not the mere transfer of economic wealth from relatively affluent to less affluent regions, but also support for programmes that aim to resolve regional issues. Cohesion policy is an active form of solidarity that includes measures designed – through strategic investment – to boost economic growth, jobs, the quality of life, as well as green and digital transitions. It plays a role in five key areas:

  • a more competitive and smarter Europe (for example, through innovation and digitisation, paying greater attention to regions at risk of falling into development traps);
  • a greener, carbon free Europe (investing in energy transition, renewables and the fight against climate change and providing support to those territories most affected by the socioeconomic impact of the transition to climate neutrality);
  • a more connected Europe (enhancing mobility and highlighting strategic transport and digital networks, for example investing in the digital transition to expand very-high-speed internet access, boost digital skills, and invest in information technology equipment);
  • a more social and inclusive Europe (supporting quality employment, education, skills, social inclusion and equal access to healthcare);
  • a Europe closer to its citizens (promoting locally-led development, by fostering sustainable and integrated development across all types of territories).

To reach these goals, the EU has set aside €392 billion for economic, social and territorial cohesion during the period 2021–2027. This support is principally delivered through four key instruments: the European Regional Development Fund, the European Social Fund+, the Cohesion Fund and the Just Transition Fund.

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Regional economic accounts – ESA 2010 (t_reg_eco)
Regional economic accounts – ESA2010 (t_nama_10reg)
Regional economic accounts (reg_eco10)
Gross domestic product indicators (reg_eco10gdp)
Branch and household accounts (reg_eco10brch)
Main GDP aggregates (nama_10_ma)
Auxiliary indicators (population, GDP per capita and productivity) (nama_10_aux)
Basic breakdowns of main GDP aggregates and employment (by industry and by assets) (nama_10_bbr)
Regional economic accounts (nama_10reg)
Gross domestic product indicators (nama_10r_gdp)
Branch and household accounts (nama_10r_brch)

Maps can be explored interactively using Eurostat’s statistical atlas (see the user manual).

This article forms part of Eurostat’s annual flagship publication, the Eurostat regional yearbook.