You have to know what is being compared here.

Costs ended in September and Costs ended in previous quarter.

thus B and D are wrong right off the bat.

To distinguish between lower and less, less is used for amount and lower is for countable quantity.

An easy way to remember is :

Less amount, Lower number

With that, you can determine that the answer to this questions is A.

I hope this clears things up for you.

After an another inspection of the question, I could understand why D is wrong.

@cyrwr1 : You are right when you say what is being compared. D compares rise in the 'employment costs' with the employment costs . That is what is not intended .

However, you are partly wrong in your post by saying that between A and D , less than or lower than makes difference.

@cyrwr1

lower is for countable quantity.

wrong.

Lower is used for uncountable quantity. lower significance/less significance.

An easy way to remember is: Less amount, Lower number

Number in itself is an uncountable quantity that's why your example is correct.

examples:
4 is less than 5.

The number of GMAT books in your house is ,certainly, lower/less than the number of GMAT books in my house . I am almost sure by the way .

here lower is modifying the number.
There are fewer GMAT books in your house than in mine.

BY the way , I learnt this from some of the Ron's post. and some ideas from Mitch aka GMATGuruNY

You seem to be confused here.

We are talking about nouns individually(Costs).We are not talking about a value versus another value.

You are right in saying four is less than 5. But that is not what I meant. You have 4 and I have 5, who has the lower number and if that corresponds to dollars/units of currency, who has less money?

In the example we are seeking something(comparative) to explain the difference in costs of the two periods.

Whether it is lower or less is the question. Lower is the answer.

Lower is countable and Less is not countable.

Less is used in time, amount, and distance. (i.e. minutes, money, miles)

GMATMadeEasy wrote:Employment costs rose 2.8 percent in the 12 months that ended in September, slightly less than they did in the year that ended in the previous quarter.

(A) less than they did
(B) less than it did
(C) less than they were
(D) lower than
(E) lower than they were

OA is A.

Could someone explain how to choose between A and D.Also, could we use parallelism as a decisive factor between A and D.

D and E state that costs rose...lower. Since it would be incorrect to say that costs rose low, it is incorrect to say that they rose lower. The correct modifier is less. Eliminate D and E.

In B, it has not clear antecedent. Eliminate B.

C incorrectly compares how the costs rose to how they were. Eliminate C.

The correct answer is A.

Employment costs rose 2.8 percent in the 12 months that ended in September, slightly less than they (Employment costs) did (rose) in the year that ended in the previous quarter.

A clear best communicates the meaning.