BNR made a thorough analysis of Romania’s status in terms of real convergence with Western economies. A precondition for adopting the euro, in line with… Mai mult›
Keeping the national currency under a controlled float exchange is a way to optimize the sustainable economic growth towards getting closer to the West but… Mai mult›
The largest share of taxes in the natural gas price structure for households has been recorded in Denmark (55% of the price), the Netherlands (53%),… Mai mult›
2018 budget – official draft: Ministry of Finance counts on a 5.5% increase and an exchange rate of 4.55 lei/euro. Prime Minister Tudose has doubts
The state budget for 2018 drafted by the Ministry of Public Finance (MPF) counts on a decline in the economic growth only to 5.5% in… Mai mult›
European Semester 2018: Romania follows a pro-cyclical fiscal policy, structural deficit went up to 2.3%, compared to MTO target of 1%
The European Commission (EC) has determined that Romania has not taken efficient measures to “correct its significant deviation from the adjustment plan to achieve the… Mai mult›
de Marin Pana 4.1.2017
Romanians’ purchasing power returned to the benchmark set for October 1990 with the accession to the European Union. From a level of 93.5% in October 2006, this indicator climbed to 109.6% in October 2007 and exceeded the limit of 160% in October 2016.
Therefore, in the ten years since receiving the status of EU citizens, Romanians’ real wages increased by about 70%.
Called real salary, it gives the ratio between the increases in wage and prices, to get an accurate picture of the power to purchase goods and services.
October 1990 has been set as a reference month for an obvious reason, as it is the last month preceding the price liberalization that took place on 1 November 1990, and for a less obvious reason as well, as it is the month considered in the official statistics representative for a certain calendar year, which is why the National Statistics Institute keeps a dedicated record.
- Evolution of the purchasing power between 2006-2016 (%, October 1990 = 100%)
- Real wage
- Increase (%)
- Labour productivity
- Wage/productivity gap (%)
- * Monthly average for the first three-quarters of 2016
The increase of the Romanian employees’ incomes has been made, of course, based on the growth of labour productivity, but the statistics show that most of the increase in purchasing power took place “by influence”.
That means by the tendency of bringing some incomes, very low for the work done from the perspective of the European practice, closer to the EU practice and very likely for creating some capacity to absorb imported products. Romania is also a market with great potential, due to the relatively large population and the very low starting point of the purchasing power.
Specifically, to a 70% increase in the real wage, the corresponding increase of the cumulative labour productivity (in the industry, as this is where solid calculations can be done to show the general trend in the economy) over the last ten years was only about 30%. The remaining 40% we can consider as start-up aid within the EU countries family.
It is very difficult to estimate what would have happened if we had missed the moment of 2007 and then we would not have caught the community train because of the crisis but it is certain that we would have had not even remotely the same purchasing power and the euro/leu exchange rate would not have benefited from the stability trend generated by the development of investments from the EU countries.
More important, though, for the current situation, is that the gap series between the wage and productivity growth reveals a major problem. Beyond the ten percent bonus from the accession year, it can be quite clearly shown that the extravagances of 2008 and 2009 have been almost entirely cancelled in 2010, and the pairs 2011 – 2012 and 2013 – 2014, having similar pluses and minuses, annul each other.In this context, the increases from 2015, not adjusted yet, and especially the absolute record from 2016, when we saw a real wage increase by more than 13%, against the background of a one percent decrease in the labour productivity, seem quite bizarre. Improving the economic stability at 13 of the 14 European indicators met and getting inflation under control took place under the effect of the continuous adjustments between productivity and purchasing power.
After ten years within the EU, we should have already learned what in English sounds like that: “There ain’t no such thing as a free meal”. Or, increased purchasing power without significant increase of productivity is harder to find anywhere in Europe, with the known exception of Greece that received the bill.
Lăsați un comentariu
Vitruvian Partners investment fund acquired about 30% of Bitdefender from Axxess Capital and becomes the second largest shareholder in the company, valued at over USD… Mai mult›
Split VAT at the Chamber of Deputies: Dilemmas of all kinds. Thresholds for outstanding payments have increased 10 times, Budget Committee to resume debates on Monday
The Budget Committee of the Chamber of Deputies has increased ten times the threshold of the outstanding VAT obligations from which companies will automatically be… Mai mult›
The Competition Council started an analysis, following the request of the Ministry of Agriculture, to establish the causes of the accelerated food price increase this… Mai mult›
Liviu Dragnea at the exit of the DNA headquarters where he was expected by a group of supporters and another of protesters. DNA prosecutors have… Mai mult›
Rompetrol saga, chapter about money: Government asks KazMunaiGaz to pay the historical debt and demand settlement of case in court
The extension of the memorandum between the Romanian state and KazMunaiGaz, the owner of the Rompetrol Group, will be discussed only after the company's historical… Mai mult›
"Not only we have not died, we rank third in the world" - Government approved second budget amendment, deficit of 2.96% of GDP
The second budget amendment this year has been adopted at the government meeting on Wednesday. As the Finance Minister assures, this amendment is "positive", the… Mai mult›
Mayors accepted on Tuesday in the negotiations with Prime Minister Mihai Tudose and several cabinet members, the promises made by the government officials to partially… Mai mult›
The establishment of own companies by local administration to manage the services at the local level is worrying for the competition authority, Bogdan Chiritoiu, President… Mai mult›
The ruling coalition registered with the Chamber of Deputies on Tuesday the draft amendments to the three important laws for the judicial system: Law 303/2004… Mai mult›
Negative opinion and analysis of Fiscal Council on tax changes. "Tax package" costs 5.2 billion, not planned at all
The Fiscal Council issued a negative opinion on the proposal to amend the Fiscal Code, according to the opinion published Friday on the institution’s website.… Mai mult›
The Economic and Social Council, a consultative body of the Parliament and the Romanian Government, issued a negative opinion on Tudose cabinet's draft amendment to… Mai mult›
Romania ranks 45th in the Doing Business 2018 ranking by the World Bank (WB), with a total score of 72.87 points, right under the Republic… Mai mult›
Regarding the EUROSTAT release on Romania’s budget deficit in the second quarter of 2017, the Ministry of Public Finance (MFP) has issued a press release… Mai mult›
Trade Winds: US broadens economic cooperation base with Romania: most US companies coming to Bucharest are SMEs
SMEs are the most numerous among the over 100 American companies participating in the Trade Winds mission launched in Bucharest by the US Department of… Mai mult›
Shareholders of Transgaz national gas carrier will provide information on the conclusion of an EUR 50 million loan agreement with the European Investment Bank… Mai mult›