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Attention, manufacturing industry – ranks last in terms of increases: Record average salary in March. Net 581 euro and 1,157 euro in terms of purchasing power

de Marin Pana , 14.5.2018

 

The national gross average salary announced by the INS for March 2018 was 4,488 lei, 8.7% higher than in the previous month.

Net nominal average salary increased at the same pace and reached 2,704 lei not only as a result of the significant increases in the healthcare sector (+ 22.3% compared to February) and education (+18.4%) but also due to the quite consistent advance in construction and financial intermediation fields.

In real terms (adjusted with the inflation), the purchasing power of the average wage increased by 8.4% compared to February 2018.

At the same time, the real reference salary (the purchasing power of the money received expressed as an index related to the purchasing power in October 1990) increased significantly compared to the previous month, from 180.6% to 195.7% and is heading towards the threshold of 200%.

Net average salary reached a record high of 581 euro at the average exchange rate of April 2018 (effective month of payment), which even surpassed the most recent month when the incomes went up due to the context, following the bonuses paid before Christmas (565 euro in December 2017).

After the decline in January to the minimum level of the last few years (only + 3.5%), the advance of the purchasing power compared to the same month of the previous year returned to a two-digit figure, similar to the one in October 2017. Significantly above the economic growth (6.9% in 2017 but estimated to have a loss of speed in the first quarter of 2018).

It is noteworthy that in February, the value of the purchasing power growth was 6.2% compared to the same month of the previous year, the same as the increase in labour productivity in 2017, which is sustainable according to the theoretical relationship that allows to sustainably maintain the real income growth over time.

*

  • Evolution of national average salary and purchasing power over the last 15 months
  • Month Net average salary     Euro/leu           Net average salary     Purchasing power

*

It is noteworthy that the values in euro from the last column indicate the salary purchasing power in Romania at the EU average prices, which ensures the comparability in terms of living standards. By benefiting from the euro/leu exchange rate stability (even its slight decrease in the salary payment month), the amount of 581 euro earned on average at the national level is equivalent to 1,157 euro received in a country where prices are at the EU average.

Increases by fields of activity – healthcare ranks first

The end of the first quarter brought, as a first for the salary increases in Romania, the healthcare sector on the first position in terms of growth rhythm (+ 28% in nominal terms and almost + 22% in real terms) and its positioning significantly above the national average (126%), as it is normal in the developed economies.

Unfortunately, the sector average (increased especially by bringing forward the increases projected for 2022) concealed some inequities in the distribution of increases and even decreases for certain categories of staff, decreases that have been corrected only recently, but will only be visible in the coming months (what’s done is done in April).

Based on some natural developments related to the evolution of labour productivity but unpleasantly transposed by the bottom position within the national economy (although the growth rate was reasonable in relation to the economic performance), the manufacturing industry dropped again compared to the national average, to only 88% of that.

*

  • Distribution of nominal salary increases by fields of activity between March 2017 and March 2018
  • Fields
  • Health
  • Construction
  • Education
  • Financial intermediations, insurance
  • Public administration, defence, etc
  • Average in economy
  • IT&C
  • Transport
  • Trade
  • Hotels and restaurants
  • Manufacturing

*

Surprisingly, the financial intermediations and insurance sector posted a significant rhythm of the income growth (+ 17.1% in nominal terms and 12.7% in real terms after the nominal increase that was also 12.7% compared to the previous month).

On the second position in the ranking of salary increases was the construction sector, where the average salary exceeded the threshold of 2,000 lei per month (2,020 lei compared to only 1,670 lei 12 months ago).

After having previously recorded the largest percentage increases of incomes in the public sector, public administration has turned in to the national average in terms of growth rhythm. Nevertheless, it remained by absolute value at a level 23% higher than the level of health sector (4,179 lei compared to 3,408 lei) and 55% above the national average.

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