Eurostatistics is a synthesis based on a set of standardized and harmonized benchmarks for the comparability between countries at the European level (Principal European Economic… Mai mult›
Romania climbed last year on the penultimate position among the EU member states in terms of the productivity of resources in the economy, after Bulgaria,… Mai mult›
Romania’s economy is becoming more and more vulnerable due to the increasing number of businesses that state no revenues, register losses and debts exceeding their… Mai mult›
Hourly labour cost increased by 15.6% in the second quarter of 2018 compared to the same period of 2017 (+ 9.36%, compared to Q1 2018),… Mai mult›
Fiscal Council, about budget amendment: Increase in revenues from VAT and excise duties has no basis
The Fiscal Council announced on Wednesday, the day when the Government adopted the draft budget amendment without the opinion from CSAT, that it considers the… Mai mult›
Important crossroads: Last ones in EU by public sector employees, but next to Germany by industry in gross value added. Where are we heading to?
de Marin Pana , 6.11.2017
Romania ranks last among the EU member states by the share of public sector employees in the total workforce, according to data published by Eurostat for 2016. That, although we registered the highest increase in the percentage of public sector workers compared to 1995, from slightly above 6% to 14% last year. But that is compared to an EU average of almost 24%.
In this context, the decision to freeze public sector employment, except for very well-founded cases, appears to be paradoxical. Especially because we do not excel at the number of medical staff or teachers in relation to the size of the population. Significant increases in public sector wages would be useful, on the one hand, but also affect the possibility of new employment.
Chart – Share of public sector employees in EU:
Truth is that the main problem is not that there are too many public servants but that we have too few employees (more precisely taxpayers), a relatively low productivity of those involved in the direct production processes and besides, their remuneration is below the average national wage, an atypical situation for the Western economies.
It is worth mentioning the penalizing effect at the level of the whole economy of a relative productivity in agriculture that currently is only 40% compared to the one registered in 1995. In simple terms, the share of about 40% of the employed population produced then almost 20% of the gross added value (VAB) included in GDP. Now, the remaining 25% still contribute less than 5% of the VAB.
Based on that, we can argue that there has been a much higher productivity gain in industry (the one that sets the tone across the economy) than in agriculture, due to massive investments in the technological upgrade but also that agriculture cannot be left anymore outside some intensive programs for increasing yields and shifting to forms of local industrialization of the production.
By contrast, the industrial sector (the former pile of scrap blamed in the early 1990s) has ensured us (based on a tradition built with great sacrifices at that time, when we ignored the opposition from Moscow) an honourable position in the EU in terms of contribution to the formation of gross value added in the economy.
Respectively, behind some countries like the ones in Central Europe, now transformed into a “workshop of the West” (the Czech Republic, Slovenia, Slovakia, Hungary or Poland), but right after Germany (the Western state that sets the tone in the EU in terms of development model and ahead of Bulgaria or Lithuania.
Basically, we have a strongly divided Romania between an industry more developed and performing than we think (not that there would not be room for improvement) and an agricultural sector closer to the 19th than the 21st century. Which gives, by the average resulting from this arrangement, social services of equally low quality, especially for those who carry out an activity of high productivity.
It would be interesting to also see what share of the workforce by sector, in the total economy, obtains these results (we will exclude Ireland, where the Eurostat reporting is affected by strong flaws of reporting large production which is obtained in other member states, related to a lower population and, implicitly, lower workforce), compared to an EU28 average of 15.3%.
- Share of workforce employed in industry, in some EU countries
- Countries Share of workforce in industry
In this context, we should emphasize the importance of this economic sector strategically developed during the times of the planned economy, when a specialized workforce was also formed. The results reported by INS show that almost 26% of the VAB (about RON175 billion out of RON 683 billion in 2016) are obtained with 21.7% of the workforce, the one in the industry.
Which means that this key sector is the driver, through the productivity and high-value base, of the whole economy. It also means that, if we look not only to Germany but also to the neighbouring Hungary and Bulgaria, there would still be room for increasing the share in VAB, on the current structure of the economy. Especially that the productivity in the agriculture sector, where even more people are involved, is low.
Thorny problem of Romanian wages in industry: lower than in public sector
It should be noted that ALL our former socialist colleagues that joined the EU have budget revenues far higher than us as a share of GDP, have wages in the industry sector above the national average, and employ more people in the public sector than us. People whom we mostly support, directly or indirectly, through our activity in the industrial sector.
Last, but not least, we should pay attention to a certain way of looking at the formation of the gross added value, more profitable in the trade and services sectors but much more solid in the industry sector. Here we are dealing with totally different approaches.
Although money is fungible, which means it adds to the same amount in the formation of GDP, it is not quite the same at a qualitative level, for the stability and strength of the economy, which afterwards translate into public services and the standard of living induced by the quality of social services.
That is, we have the Germans in the EU (who set the tone for the former socialist countries around) and the Northern countries, which prefer to contribute a relatively high added value to industrial products and are not very keen to pay much in the trade and services sectors, versus the Latin populations (French or Spaniards or Italians, who tend to add a slightly lower value to tangible results and slightly more to services and trade.A kind of as much food as possible versus as much entertainment as possible, a phenomenon well described by the prices of transfers in the football domain. Where the largest amounts are spent in Spain and Italy but the result in terms of quality/price ratio is by far higher in Germany.
Now, it depends on us how much we want to increase the quality of state-provided services based on an economy with real industrial force and towards what kind of system we move.
Lăsați un comentariu
Finance Ministry wants to change rules for insolvency: state could also register claims after procedure is launched
Companies’ possibility to avoid paying creditors (and in particular the payment of tax receivables) simply by declaring their insolvency would be drastically limited, according to… Mai mult›
Prime Minister Viorica Dancila, European Commissioner Phil Hogan and Agriculture Minister Petre Daea The swine fever epidemics in Romania has an impact on neighbouring countries,… Mai mult›
Infrastructure projects lost EUR 41.5 million following budget amendment. In what projects cuts have been made
Despite the assurances that Dancila government is concerned and intensely working on the road infrastructure projects, at the budget amendment the Transport Ministry has cut… Mai mult›
Leaders of the political groups in the European Parliament have decided to adopt in October a resolution on the rule of law in Romania. The… Mai mult›
"Romania's buffers have deteriorated, the country is less prepared for a negative shock" - IMF will reduce economic growth estimate
Romania will be less prepared if the economy is hit by a negative shock, as the structural deficit has been deteriorated - IMF representative for… Mai mult›
Premiere: CSAT asks Finance Ministry to amend amendment - session suspended until Government comes with a draft that does not affect budgets of secret services
President Klaus Iohannis suspended on Tuesday the CSAT meeting for discussing the budget amendment, as there was no consensus on the budgets of institutions from… Mai mult›
Rating agency Standard & Poor's confirmed on Friday ratings for long- and short-term debt in foreign and local currency to "BBB-/A-3" with a stable outlook,… Mai mult›
"Romania’s presidency seems to fail before it starts": Gunther Krichbaum - reaction to anti-German violent statements made by government officials
Romania's presidency of the Council of the European Union seems to fail even before it starts, warns Chairman of the Bundestag European Affairs Committee Gunther… Mai mult›
OMV Petrom sells a quarter of its deposit perimeters to finance potential gas extraction from Black Sea
OMV Petrom (SNP) will sell another 50-60 perimeters from its portfolio of about 200, as most of the company's investments focus on operating the Black… Mai mult›
The number of people who left the country for more than 12 months continued to grow last year, reaching almost 220,000 people (which exceeds the… Mai mult›
The Minister of Justice stirred up the fury of magistrates. 181 prosecutors and judges sent him a letter criticizing Tudorel Toader for his statements about… Mai mult›
MApN announced on Wednesday that Mihail Kogalniceanu Air Base 57 had a ceremony occasioned by the handing over of the Enhanced Air Policing between the… Mai mult›
The Ministry of Public Finance makes a "comparative analysis" of the Tax Code and the Tax Procedure Code with a view to applying a new… Mai mult›
Romania, Hungary and Slovenia are the member states that recorded the largest increase in the share of public sector employees in the total number of… Mai mult›