SIMILAR ARTICLES

Alan Duncan / We cannot allow our societies to continue to be attacked and undermined

Global security is under threat. The system of international rules that has kept our citizens safe and our societies prosperous since the end of the Second… Mai mult

Q2 / Average monthly income per capita in Romania has risen to nearly RON 1,600: Changes in redistribution of family budget

Data published by INS for the second quarter of 2018 show that Romanians’ monthly incomes have reached nearly RON 1,600 per person. They were RON… Mai mult

Current account deficit flickers to red on dashboard

According to the data released by Eurostat, Romania’s current account deficit exceeded, in the second quarter of the year, the threshold of five percentage points… Mai mult

Strategic chemical industry: Romania, on top in import increase and ranking last in EU in terms of increase in exports outside single market

Data published by Eurostat show that Romania recorded the second highest annual growth rate in imports of non-EU chemicals from 2007 to 2017 (13.1% per… Mai mult

Economic growth in the pocket: Current accounts vs. saving accounts – 64% to 4.5%

  Rising incomes have fuelled consumption and, implicitly, the economic growth in recent years, but not the savings. Although a large proportion of the population… Mai mult

Increase of labour cost, triple compared to GDP growth

de Marin Pana , 11.6.2018

The hourly labour cost increased in the first quarter of 2018 by 12.72% compared to the same period in 2017, according to the data announced by INS.

It is a decreasing pace from a level of 14.29% recorded in the previous quarter, related to which the increase was relatively small (only + 1.42%), but above the 12% threshold set by the European requirements for macroeconomic stability.

Moreover, while the increase in labour cost was about double at the end of last year compared to the GDP growth (for now, estimated at 6.9%), in the first quarter of 2018 there was a three times ratio in the context of the slowdown in the growth economic growth to only four percentage points. The mismatch occurred between the two indicators raises questions.

And that, before new wage increases in the health sector are to entry into force, outpaced at the level of the pay scale planned for 2022. Which shows this labour cost trend is unsustainable, generates inflationary pressures and reduces competitiveness.

In a structure by economic sectors, there are considerable differences in salary increases. We present you the rhythm of labour cost increases in various economic sectors, structured according to international norms (see table).

*

  • Quarterly indices of hourly labour cost in Q1 2018
  • (% compared to Q1 2017, adjusted by number of working days)
  • Education
  • Construction
  • Public administration and defence; social security
  • Health and social assistance
  • Arts, entertainment and recreation
  • IT&C
  • Hotels and restaurants
  • Real estate transactions
  • Manufacturing, construction and services
  • Water supply, sewerage, waste management
  • Other service activities
  • Transport and warehousing
  • Professional, scientific and technical activities
  • Manufacturing
  • Administrative services and support services
  • Retail and wholesale trade, auto repairs
  • Energy, gas and water production and supply
  • Financial intermediations, insurance
  • Extractive industry

*

As was readily anticipated, the public sector has already positioned significantly above the average in the economy and covers three of the top four positions in terms of growth. Because of the advance in the national minimum wage and the lack of workforce in the sector, the constructions were interfered with this ranking.

This structure of cost increases in the economy, with those inherently paid from taxes collected from “productive” activities, will be increasingly difficult to support, as the revenue collection to the public budget shows it cannot keep the pace with the rhythm of increase in salaries and pensions (which have not been increased yet and will receive a 10% increase planned for the middle of the year).

We remind that two-digit increases in wages are rare in a settled economy. The share of wages in the cost of products has already led, by way of salary increases, to an advance of more than four percentage points in industrial production prices. An advance that cannot be accommodated within the trade chain and that can already be seen, including at the shelf.

It should be noted that there are two sectors where wage growth was well below the average in the economy, only about five percentage points in the energy, gas, water production and supply and about three percentage points in the financial intermediation and insurance sector. As well as one that recorded the only decline (more than 5%!), the extractive sector.

Prior to these double-digit wage increases for the vast majority of the economic activities, there was a reserve (about to end) from the relatively low level of the share of the economic outcome attributable to employees, compared to the practices of Western economies. It is a rapidly exhaustible resource that can no longer be used in the years to come.

Fortunately, we resumed a robust industrial labour productivity in 2017 (the benchmark for the entire economy, because this is the only sector where it can be accurately calculated) after four years of consecutive cuts and after it had slightly entered the negative range in 2016:

*

  • Labour productivity in the manufacturing sector
  • Year
  • Labour productivity

*

Unfortunately, the trend for the first three months of 2018 is not at all encouraging, and the value estimated for March reached almost zero.

Therefore, it will be increasingly difficult to accommodate wage increases in the public sector and pension increases without a revitalisation of the labour productivity to more consistent growth rates.

Mergeți în homepage ›

Publicat la data de 11.6.2018

Lăsați un comentariu


NEWS

Cluj-Napoca - only city in Romania that receives European funds for innovative projects

Only Cluj-Napoca is among the 22 European cities that will receive financing from the European Regional Development Fund (FEDR) for innovative solutions in addressing urban… Mai mult

Prime Minister Dancila dismissed 13 of 15 civil society representatives from Economic and Social Council. They were blocking legislation that did not gathered all opinions

Prime Minister Viorica Dancila has replaced 13 of the 15 civil society representatives in the Economic and Social Council (CES). Following a decision published on… Mai mult

West Quadrilateral / Four counties joined to directly access European money for major infrastructure projects

From right to left: Gheorghe Falca, Nicolae Robu, Ilie Bolojan. Emil Boc, Mayor of Cluj Napoca, misses Four mayors from the West of the country… Mai mult

Chamber of Deputies / PSD loses UDMR’s support for amending Offshore Law, draft returns to committees for a week

The plenum of the Chamber of Deputies decided on Wednesday to resend the Offshore Law to committees after a seemingly surprising request of UDMR leader… Mai mult

Government amended insolvency law. Guarantees given by Minister Teodorovici

The Government adopted on Thursday the draft Emergency Ordinance for amending and supplementing legislation in the field of insolvency, which provides among other things for… Mai mult

Romania ranked 7th in EU in terms of renewable electricity

Unlike the vast majority of the economic areas, in which we are at the bottom of the European ranking, Romania succeeded to rank 7th by… Mai mult

Resounding failure of PSD lobbying action in Brussels

There are clear signs that the lobbying action launched by the ruling coalition in Brussels in favour of the government in Bucharest will end with… Mai mult

MFP: Romania does not endorse a separate budget for Eurozone and rejects the idea of ​​taxing financial transactions

Romania does not endorse a separate budget for Eurozone and rejects the idea of taxing financial transactions, Minister of Public Finance Eugen Teodorovici said after… Mai mult

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

Phil Hogan: Swine fever in Romania has an impact on neighbouring countries and EU trade in pigs

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

European Parliament have decided to adopt in October a resolution on the rule of law in Romania

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