SIMILAR ARTICLES

What Romania exported and imported in 2017. Some observations

According to INS data, last year, the automotive industry was the driver of Romanian exports, with about EUR 9.6 billion, of a total of EUR… Mai mult

EU tax harmonization plan may have negative effects on Romania. Bucharest – totally unprepared

European authorities are taking increasingly decisive steps towards tax harmonization of the 27 systems remained in the EU, but the new measures may have negative… Mai mult

Beware of who bears the burden: Atypical arrangement of wage cost increase in Romania in 2017

Romania ranked first in the EU in 2017 by the labour cost increase, according to data published by Eurostat. With an increase of +15% in… Mai mult

A ruthless table: Number of Romanians who obtain citizenships in other EU countries is growing more than those who run away from dictatorships

The number of Romanians who obtain citizenships in other EU countries keeps growing. Only in 2016, 29,700 people swore to another member state, compared to… Mai mult

Romania fulfils again stability requirements (a near-miss) in terms of housing price increase

According to the revised data published by Eurostat, Romania has fulfilled again (a near-miss) the macro stability requirement set at the European level for the… Mai mult

Real salary goes “down to Earth”. Health and education are still Cinderella

de Marin Pana , 16.4.2018

The average gross salary earning announced by the INS for February 2018 was 4,128 lei, 0.4% lower than in the previous month. Paradoxically, the net average nominal salary earning increased slightly (+ 0.1%) to 2,487 lei, due to a change in the structure of the income similar to money earnings and included in the salary earnings.

In real terms (adjusted with the inflation registered), the purchasing power of the average wage decreased by 0.2% compared to January 2018. At the same time, the real reference salary (the purchasing power of the money earned, expressed as an index related to the one registered October 1990) dropped compared to the previous month from 180.9% to 180.6%.

Net average salary maintained around EUR 533 at the average exchange rate of March 2018 (the effective month of payment), almost the same as in November 2017 (when there were no significant seasonal variations following the bonuses paid at the end of the year). Basically, wages in euro have maintained at the same level for almost half a year.

After decreasing in January to the minimum of the last few years (only + 3.5%), the purchasing power advance compared to the same month of the previous year returned to a closer value to the economic growth, much the pace recorded in 2017. The explanation does not come much from the decrease in the pace of wage nominal increases (+ 11.2%) but from the significant increase in the value of the inflation index (4.72%).

*

  • Evolution of average salary earning and purchasing power over the last 14 months
  • Month  Net average salary     Euro/RON       Net average salary     Purchasing power (%,12 months)

*

Noteworthy, the values in euro pcs express the purchasing power of wages in Romania for the EU average prices, which ensures the technical comparability in terms of living standards.

In other words, EUR 533 earned in the country equal EUR1,063 in a Western country where prices are at the EU average (closest to this situation would be Italy).

Salaries in the national economy return to the economic growth reality

The beginning of 2018 has brought the inevitable situation of the salary growth in real terms getting close to the GDP growth (recently reset at 6.9% for 2017). Exceptions are constructions for reasons related to the seasonality of this activity and the salaries getting toward the level imposed by the new legislation. Noteworthy, ancillary activities related to the production have benefited to some slightly larger extent from the wage increases.

Encouraging to some extent, the increase in the manufacturing sector in February slightly rose above the average increase at the national level and was, not by chance, the closest to the GDP growth rate (both in real terms). Following the bonuses paid at the confluence of the years, the financial intermediation and insurance sector resumed a modest rate of income growth.

It should be noted that the largest percentage increases of incomes in the public sector were in the public administration. Respectively 15.6% in nominal terms and 10.4% in real terms, following the possibility of autonomous increasing the salaries in the administrative-territorial units, but also the increases at the central level.

*

  • Distribution of salary nominal increases by sectors between January 2017 and January 2018
  • Sector Salary February 2017 Salary February 2018 Change
  • Construction
  • Public administration, defence, etc.
  • Transport
  • IT&C
  • Trade
  • Manufacturing industry
  • National average
  • Hotels and restaurants
  • Financial intermediation and insurance
  • Health
  • Education

*

Contrary to the public discourse and against the trend of expectations created among some categories of state employees representing more than half a million people, health and education were seen in February 2018 as the “Cinderella” of the economic growth. Moreover, teachers and support staff have “succeeded” the poor performance of being below the national average.

Manufacturing and transport are the only areas, otherwise below the national average in terms of payment value, where increases in the purchasing power appear justified in relation to the 2017 economic result. With the mention that the manufacturing industry has not yet exceeded the critical threshold of 90% of the national average that is also much below the European practice.

These developments explain to a large extent the protests in these sectors and will be remedied as measures of adjusting the salary increases will come into effect (sooner for the health sector), but the effects will only be seen in the March data, with the effect in April.

Mergeți în homepage ›

Publicat la data de 16.4.2018

Lăsați un comentariu


NEWS

Industrial production, up 7% in first two months of 2018, compared to the same period of last year

Industrial production (gross series) was up 7% in the first two months of 2018 compared to the same period in 2017, following the growth in… Mai mult

Deloitte study: Romania vs. EU - Tax rules applied to losses from selling bad loans

Deloitte Romania, at the request of the Romanian Banking Association, conducted a study for analysing the tax treatment of the sale of receivables and the… Mai mult

Transgaz, favourite to take over Greek natural gas transport operator

The US and the EU support Transgaz-Reganosa (Spain) offer to take over the Greek natural gas transport operator DESFA, for geopolitical reasons, the Greek media… Mai mult

Workforce (i)mobility: Unemployed young Romanians are not willing to move to another locality for a job

Romania has one of the highest percentages of young unemployed people who would not leave their hometown to find a job (either in the country… Mai mult

Unions: State will pay detainees between EUR 370 -550 million

Total compensation that the state will pay to detainees who have been imprisoned in improper conditions will be between EUR 370 million (in the case… Mai mult

Schweighofer sells forest domains owned in Romania and only keeps processing activities

Schweighofer Group, one of the European leaders in wood processing, announced on Monday "a strategy change": it sells its subsidiary Cascade Empire S.R.L. (Cascade Empire)… Mai mult

Dancila government has established "Commission for Preparing Changeover to Euro". Another committee has been already doing the same thing for a year and a half

On Wednesday, the Government adopted an Ordinance aimed at establishing a commission for preparing the timetable for Romania's accession to the single European currency. Prime… Mai mult

Mangalia Shipyard: Agreement between Ministry of Economy and Damen. Dutch buy Daewoo shares, give state 2%

The state has reached an agreement with Damen Shipyards Group after blocking for several months the takeover by Dutch company of Daewoo's shares at Mangalia… Mai mult

CCR judges are no longer willing to participate in MCV assessments

The President of the Constitutional Court (CCR) has communicated to the European Commission (EC) delegation the fact that "the Court plenary expressed its wish not… Mai mult

Five priorities of the Coalition for the Development of Romania presented to Dancila government

Representatives of the Coalition for the Development of Romania (CDR), an initiative of the Romanian business community coordinated since the beginning of this year by… Mai mult

Romania to host regional centre for endowment of Black Hawk helicopters for Central Europe

Romaero and American company Sikorsky, part of the Lockheed Martin group, have signed an industrial partnership agreement that will lead to the establishment of a… Mai mult

State-owned companies forced to participate in public tenders

The Government approved on Thursday a memorandum that includes a series of measures targeting publicly owned or controlled companies. Basically, the document forces the state-owned… Mai mult

Country Report - European Semester: Romania risks a tough economy landing at change of cycle, because of growth model

"In the absence of structural reforms and fiscal consolidation, Romania's strong economic growth risks creating the conditions of a tough landing," in case of a… Mai mult

Governance and Congress: Prime Minister Dancila appointed PSD Vaslui and Neamt leaders’ sons as state secretaries

Prime Minister Viorica Dancila, who is aspiring to the position of PSD executive president, promoted the sons of PSD Vaslui and Neamt presidents to government… Mai mult

Monopoly on natural gas market in Romania: Interests supported by deputy Iulian Iancu push Romania to an open conflict with European Commission

The European Commission will sue Romania at the European Court of Justice if the Parliament in Bucharest adopts the amendments to the Emergency Ordinance 64/2016… Mai mult