In the fall of 2023 and the spring of 2024 Romania was EU’s champion in terms of increased labor cost per hour, with an increase rate of 16.4% per total activities, according to data gathered by Eurostat. The next biggest increase was recorded in Bulgaria, by 15.8%.
It should be noted that labor cost increase stands gradually higher above the rate of inflation, which fell below 6% this year, which points to a significant actual increase in terms of income.
Labor cost increase (economy total) (% against previous years’ quarters)
Labor force grows more expensive in the non-business (public employment) field
The advance of labor costs in Romanian in the first quarter of 2024 is due to the 15.9% (yoy) increase of the labor cost increase per hour in the field of business, while labor cost increase in the non-business field recorded a hike of 18%.
The cost of labor (adjusted to the number of working days) increased in all economic activities compared to the same quarter of the previous year.
The most significant hikes in labor cost per hour were recorded by the fields of education (33%), hotels and restaurants (27%), transportation and storage (21%) and constructions, respectively (20,5%).
The increase in the field of education was caused by the income increase for teaching staff over 2023, a fact reflected by statistics.
On the other hand, the lowest increases were registered in the fields of extractions (8,7%), health and social assistance (10%), and support and administrative services activities, respectively (10,7%).
Comparatively, the hourly labor cost in the European Union went up 5.5%, while the increase in the Eurozone stood at 5.1% in the first quarter of 2024 against the similar period of 2023.
Labor cost goes up, but productivity drops The problem of increasing labor costs resides in it being caused by the constant drop in productivity over the past year.
The first three months of this year marked an acceleration in the decline of labor productivity, although the rule dictates the order be reversed: first the productivity rises, then follows the increase in income.
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