fbpx Modifica setari cookieuri

SIMILAR ARTICLES

Eurostat data: Romania managed poorly good times but performed well when came to the end of its rope

Romania had in the second quarter of 2020 the fourth-lowest increase in public debt relative to GDP among the EU Member States compared to the… Mai mult

Government attacked the Mobility Package at the CJEU, arguing that European legislation affects Romanian companies

The Romanian Government notified, on Friday, the Court of Justice of the European Union (CJEU) with three actions in the annulment of the problematic Mobility… Mai mult

Finance Ministry announces payment incentives for budget obligations outstanding after the state of emergency announcement

The Ministry of Public Finance (MFP) proposes to regulate a simplified alternative procedure for granting a payment rescheduling of up to 12 months, for the… Mai mult

IMF improved its forecast for Romania: 4.8% decrease in 2020 and 4.6 % increase next year

Romania’s economy will contract by 4.8% of GDP this year, according to the revised forecast of the International Monetary Fund (IMF), a slightly more optimistic… Mai mult

Romania’s recovery – in WB Report: 2021 indicators compared to starting moment of Covid crisis

The data included in the autumn report of the World Bank “COVID-19 and Human Capital” which brings the forecast for Europe and Central Asia countries… Mai mult

How badly distributed is cost for wages in Romania – country with the largest increase of labour costs in 2016

de Marin Pana 15.4.2017

Romania leads by far among the EU countries with the highest growth of the labour costs, according to the Eurostat data for 2016.

With an increase of + 11.6% (in euro) registered last year, our country is far ahead of Bulgaria (+7.8%) and the Baltic countries – Lithuania (+7.5%), Latvia (+6.4 %) and Estonia (+5.6%).

To note, the cost for wages in Romania almost tripled in November compared to 2004 and rose by 30% compared to 2008, which shows that this competitive advantage from investors’ perspective is steadily diminishing. So far, this trend (beware, excepting the public administration) is comparable to the situation in the BELL group countries, mentioned above (see table).

*

  • Evolution of wage per hour worked in some EU countries (euro, without agriculture and public administration)
  • Year

*

Problem is that we are not among the small countries with the currency indexed to euro (adopted in the meantime in the Baltic countries), but we are closer to the middle-sized economies with currencies that have a floating exchange rate regime, such as Hungary, Poland and the Czech Republic. These countries are a few years ahead of us in terms of economic development.

Therefore, we might need to be aware that the growth rate of labour cost, also a few years back considering the rates comparable to ours, fell in the Central Europe somewhere close to a benchmark of 10% over the last eight years (years that just follow for us, given the economic history scale). Large powers Germany, France and Italy also confirm about how much we can go with the wage increases on a solid base (read in euros).

That, unless there are times coming like the period reported in Spain (within the Eurozone), between 2012 and 2014, or Poland (outside the Eurozone), just last year (!), to prove us that we can run around in circles. Because salaries cannot be systematically increased (and substantially, we would like) whenever the economy grows and in any international conditions.

Organization of costs by sectors – a poor distribution in Romania

We clearly differentiate ourselves from the large majority of these countries not only by the strong growth of the costs for wages but also by the distribution of these costs by sectors. To draw some conclusions, beyond the obvious gaps between us and the developed countries, where the leaders by far are Denmark (42 euros/hour), Belgium (39.2 euros/hour) and Sweden (38 euros/hour), we selected from the last year’s Eurostat data the same countries in the table above.

*

  • Wage per hour worked in the EU countries by types of economic activities (euro, 2016)
  • Year    Business          Industry           Construction    Services          Non-business
  • EU average
  • Eurozone average

*

If marked in green the desired situations in the manufacturing sector and in violet the desired situations in the non-business area, at least in relation to the European practice confirmed to have been successful for the development of these economies, and in red the situations that appear to be abnormal in this context, we can easily see to what we should pay attention and in what areas we should adjust the cost for wages to be successful Europeans.

The experience of other countries suggests two key relations for the proper organization of the cost for wages.

1. The business segment should have costs for wages (usually and implicitly salaries) higher than the non-business segment. Only Romania and Poland, in the group of former socialist countries, and Italy and Spain, by contrast with the Franco-German tandem, DO NOT follow this “rule”. Moreover, and very worrying, we are close to placing the non-business segment at a level of excessively high values in relation to the business segment, which is a likely adverse consequences experiment.

2. Within the business segment, it seems to be useful that the industry to be above and not below the sector average, a phenomenon found only in our case and in the BELL group. Furthermore, the greater this correlation, the clearer the results seem to be for the economy (see the situation of our Italian cousins, whom we resemble the most in terms of cost distribution and therefore they cannot compete with Germans). We are, in terms of percentage, with -7% in manufacturing, at the lowest level even among the BELL countries and the opposite of Germany, which, at a cost six times higher than ours (!) has a growth of 16% in manufacturing.

Mergeți în homepage ›

Publicat la data de 15.4.2017

Lăsați un comentariu


NEWS

New Renault boss: “Dacia is a miracle. It's time for the brand to flourish"

Luca de Meo (foto), the new general manager (CEO) of Renault group, considers that Dacia project proved to be a miracle and that no one… Mai mult

Pentagon transforms Campia Turzii unit into a NATO air hub at the Black Sea

A former Soviet airbase in central Romania could become a hub for US Air Force operations in south-eastern Europe, where the Pentagon is seeking to… Mai mult

Nuclearelectrica shareholders approved to terminate negotiations with Chinese for building reactors 3 and 4 from Cernavoda

Nuclearelectrica's Board of Directors has been mandated to initiate proceedings to terminate negotiations with China General Nuclear Power Group (CGN), as well as legal effects… Mai mult

Renault holds expansion of its plant in Romania, 15,000 jobs cancelled at global level

"Putting capacity growth projects planned in Morocco and Romania on hold" - is one of the measures included in the draft plan of Renault Group… Mai mult

Romania is a net importer of electricity in 2020 as well

Romania imported an amount of electricity of almost 796 GWh in the first month of this year, by more than 36% above what it exported… Mai mult

Shareholders of Galati steel plant promise investments of one billion euros

GFG Alliance has committed to invest one billion euros to upgrade Galati steel plant in order to reduce emissions and increase production. Another EUR 1… Mai mult

Transport Ministry announces it has sent to Brussels the financing request for Sibiu - Pitesti highway

The Transport Ministry, as the Intermediate Body in Transport, approved the financing request for the project "Construction of Sibiu - Pitesti highway", Sections 1, 4… Mai mult

Romania and Juncker Plan: EUR 720 million attracted, of which 35% by Transgaz for BRUA

(The map of investment financed through Juncker Plan, by GDP share. Darker colours mean higher shares) The operator of national natural gas pipelines, Transgaz (TGN)… Mai mult

Top 3 reasons why young people leave Romania

Lack of trust in authorities, corruption and low living standards are the main reasons why young people leave Romania. The data is part of a… Mai mult

IMM Invest Romania – program implementing rules have been published

The Ministry of Public Finance announces that it has issued the methodological norms for the implementation of the Program for supporting small and medium-sized enterprises… Mai mult

Pollution import and car park expansion: comparisons with the other EU states

Romania is the EU country with the fewest cars in terms of the number of inhabitants, according to data recently published by Eurostat. We appear… Mai mult

Government is trying to save budget deficit: reductions in public administration system, cancellation of bonus for harmful conditions, excise duty on soft drinks

The Government is preparing the public for the first measures aimed at avoiding the budget slippage, which would be applied by the PSD-ALDE government. News… Mai mult

Laura Codruta Kovesi remains alone in the race for European Chief Prosecutor

French Prosecutor Jean-Francois Bohnert will be appointed as head of the European Financial Prosecutor's Office, a position for which he was heard on Thursday, 11… Mai mult

Romania - EU country with highest risk of dying in a road accident, Bulgaria is quickly decreasing number of victims since it built motorways

Romania recorded the highest road deaths in the EU also last year, with 96 deaths per one million inhabitants in 2018, almost double the EU… Mai mult

Latest developments in progress at Health Ministry: Differentiated wages based on performance, competitions organised at a regional level not by hospitals

Sorina Pintea announced on Thursday further new changes that will be brought to the functioning of the health care system, including new rules for employment… Mai mult

ANAF changes selection procedure for liquidators. Main changes

The new order on approval and selection procedures for insolvency practitioners is an important step to a very good direction, industry experts say. ANAF is… Mai mult