SIMILAR ARTICLES

Again -7.7% (!) in industrial production: 6th consecutive month with a negative result

According to data provided by INS, in November 2019 Romania recorded a new alarming decrease in monthly industrial production at the level of the negative… Mai mult

12.6% of Romanian children and young people under 20 live abroad

Almost 600,000 Romanian children and young people aged between 0 and 19 years, that is 12.6% of the total Romanian people in this age group,… Mai mult

Document / PNL Government Program for next year

On Thursday, the appointed Prime Minister, Ludovic Orban, presented to colleagues from the National Office the document that he will submit to the Parliament, which… Mai mult

Ranking of discernment: Spectacular increase in August in the difference between Romania’s other EU countries’ borrowing costs

The long-term interest rate fell below zero in the Eurozone and dropped to only 0.28% on average at the EU level, half as compared to… Mai mult

Tourism balance drops to minus 36%, despite billions of public money that Government pumped into the market

Net costs for the state with holiday vouchers for public sector employees and the VAT cut for tourism will amount to RON 1,878 million in… Mai mult

Cronicile

Labour cost increase by field of activity. Remarks

de Marin Pana , 11.3.2019

Hourly labour costs grew by 13.09% in the fourth quarter of 2018 compared to the same period in 2017, according to data announced by INS. This rhythm is in a slight decline compared to 13.91% recorded in the previous quarter, but above the threshold of 12% set by the European macroeconomic stability requirements, a situation perpetuated since Q4 2016.

Moreover, while at the end of last year the increase in labour cost was about double compared to GDP growth (estimated at 7%), in the last quarter of 2018, a ratio more than triple has been reached, amid the slowdown in the economic growth to just over four percentage points.

An increasing discrepancy between the two indicators raises questions

*

  • Hourly labour cost evolution
  • (Q4 2016- Q4 2018, % compared to the same quarter of the previous year)
  • Quarter
  • Hourly labour cost
  • Quarter
  • Hourly labour cost 

*

And that was before new salary increases came into force, arbitrarily stipulated in a systematic growth pay scale committed for 2022, without the certainty that the growth forecast (already in distress) will be achieved. Practically, the steady growth trend in labour costs generates inflationary pressures and reduces competitiveness.

In the structure by economic fields, there are significant differences in wage evolution, from an increase of more than 30% in health (sent directly to the 2022 pay scale) to a nearly ten percentage point decrease in the mining field.

We present how the labour cost in different fields of the economy, defined according to international norms (see table), has evolved over the past 12 months.

*

  • Quarterly indices of hourly labour cost in Q4 2018
  • (% compared to Q4 2017, adjusted based on the number of working days)
  • Total labour cost
  • Economic activities
  • Health and social assistance
  • Education
  • IT&C
  • Construction
  • Water supply, sanitation and waste management
  • Manufacturing, construction and services
  • Other service activities
  • Public administration and defence; social insurance
  • Transport and warehousing
  • Real estate
  • Manufacturing
  • Hotels and restaurants
  • Retail and wholesale trade, auto repairs
  • Professional, scientific and technical activities
  • Energy, gas and water production and supply
  • Administrative and support service activities
  • Entertainment, cultural and leisure activities
  • Financial intermediation and insurance
  • Extractive industry

*

The public sector has already positioned significantly above the average in the economy, with health and education holding the first two positions in the increases ranking. However, it should be noted that “Public administration and defence; social insurance” segment is positioned slightly below the industry, construction and services group, which is an evolution worth to be welcomed.

Unfortunately, the manufacturing industry, which gives the overall tone in the economy, remained in the second half of the ranking. However, the unbalance between the “real” economy and the steady rise in wages from the public sector (which reached somewhere around the 10% of GDP threshold) and pensions (which will increase significantly during the electoral period at the end of the year) will pose major problems in terms of financing.

We remind that two-digit wage increases 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 about four percentage points in industrial production prices. An advance that will have to be integrated into the commercial chain and is already seen at the shelf.

As far as the labour productivity is concerned, which should be above salary increases, in optimal theoretical terms, better performance in 2017 attenuated in 2018, and official data does not look very good if we relate to the wage advance of more than four times the measured results.

*

  • Labour productivity in manufacturing
  • Year
  • Labour productivity

*

That is why it would be important for 2019 to achieve a more pronounced increase in labour productivity while limiting the wage growth rate to acceptable levels.

A level slightly higher than the economic growth is possible given that the share of labour remuneration in GDP is still relatively low, but forcing the growth in an area competitive environment is not recommended.

Mergeți în homepage ›

Publicat la data de 11.3.2019

Lăsați un comentariu


NEWS

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

Romania loses competition for a seat at UN Security Council. MAE Excuse: Campaign started too late

Romania lost to Estonia in the final vote to get the non-permanent member position within the UN Security Council for the period 2020-2021. On Friday,… Mai mult

Business internationalization / eMAG makes a step to entry five new international markets and targets a business of EUR 2 billion

eMAG hopes to get the opinion of the Hungarian Competition Council over the next two months for the acquisition of Extreme Digital, the market leader… Mai mult

"At a distance from books": 85,000 teachers (one third of educational staff) are graduates of distance learning

Approximately 85,000 teachers are graduates of distance learning (ID) programs, Education Minister Ecaterina Andronescu said at a meeting with school inspectors from Caras-Severin County. The… Mai mult