Net earnings see 11.7 pct growth y-o-y but drop against previous month in January 2016

The average net earnings have increased by 11.7 percent in the first month of the year as compared to January 2015, data from the National Institute for Statistics (INS) show. Computer programming, consultancy and related activities registered the highest values (RON 5,113), while accommodation and food service activities stood at the other end (RON 1,163).

Compared to December 2015, net earnings in January were 8.1 percent lower (down RON 171), mainly due to the granting of occasional bonuses during the last months of the year. Gross average earnings stood at RON 2,688 (down 8.3 percent over the previous month).

According to a report by ING’s chief economist, Ciprian Dascalu, monthly dynamic is less relevant to the earnings dynamic, as December includes bonuses. The economist suggests, in turn, to use October 2015 as base of comparison, a data set which does not have any bonus impact. “This January showed an increase of 2.8 percent versus Oct-15, which is the best print since Jan-11, pointing to strong underlying momentum for wage expansion,” the report showed.

Increases in net earnings were posted by real estate activities (up 2.6 percent), computer programming, consultancy and related activities (0.7 percent) and were mainly due to occasional bonuses, production achievements or higher receipts.

Significant decreases were seen across most economic sectors, with a 33.1 percent drop in forestry and logging activities and 30.9 percent in manufacture of coke and refined petroleum products.

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Publishing activities, mining of metal ores, water transport, financial service activities, manufacture of paper and paper products, manufacture of other transport equipment, air transport, printing and reproduction of recorded media, scientific research and development saw decreases between 20.5 percent and 29.5 percent.

Manufacture of computer, electronic and optical products, sewerage, manufacture of tobacco products, manufacture of basic metals, telecommunications, mining of coal and lignite, manufacture of basic pharmaceutical products and pharmaceutical preparations, warehousing and support activities for transportation and other service activities registered drops between 15.0 percent and 19.5 percent.

The private sector wage growth lags considerably behind the public sector, the ING report further adds, with the 19 percent hike due to come into force in May posing competitiveness concerns. However, a possible side effect of the measure could be higher budget revenues, “as it brings to surface anecdotally widespread informal payments above the minimum wages threshold”.

The economist went on to say that double digit growth for net wages is expected throughout the year, amidst coming elections and the announced wage hike “abounding political populism”.

“This is coming in a context of an already elevated underlying inflationary profile versus peers and fast deteriorating external balances. With planned fiscal stimulus of about 1.5 percentof GDP this year, the pressure on NBR to frontload monetary policy tightening is increasing despite fears of potential currency appreciation pressures due to policy divergence versus peers,” the report concludes.

Natalia Martian