Analysts: Romania’s government increased wages in the public sector by 23.4 pct in the last year, while pay rises in the private sector are at 11.8 pct

Romania’s government has increased by 23.4 percent the wages in the public sector between June 2017 and June 2018, while pay rises in the private sector are at 11.8 percent, analysts say.

National Institute of Statistics (INS) data showed that Romania’s average net monthly earnings growth rate eased to 14.3 percent year-on-year in June, from 14.4 percent in May and 14.7 percent in April.

However, wages in the public sector have increased twice as fast as wages in the private sector.

“Wage increases in the public sector stood at 23.4% YoY, while pay rises in the private sector are at 11.8% YoY,” ING Bank analysts said in a research note.

“A tight labour market with an unemployment rate near historical lows, labour market frictions, lack of reforms, migration and public wage policy are the main drivers for this wage growth,” the analysts point out.

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The average net monthly earnings rose by 0.6 percent month-to-month, from RON 2,704 (EUR 583) in May to RON 2,721 (EUR 584) – a record high – in June.

But real wages have increased by only 8.4 percent between June 2017 and June 2018, due to high inflation rate (5.4 percent in June, year-on-year).

Romania has the second lowest average wage among the European Union member states, after Bulgaria.