Higher wage bill. Romanian employees received record wages last year totaling EUR 80 bln

The total amount of wages paid by the Romanian employers rose last year by 17 percent compared with 2017, up to EUR 80.3 billion, an all-time high, mainly due to minimum wage and public sector wages’ increases.

In 2017, the amount of wages was EUR 68.5 billion, and this means that the total wage bill rose by almost EUR 12 billion last year, according to BR calculations based on Eurostat data released on Thursday.

The wage bill registered in 2018 is equivalent with 39.8 percent of GDP, up from 36.5 percent in 2017 – a level much lower than the EU average of 47.7 percent of GDP.

Compensation of employees is defined as the total remuneration, in cash or in kind, payable by an employer to an employee in return for work done by the latter.  In particular, it also includes social contributions paid by the employer, according to Eurostat.

Many economists expect wage increases to slow down in 2019, due to high fiscal constraints.

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In December, Romania’s average net monthly earnings rose by 12.5 percent year-on-year up to RON 2,957 (EUR 636) on end-year bonuses.

Real wages increased by only 8.9 percent between December 2017 and December 2018, due to high inflation rate (3.3 percent in December, year-on-year). The gross average monthly earnings increased to RON 4,938 (EUR 1,061) in December.

Since the beginning of last year, the social security contribution and the social health insurance contribution paid by the employer were transferred to the employee in Romania, and the effect was a sudden surge of the gross wages in January 2018.

The highest net monthly earnings were recorded in December in the IT sector (RON 6,888, EUR 1,480), and the lowest in accommodation and food service activities (RON 1,657, EUR 356).

However, following the rapid increase in earnings registered during the last couple of years, Romania is now close to Hungary or Latvia in terms of average net earnings.

A recent BR Analysis showed that the highest wages in Romania are in Bucharest and four counties (Cluj, Sibiu, Ilfov and Timis), exceeding EUR 600 per month on average, while in almost half of the country, the average net earnings are bellow EUR 500.

The high wages are concentrated in only five areas of Romania: the Capital city and its surroundings (Bucharest-Ilfov), the three major regional centers from Transylvania, Banat and Moldova provinces (Cluj, Timisoara and Iasi) and Southern Transylvania (the highly urbanized and industrialized counties of Sibiu and Brasov).

At the opposite end of the scale, in 19 out of the 42 counties of Romania (including Bucharest), net monthly average earnings are still below EUR 500.