Double digit growth for wages in December 2015

Newsroom 08/02/2016 | 14:00

Net wages registered a 10.2 percent increase in December 2015 over the previous month, while the yearly rise stood at 13.3 percent, according to data released by the National Institute for Statistics (INS). The gross nominal earnings stood at RON 2,930, also 10.2 percent higher over November 2015.

With average net earnings standing at RON 2,114 (up by RON 196), the highest were recorded in manufacture of coke and refined petroleum products (RON 5,633), while the lowest in accommodation and food service activities (RON 1,165).

Domains posting the highest hikes over November 2015 were forestry and logging (43.9 percent), oil refining and mining activities, water transport and publishing activities (between 35.5 and 40 percent) and in transport, warehousing, manufacture of paper and paper products, financial service activities, manufacture of other transport equipment (between 21.5 and 29.5 percent).

Public sector wages were increased by 10 percent, excluding the ones in health and education, as they had previously benefited from pay rises. Per sectors, public administration posted a 10.7 percent increase, education a 9.4 percent rise, while health and social assistance wages went up by 4 percent.

 “Wage hikes do not bode well for Romania’s long-term competitiveness if they are not accompanied by structural reforms in relevant areas like education or transport infrastructure, which would boost productivity. The tricky issue is that while the current technocrat government might aim for such reforms, it has to balance the politicians interest to act in favour of populist policies ahead of the late 2016 general elections. As such, we feel the risks are skewed for an even faster average wage increase this year, as the Parliament might even push for new pay hikes in the public sector or more promises on the minimum wage. Diverging wage trends from productivity gains is likely to keep underlying inflation under upward pressure, from levels that are already much elevated versus peers,” concludes Ciprian Dascalu, chief economist with ING Romania.

According to ING Romania representatives, such interventions that lead to higher salaries in the private sector eventually lead to higher unemployment, especially in countries with low levels, such as Romania (6.7 percent).

Natalia Martian

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