Opinion | Sorina Faier: Private versus Public Wages

Mihai Cristea 03/06/2021 | 14:42

Unfortunately, there are very big differences between the private employees’ wages of the same seniority and specialization. In multinationals, there are striking differences between the salaries of tenured employees and new ones, both having the same level of expertise, age, etc.

By Sorina Faier

 

Many times a tenured employee’s wage is much lower than that of a new one. And this happens because pay raises are very low from one year to another if one remains at the same employer. Studies show that the average ranges between 5% to 7% per year, which means that it barely covers inflation.

Frequently, an employee changing jobs every 2-3 years has a wage 20-50% higher than the one who has been working for over 10 years in the same company. On the other hand, loyal employees are better praised by their employers than job hoppers.

Multinationals should bring wages to the same level, especially when their employees prove to be loyal and, if they also achieve the targeted results, they should be rewarded accordingly. A new employee, no matter how skilled, needs to go through an accommodation period until being productive and achieving their targets.

Multinationals should always be aware of the financial margins on the market using as an indicator the exact wage studies made by specialists. Annual performance reviews for all employees should align salaries. Of course that financial benefits are confidential, but most of the time the employees exchange information and this is how they get into conflicts, become demotivated, or search for a new employer who pays better.

Definitely, there are also companies accurately assessing both their new colleagues and the tenured ones, and, depending on the KPIs, they offer correct salaries to all.

 

As regards the average state wage, this has always been over the one from the private sector, but, in the last years, the difference between them has been increasing dramatically.

According to the latest data communicated by the National Institute of Statistics (INS), the highest state gross average wage is in the area of public administration and amounts to lei 8,474 per month.

The National Commission for Strategy and Prognosis (CNSP) forecasts a gross average wage of lei 7,141 for 2021, and the gross average wage in the private sector will be of lei 5,078.

Salaries in the state sector do not have much to do with the economic reality, performance indicators, but to the politician’s responsibility. And we have seen that many times, this responsibility does not exist, and many pay raises or public expenditures are not sustained by reality and are populist measures, which, actually, do not add value, but put pressure on the state budget.

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