Employee return on investment dropped by 12 percent in Romania in 2010, shows PwC study

The employee return on investment decreased by 12 percent in Romania in 2010 reveals the PwC Saratoga Romania 2011 survey, that was launched this week, from 1.53 to 1.34. The indicator that measures the Human Capital Return on Investment (HC ROI) shows the pre-tax revenue produced by an employee for every monetary unit, be it EUR, USD or RON, that is paid out in remuneration.

The study also mentions that labor costs have increased from 9.26 percent of the total costs of a company in 2009 to 10.13 percent last year. However, this cost is still low compared to Western countries.

These evolutions have brought Romania’s HC ROI of 1.34 closer to the CEE average of 1.36, faring better than Western countries that have on average 1.17.

“In the context of the current economic environment, most of the Romanian companies witnessed a deterioration of their financial results. Adding to that there was a slight increase of the labor costs, as most companies gave up on the practices of unpaid leave or partial employment, which were widely used during the peak of the crisis. Therefore, Romania’s average employee return on investment decreased quite significantly in 2010. This is a worrying sign about Romania’s competitiveness and the local companies should focus on strengthening financial results and labor productivity in order to maintain Romania as an attractive investment destination in Central and Eastern Europe”, stated Peter de Ruiter, Partner, Tax and Legal Services Leader, PwC Romania. Peter de Ruiter added that the recruitment rate of Romanian companies has doubled from 6.7 percent in 2009 to 14.1 percent in 2010.  

The PwC Saratoga survey notices that the number of employees allocated per manager is up by 38 percent. The PwC study also revealed that the number of training hours per employee doubled to 25 hours/employee/year, beating the figures reported in the CEE.

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The PwC Saratoga Romania 2011 survey presents comprehensive data on specific Human Capital indicators based on data collected from 81 participating companies from five industry sectors (telecom and technology, industrial products, pharmaceutical industry, retail and consumer goods, and banking).  

Ovidiu Posirca