The average wage increase in 2010 in the private sector is 4.3 percent, says PwC study

The average wage increase in the private sector amounted to 4.3 percent in 2010, according to this year’s edition of the PayWell Romania salary and benefits survey.

This year’s figure is 40 percent lower than the average increase of 7.2 percent reported by the companies participating to the survey in 2009.

The study data also indicates that almost 70 percent of the participating companies increased or plan to increase wages in 2010, while 30 percent either don’t intend to operate such wage increases, or haven’t taken a decision by the time the survey’s data were collected.

“Companies have shown a remarkable similarity this year regarding the salary and benefits policy, as wage increases in different sectors ranged between an average of 2.9 percent in retail and 5.9 percent in the IT sector. This highlights the fact that all Romanian companies, regardless of their sector of activity, remain cautious in the current economic environment and have kept a close watch on costs, especially personnel costs. Although this year we have had certain economic sectors that have emerged out of recession and reported modest growth rates, for example companies that have a strong exports component, companies still remain pessimistic regarding the recovery perspectives of the internal market”, stated Peter de Ruiter, Partner, Tax and Legal Services Leader.

For 2011, almost 40 pecent of the participating companies in the PayWell Romania 2010 study have budgeted salary increases, with the average wage increase being 6.8 percent, 60 percent higher than this year’s average wage increase.

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“We anticipate stronger pressures for wage increases in the near future, given the recent VAT hike from 19 percent to 24 percent, especially in the economic sectors that have a strong trade-union presence. Still, PwC does not expect much higher salary increases in 2011, taking into consideration the current economic environment and the balance between supply and demand on the labor market”, added Peter de Ruiter.

As far as extra-salary benefits are concerned, PayWell Romania 2010 concludes that 60 percent of the Romanian companies provide fix bonuses to all employees. These are granted mostly in connection with the winter holydays, Easter and the summer season vacations. The only sector where fixed bonuses are less frequent is the IT sector. These bonuses are usually offered as fixed amounts, ranging between RON 150 and RON 700.

The performance bonus is a common incentive for management, being offered by three-quarters of the respondents to the PayWell Romania 2010, while also being used by more than half of the respondents for their operational and support staff. The planned level of the performance bonus ranges between 10 percent and 20 percent of the annual salary, with the highest levels being allocated to Top Management.

The PayWell Romania 2010 study comprises compensation data provided by 150 companies and 140,000 employees, for 700 job positions across nine industry sectors- Agrochemical; Automotive Manufacturing; Banking; Food, Beverage & Distribution; Industrial Products; IT; Leasing; Pharmaceuticals and Retail.

Otilia Haraga