Labor cost in Romania, Bulgaria is a quarter of that in Western Europe

The hourly labor cost in central and eastern Europe rose by double-digit rates (+15.8% y/y in Romania) in 2023, compared to a +5.3% y/y advance of the EU average (EUR 31.8), but they remain a quarter to a third of the average hourly labor cost in Western European countries such as France or Germany, according to data published by Eurostat.

In Romania, the hourly labor cost rose by 15.8% y/y to EUR 11 in 2023, while higher growth rates were seen in countries where the cost was already higher: +19.6% y/y (to EUR 18.3 in Hungary) and +16% y/y (to EUR 14.5) in Poland.

Labor cost (largely reflecting the gross wage) in Romania thus lags behind its most developed peers in the region, while the lowest hourly labor cost can be found in Bulgaria (EUR 9.3, +13.4% y/y).

The labor cost in countries where most Romanians found employment, Italy and Spain, notably lag significantly below the EU averages: EUR 30 and EUR 25, respectively, compared to over EUR 40 in France and Germany.

The intensity of immigration (not only from Romania or Eastern Europe) seems to be negatively correlated with the labor cost across Europe: the stronger the immigration, the lower the labor cost. The labor cost also correlates negatively with the workforce shortage accused by employers: intuitively, the lower the wages paid, the stronger the workforce shortage.

Within the euro area, hourly labor costs increased in all countries, Eurostat concluded.

The most significant increases were recorded in Croatia (+14.2%), Lithuania (+12.4%), and Estonia (+11.7%).

For EU countries outside the euro area, the hourly labor costs expressed in national currency increased in 2023 in all countries, with the largest increases recorded in Hungary (+17.0%), Romania (+16.5%), Bulgaria (+14.0%), and Poland (+12.4%). They increased the least in Denmark (+2.7%).

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