Romania witnesses steepest real wage correction in decades

The real net wage in Romania plunged by 5% y/y in August, after it had contracted nominally for the second consecutive month (-2.4% m/m) and the headline inflation rate accelerated to 9.9% y/y from 5.7% y/y only two months earlier, according to the data published by the statistics office INS. In absolute terms, the net wage reached RON 5,387 (EUR 1,063).

The real wage correction thus undergoes the steepest correction since July 2010, when the wages in the public sector were slashed by 25% and the VAT rate was hiked from 19% to 24% to address the severe budget crisis. This time, the wages in the budgetary sector will be kept steady over two years, and the VAT rate rose from 19% to 21%. Some analysts expect a further VAT rate hike in 2026.