Wages keep the pace with inflation in March when they rise by real 0.8% YoY

The net wages in Romania rose by 11.0% in March compared to the same month last year - out of which by 5.8% during the latest month alone - thus maintaining a positive advance of the real wages.

In absolute terms, the average net salary reached RON 3,937 (EUR 796) in March, while the gross wage was RON 6,401 (EUR 1,294).

In the whole of Q1, the net wages rose on average by 10.2%, accelerating from the 6.7% YoY rate in Q4 last year, and the real growth rate returned to the positive territory: to +1.1% after the -1.2% YoY decline in Q4.

This was possible due to the sharp rise of the wages in some markets with strong bargaining power in front of end-users, in general, explained by imperfect competition, non-elastic prices or rising demand.

Thus, the net wages increased by 21.2% YoY (+17.7% MoM) as of March in the oil refining, by 35.1% YoY (+28.7% MoM) in the tobacco industry and by 25.3% YoY (+18.6% MoM) in financial intermediation. In some sectors, the wages are still rising on a low base after the pandemic period: by 37.6% YoY (+3.7% MoM) in air transportation.

However, the prices kept growing in April and will surge through Q2, most likely pushing back the annual dynamics of the real wages back into the negative territory.

Compared to the previous crisis in 2008, however, the income corrections are operated against a much stronger base, particularly thanks to the unsustainable wage-growth led economic growth policy conducted over the several years prior to the Covid-19 crisis.

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