German group Ara Shoes announced that it would close one of its two factories in Romania and cut the workforce at its second plant, in April this year.

The factory to be closed, located in Simleul Silvaniei (Salaj county), employs 350-400 people. The second factory, located in Valea Lui Mihai (Bihor county), has 600-650 employees.

The decision was prompted by the repeated hikes in the minimum wage in Romania, Adevarul daily reads.

Ara Shoes entered the Romanian market 20 years ago and invested EUR 20 million in its two factories. The group has a share of 5% of Romania’s shoe exports, according to Ziarul Financiar.

Separately, Ara Shoes holds stakes in two other shoe producers located in Bihor county: Lloyd Shoes Romania and Legero Shoes Romania, which are managed independently.

In 2019, Swiss shoe producer Rieker also closed both its factories in Romania invoking the lack of workforce, low productivity and wages that have become too high. The wages in the footwear industry, RON 2,100 (EUR 440) in net terms on average, are one third below the economy-wide average.

editor@romania-insider.com

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