Romania’s wages once buoyant show signs of fatigue
Romania’s average net wages posted an impressive 11.9% annual advance (+8.4% YoY in real terms), to RON 3,561 (or EUR 724) in April - but the outstanding performance is mainly due to low base effects while the wages will rise at a much more moderate pace this year compared to the pre-crisis period.
Rising inflation and a weaker currency will predictably erode the nominal advance of the nominal wages in the private sector. The salaries in the public sector were already frozen by the Government as part of the fiscal consolidation framework.
However, the relaxation across European countries will result in the evaporation of a part of the local workforce, putting pressure on wages and labour costs again.
Compared to April 2019, the net wages increased in April by a real 7.8% (3.8% annualised terms), compared to an 8.6% 24-month increase calculated as of March. Expressed in euros, the average net wages edged down from EUR 726 in March to EUR 724 in April.
The wages have visibly lost the impetus provided by the repeated hikes in the salaries and bonuses in the private sector, but the convergence toward EU levels in the private sector is likely to continue. The state forecasting and strategy body CNSP projects a 2% real advance in net wages this year (from +4% in 2020 and +8.8% in 2019), with the real growth rate gradually returning toward 4% per annum 2022-2024.
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