Romania’s profit share, defined as the proportion of value added distributed by non-financial corporations to capital rather than labour, fell for the second consecutive year to 48.1% in 2024, Eurostat reported on December 7. The ratio was 40.0% on average in the European Union, with below-average ratios in more developed countries such as France (32.2%) or Germany (37.2%).

The decline, seen across entire Europe, has possibly followed broader pressures on profitability linked to higher energy prices.

Despite the decrease, Romania remained among the countries with the highest ratios of value added allocated to capital owners. Only Slovakia, at 49%, recorded a higher share among EU member states with available data. Bulgaria did not publish figures for 2024, but historically has also reported elevated levels.

Higher profit share values can be in principle, be associated with two situations: capital-intensive economies with high value-added activities, or labour-intensive economies capitalising on cheap labour costs. Chances are Romania lies in the latter category of such high-profit share countries.

The profit share corresponds to the gross operating surplus generated by businesses after labour compensation is deducted, explains Eurostat. A lower ratio may indicate reduced profits or a shift towards more labour-intensive production, while a higher ratio may reflect stronger profitability or the prevalence of capital-intensive activities.

iulian@romania-insider.com

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