The salaries in the local private sector increased by 6.4% in 2018, the PayWell Salary and Benefits Survey conducted by PwC Romania revealed. This was higher than the planned adjustment of 5.7%, the survey showed.

The industry sector has seen an 8.9% increase, while retail registered a 6.7% increase, above overall market average. Lower than average increases were seen in banking (5.4%), leasing (4.6%) and pharmaceuticals (4.8%), but still over the budgeted percentages.

The blue collar staff has seen the highest wage increase, of 7.7%, while management level staff received a salary increase of slightly below 6%.

Overall, the salary increases kept the upward trend, after 3.7% in 2016 and 5.1% in 2017. All sectors performed increases higher than in 2017. The banking sector stands out with a more than double increase rate compared to 2017 (5.4% versus 2.1%).

The accelerated increase pace is determined also by the high levels of staff fluctuation. The average turnover rate was 17.4%, almost 4 percentage points higher than in 2017.

“Off the charts salary increases are one of the incentives used by companies in the fight against workforce deficit. Moreover, we see solid increase of wages for workers directly involved in production and leisure while the retail and financial services lag behind. The problems currently faced by the Romanian labor market have deeper causes and are the results of brain-migration and of the mismatch between the educational system and the needs of the labor market,” Daniel Anghel, leader of the Tax and Legal Department at PwC Romania, said.

For 2019, companies estimate a much lower increase, averaging 4.6%. Businesses plan a 6.5% increase of wages for staff directly involved in production. All other staff categories are not planned to reach more than 5% increase in the coming year.

Considering the changes in contribution transfer, nearly two thirds of surveyed companies (63%) already increased the gross salary, while 20% used the compensatory bonus mechanism. Only 17% of the private companies surveyed had a mixed approach, meaning that they increased the gross salary for some positions, while the others were compensated with a bonus.

“The workforce deficit is pressuring the employers to find alternative methods, beside salary, to motivate both own staff as well as future colleagues. It is a race of flexibility among companies to become more attractive in the context of both a dynamic workforce era and ever changing needs of the new workforce generation”, Ionut Sas, partner, Tax and Legal Department at PwC Romania, said.

Aside from the paychecks, slightly over half (53%) of the companies provide fix bonuses to their employees on various occasions. Companies active in the industrial products and retail sectors lead the fix bonus scheme rankings with 68% respectively 73% of them providing a fix bonus. Other sectors preferred performance related bonuses on top of salaries.

The number of companies oriented towards offering work - life balance programs is higher than in 2017. In this respect, 55% have flexible office hours, half of the surveyed organizations involve their employees in CSR activities, while 26% offer subscription to online book libraries. This is how companies answer to the emerging employee requirements in order to secure staff retention.

“Private companies are increasingly under the pressure of the labor market. Scarcity of labor resources, at all levels, but in particular for manual workers, combined with raising competition from the public sector which benefited of significant increases, are bringing human resources and compensation budgets on top of the business agenda. HR and business executives have to invest in productivity enhancement programs to be able to sustain their growth ambitions and be very creative about attracting, retaining and developing internally needed skills, as the labor market will be more and more challenging”, Oana Munteanu, leader of People & Organisation Consulting at PwC Romania, said.

The PayWell survey was conducted between January and August 2018. The report surveys 97 companies and looks at the banking, leasing, pharmaceuticals, industry, retail and hotels sectors.

Salary expectations in Romania

editor@romania-insider.com