Net wages in Romania up real 1.6% y/y in April.

By bne IntelliNews June 6, 2013

The average net wage in Romania increased by a nominal 7% y/y to RON 1,661 [EUR 379] in April, the statistics office reported. In real terms – adjusted for consumer prices inflation, the net wages were up 1.6% y/y in the month.

In industry, the wages increased slower - by 5.2% y/y to RON 5,715 [EUR 385] – in line with the consumer price inflation, so that in real terms they remained roughly steady.

Net wages thus returned to a small real annual increase in April after the 2.2% y/y contraction in Q1. Notably, the contraction in Q1 was caused by lower wages in the private sector, where the gross* average wages decreased significantly by a real 3.3% y/y. The decline in real wages in the private sector is a significant concern revealing continuing financial constraints faced by private companies.

Wages have roughly recovered in past years after the negative corrections occurred in the first years of the recession - now, wages are at pre-crisis levels but the prospects for further gains are rather modest.  

The small rise in April is in line with the slight upward pattern in economy-wide real wages in the past couple of years, driven by the gradual recovery of public wages to the levels of June 2010 - before the sharp 25% cut operated by the government.

Compared to the level of late 2008, at the outset of the recession, the average real wages as of April 2013 have remained more or less constant in real terms. Expressed in euros, the wages have increase at higher pace over the past years (up 6.9% y/y in April) – but they are still roughly at the same level where they were at the beginning of the recession at end-2008.

The wages in the public sector, which accounts for some 20% of the total employment, keep growing by above-the-average rates of close to or above 10%. In particular, the gross wages in the public administration increased by a real 13.8% y/y in April after climbing a real 13.7% y/y in Q1.

* Please note that while the overall wages are expressed in net terms, detailed gross wages are expressed at gross level; adjustment for inflation is done, however, by CPI in both cases. But due to no change in income taxation, the dynamics of net/gross wages is directly comparable.

 

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