Labour costs in Western Europe still four times higher than in Romania and Bulgaria

Labour costs in Western Europe still four times higher than in Romania and Bulgaria
/ bne IntelliNews
By Iulian Ernst in Bucharest March 28, 2024

The hourly labour cost in Central and Eastern Europe (chart) rose by double-digit rates in 2023, compared to a +5.3% y/y advance of the EU average (€31.8), but remain only a quarter to a third of the average hourly labour cost in Western European countries such as France or Germany, according to data published by Eurostat.

In Romania, the hourly labour cost rose by 15.8% y/y to €11 in 2023, while higher growth rates were seen in countries where the cost was already higher: +19.6% y/y to €18.3 in Hungary and +16% y/y to €14.5 in Poland. Labour cost (largely reflecting the gross wage) in Romania thus lags behind its most developed peers in the region while the lowest hourly labour cost can be found in Bulgaria (€9.3, +13.4% y/y).

The labour cost in countries where most Romanians found employment, Italy and Spain, notably lag significantly below the EU averages: €30 and €25 respectively compared to over €40 in France and Germany.

The intensity of immigration (not only from Romania or Eastern Europe) seems to be negatively correlated with the labour cost across Europe: the stronger the immigration, the lower the labour cost. The labour cost also correlates negatively with the workforce shortage reported by employers: intuitively, the lower the wages paid, the stronger the workforce shortage.

Within the euro area, hourly labour costs increased in all countries, Eurostat concluded. 

The largest increases were recorded in Croatia (+14.2%), Lithuania (+12.4%) and Estonia (+11.7%).

For EU countries outside the euro area, the hourly labour costs expressed in national currency increased in 2023 in all countries, with the largest increases recorded in Hungary (+17.0%), Romania (+16.5%), Bulgaria (+14.0%) and Poland (+12.4%). They increased the least in Denmark (+2.7%).