Net wage in Romania moves up in November to catch up with inflation

Net wage in Romania moves up in November to catch up with inflation
By Iulian Ernst in Bucharest January 14, 2022

The average net wage in Romania rose by 2.8% m/m in November to RON3,645 (€736.5) in one of the highest monthly increases over the past couple of years.

The advance, even if it seems to reflect volatile elements in November, is likely to further be encouraged by the rising inflation that has eroded households’ real incomes.

In real terms, the average net wage in November was 0.9% smaller than it was in the same month of 2020. It was the third month in a  row when the net wage posted a negative real annual change.

The deterioration was prompted by the sharp rise in consumer prices, as the headline inflation doubled from 3.9% y/y in June to 7.8%-7.9% y/y in October-November.

The volatile activity in some industries will generate more ample variations in the employees’ incomes from a month to another until the production chains return to the pre-crisis smooth functioning.

In November, for instance, the wages in automobile production increased by 19% m/m after subdued activity (hence wages) in the previous months.

Overall, however, the pressures for pushing up the nominal wages in order to keep pace with the inflation and energy bills is likely to tighten.

Consumers’ weaker confidence has already surfaced in the retail sales figures: the seasonally adjusted sales of non-food items contracted by 5% from April to November.