Only 34,000 employees earn more than RON10,000 in net amount per month, 400,000 earn RON3,000 to RON10,000 and the remaining 4 million less than RON3,000, according to the Labor Ministry data that Ziarul Financiar got. The employee breakdown by salary level is an indicator all marketing departments watch in order to adjust their offers.
“Income inequality is not as much a problem as productivity is, because low productivity stems from having too little capital in Romania. We lack a long-term policy to attract and keep investments because short-term policies are the ones that put us in this situation,” said Radu Nechita, Ph. D, associate professor with the Faculty of European Studies with the Babes-Bolyai University in Cluj.
“The solution to increase the low salaries is to boost productivity but for that to happen, conditions must be created for attracting capital and for capital formation instead of going after supermarkets for making profit or harassing the small investors with many tax authority inspections (…).”
So far the salaries of Romanian employees have seen the highest growth in sectors such as financial services, IT and oil drilling, which are exactly those areas “connected to the world market.”
The employee breakdown by incomes shows a big gap on the labor market in Romania, where very many employees earn very little and very few have high incomes. About 44% of the Romanian employees earn less than RON1,000 in net amount per month (more than 2 million people that is) and 28% (more than 1.3 million) earn RON1,000 to RON1,700. Almost one quarter (23% or 1.1 million) earn RON1,700 to RON4,000 and 5% (or 250,000) earn more than RON4,000 per month.
It is necessary to conduct research into income inequality, Professor Cezar Mereuta, Ph.D., associate researcher with the Center for Macroeconomic Modeling of the Romanian Academy believes, who told ZF in an interview that Romania needed a ranking by incomes, considering its demographic particularity – 48% of its population lives in rural areas and more than two thirds of those have no money and resort to self-consumption.
This is the fundamental theme of the globalization, which was theoretically supposed to help people reach an equal level, he added, saying that US President Barack Obama, and French President Francois Hollande, too, had requested income inequality studies.
“Income inequality is normal, what is less normal is the source thereof. For instance, it is outrageous that some monopolistic so-called self-funded public institutions pay high salaries to their employees, which are funded by the contributions of the many minimum wage employees,” said Babes-Bolyai University’s Radu Nechita.
On the other hand, Professor Marian Preda of Faculty of Sociology and Social Work with the University of Bucharest says that employee pay depends a lot on productivity.
“There are many places where everybody is paid the minimum wage, because employees do not have high productivity. Which is why an increase in the minimum wage must go hand in hand with an increase in labor productivity or else the costs of a company go up and profit turns into loss or layoffs. The minimum wage in Romania is low compared with other European countries but not low compared with employee productivity.”
(English version by Loredana Fratila-Cristescu)