This does not mean that Romanians have become less productive, only that the total number of employees has increased slightly, while company revenue has decreased, Peter de Ruiter, head of PwC Romania’s Tax and Legal Services department, explained Tuesday in a press conference. Employee spending also increased as businesses eliminated the use of unpaid or part-time work, which had been popular at the crisis’ peak, he also said.
Labor costs as a share of companies’ total costs have increased by 10%, from 9.26% in 2009 to 10.13% last year. Nevertheless, Romanian labor costs are still low compared with Western Europe, according to a PwC Romania press release.
These developments have brought Romania’s human capital RoI close to the Central and Eastern Europe (CEE) average of 1.36, while maintaining a significant advantage compared with Western Europe (1.17).
In de Ruiter’s opinion, the lower RoI is of concern with regard to Romania’s competitiveness and he says local companies should focus on improving their financial results and work productivity, in order to maintain Romania’s appeal as an investment destination in CEE.
On the other hand, PwC observed a higher rate of external recruitment in local companies: 14.1% in 2010 compared with 6.7% in 2009. The cost of recruitment halved, from EUR500 per employee in 2009. This means that local companies have moved beyond focusing on survival and have started replenishing their workforce. Still, de Ruiter warns, given that the economic instability appears to linger, it is important for local companies to remain “lean and agile” and keep a tight grip on costs.
The study PwC Saratoga Romania 2011 presents comprehensive data on Human Capital indicators, based on data collected from 81 participant companies in five sectors: telecommunications and technology, industrial products, the pharmaceutical industry, retail and consumer goods, and banking.