Romania’s wage bill will therefore be higher than Portugal’s and Czech Republic’s by that year, two countries whose wage bill is higher at the moment, each having half of the population of Romania.
“The salary raises will continue over the coming years at a faster rate than the growth of the GDP. If we look at the average wage in the past few years, we can see it has gone up in nominal terms at a rate of 10% to 15% a year, while the GDP has grown at a slower rate. Therefore, the wage bill as a percentage of GDP has increased,” said Ionut Dumitru, chairman of the Fiscal Council.
Romania’s wage bill accounted for 40% of the GDP in 2018, much higher than in 2007, when it stood at EUR43 billion and accounted for 34% of it.
The average wage has increased by 12% to 15% a year in the last four years, following the minimum wage hike, the raises in the public sector (mainly in the healthcare and education sector), and in the private sector due to the worsening labor shortage.
The wage bill in Romania will go up from EUR81 billion in 2018 to EUR91 billion in 2019 and to EUR100 billion in 2020, according to the forecasts of AMECO, the annual macroeconomic database of the European Commission. In comparison, the wage bill in Czech Republic stood at EUR89 billion in 2018 and is estimated at EUR99 billion in 2020, while Portugal’s stood at EUR90 billion in 2018 and will reach EUR97 billion in 2020.
“As an economist, all I can say is that rewarding employees in a country has to be proportionate to the increase in work productivity, one cannot increase rewards if production and its quality have not increased as well. If wage hikes follow productivity in our country, that’s a good thing,” said Professor Dumitru Miron, Ph.D., with the Bucharest University of Economic Studies (ASE).
(English version by Loredana Fratila-Cristescu)