Real wage growth in Romania turns negative in September

Real wage growth in Romania turns negative in September
By bne IntelliNews November 12, 2021

The real annual rise of the net wage in Romania, typically buoyant over the years before crisis and still resilient during the crisis, turned negative in September as energy prices pushed up inflation, and the trend is likely to continue.

Higher inflation will keep eroding the nominal wage gains in the coming quarters, putting pressure on wages and thus on the cost of labour. Particularly in the context of a tight labour market, this will generate second-round inflationary effects.

Rising inflation has gradually eroded the rise of the nominal wages in Romania during the second and third quarters of 2021 and the annual rise of the consumer prices (driven up by energy goods) already surpassed that of nominal wages, as of September when real wages fell in annual terms. 

The average net wage increased to RON 3,517 (€711) in September, when it was 5.8% higher than a year earlier. 

The annual increase thus eased from 6.5% y/y in August and it was slower than the annual rise of prices (consumer price inflation).

With the inflation reaching 6.3% y/y in September, the real rise of wages dropped in the negative area (-0.4% y/y) for the first time since early 2013 — not counting the 0.5% y/y decline in April 2020 when the wages dropped temporarily during the pandemic.