Romania’s Q3 wages boast strongest growth rate in nearly five years
<p>The average nominal wage increased by 14.2% y/y in Romania in the third quarter of the year, accelerating from 13.2% y/y in Q2, according to data published by the statistics office INS. In real terms, this was the strongest advance in nearly five years.</p>

<p>Such high growth rates were seen in high inflation periods over the past years, but this is no longer the case.</p>

<p>The households’ stronger purchasing power is visible in the retail sales (particularly the sales of non-food goods), magnified by the consumer lending fueled by strong consumer confidence and lower interest rates. Non-food goods sales surged by 16.4% y/y in volume (comparable prices) terms in Q3. However, fewer car fuel sales and moderate growth of food sales kept the overall sales volume index at a single-digit annual growth of +8.8% y/y in Q3.</p>

<p>Unfortunately, the strong consumption has stimulated imports rather than the local industry, which only moderately capitalised on the households’ improved incomes. Sectors such as food manufacturing of HoReCa (and services in general), however, saw their business grow.</p>

<p>The fiscal corrective package expected for 2025 will probably erode the households’ consumption exuberance, as the VAT rate hikes and higher income tax rates are among the expected elements of the corrective package.&nbsp;</p>

<p>Combined with slightly lower inflation, 5.0% y/y in Q3 compared to 5.3% in Q2, the buoyant nominal increase resulted in a robust 8.7% y/y real increase of the average net wage in Romania – which marks a visible acceleration after +7.5% y/y in Q2 and +6.5% y/y in Q1.</p>

<p>The net wage in Romania actually boasted in Q3 the strongest annual growth rate in nearly five years.</p>

<p>Looking at the sources of the sharp +14.2% y/y growth in net wages in Q3, the budgetary sectors stand out with an average advance of +18% y/y. The wages in public administration, education, and healthcare rose by 18%, 17.4%, and 18.4%, respectively. The wages in these sectors were in Q3 above the national average – even 36% above the national average when it comes to the public administration segment.</p>

<p>However, sectors such as chemistry (+23.8% y/y) and HoReCa (+26.6% y/y) also contributed. Notably, the average wages in constructions increased by only 6.6% y/y, faster than the consumer prices but far from the average wages’ +14.2% y/y average advance.&nbsp;</p>

<p>The wages in computer programming, the highest in the entire economy (more than twice the average), increased by 8.5% y/y despite the slowdown faced by the sector.</p>

<p><em>iulian@romania-insider.com</em></p>

<p><em>(Photo source: <a href="https://www.dreamstime.com" rel="noopener" target="_blank">Aaron Amat/Dreamstime.com</a>)</em></p>