Average salaries in Romania belong to the lowest of Europe and even the double digit growth rates experienced during the last years of economic boom did not raise them to an European average level. And: several years of double digit would be needed to achieve a convergence with Western European average salaries. A simple example might illustrate this notion: If we take average industrial labor costs from 2002 for Germany (32 EUR) for Germany and for Romania (1.5 EUR) and make the realistic assumption that labor costs will grow each year by 3% for Germany and the unrealistic assumption that they will grow by 20% for Romania each year a catch up for Romania would have been achieved in 2022. But let’s switch to reality and have a look on real wages in Romania, the average gross salary and average income.

Charts: Salaries and Income from Labor in Romania

Real wages in Romania followed largely the evolution of the Romanian GDP and exhibited since the nineties a w-shaped development path. After a sharp fall all during the 1990ies, interrupted just for a short period of artificial recovery, real wages began rising after 2000 when Romania overcame the recession of transition and enjoyed high GDP growth rates. Only in 2006 the Romanian real wage reached the starting level of 1990 (Figure 1).

Faster rising have been nominal gross and net salaries in Romania and reached some 457 EUR (gross), respectively 350 EUR (net) in 2008 after some years of double digit growth. These times seem to have come to an end after the outbreak of the crisis. Growth rates of the average salary in Romania have been modest during 2009 and are likely to remain modest, not even making up for inflation and the loss in purchasing power due to the deprecation of the Romanian currency. Faster rising are by the way labor costs, as an employee will receive some 75% of the gross salary, yet an enterprise will actually 1.81 as much the sum of the gross salary due to high payroll taxes in Romania.

However, only a small part of labor force actually earned the average salary, which is considerably risen by a small percentage of top earners (Figure 3).

Table: Romania – Average Gross and Net Salary Data and their Growth

Year		2008	2009	2010	2011	2012	2013	1014
Average Salary (Gross)	RON	1,682	1,767	1,836	1,920	2,020	2,130	2,282
	%	26.40%	5.05%	3.90%	4.58%	5.21%	5.45%	7.14%
Average Salary (Gross)	EUR	457	416	432	457	487	520	563
Aerage Salary (Net)	RON	1,309	1,350	1,403	1,464	1,539	1,620	1,734
Average Real Wage Growth	%	16.50%	-2.30%	0.20%	1.10%	2.30%	2.70%	4.60%

 

The data represents the current estimates of the CNP (Comisia Nationala de Prognoza), Romania.