Romania: Robust wage advances in September

September has been another good month for most Romanian employees. Average wages advanced by 15.3% for those working in the private sector and by “only” 12.7% in the public sector. Hence, we could say it is business as usual for the labour market front. However, the mild economic slowdown that the economy is seeing has started to leave some traces, as indicated by sectorial employment dynamics.

The manufacturing sector, which employs over 1.1 million people - and is the largest economic sector by number of employees - has been losing jobs for more than a year now. As of September 2019, over 24,000 jobs had been lost since September 2018, most of these in areas sensitive to external demand such as automotive and textiles. The latest industrial production numbers (as of August 2019) are also showing that 2019 will likely be a year of contraction.

For now, however, industry’s contractionary signals don’t seem to have spread to other sectors. Consumers still look generally optimistic, as indicated both by sentiment indicators and by hard data (more here). Services are showing some signs of weakness but nothing alarming yet, while the construction sector roars ahead, posting above 20% annual growth numbers.

The current state of the job market is not exclusively a product of economic growth, but rather a mix of factors ranging from migration to public sector policies and absence of structural reforms to improve the participation rate.