Snap9 July 2018Updated one week ago

Romania: Wage growth remains strong (yet again!)

Average net wages posted a 14.4%  advance in May, a mild slow down versus the previous month, but despite a flattening Phillips curve, a tight labour market remains a key factor for upside risks to the inflation outlook

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Wage increases in the public sector stand at 24.4% year on year, while pay rises in the private sector are at 11.7% YoY. Tight labour market with the unemployment rate near historical lows and public wage policy are the main drivers for wage growth.

NIS, ING, Eurostat
NIS, ING, Eurostat

Without labour market reform to improve labour force participation which stands at  66.3%, one of the lowest in Europe, pressure will remain to the upside for salaries and is likely to limit growth. Despite flattening Phillips curve, tight labour market remains a factor for upside risks to inflation outlook.