Investors discouraged by higher salaries for skilled workers

The local labor force market, while still less expensive than in other Central and Eastern European countries, is becoming costlier for foreign investors. Moreover, Romania is facing a qualified personnel shortage. The rapid rise in salaries and the appreciation of the local RON currency in relation to the euro is making Romania less attractive for foreign investors.

“Costs have risen to much for the first investors who came to Romania, so they are considering moving their production capacities to other countries,” Rutze told the Rompres newswire. Besides higher salaries, finding the necessary qualified personnel has become more difficult. Most companies operating in Central and Eastern Europe are facing this problem. Rutze said production companies have registered the highest losses, especially those specialized in auto parts, who have also been affected by the RON-EUR exchange rate. German investments are mostly export-oriented and higher demand from the Romanian market is not adding much to their profitability.

In spite of the recent increases in wages, statistics show that Romania is still one of the countries with the lowest European labor costs. The average monthly wage last year was €434 per employee, 16.8 percent higher year-on-year. The average hourly wage was €2.53 per employee, 17.3 percent higher year-on-year, according to a National Institute for Statistics (INS) report. The highest hourly wage in the region is registered in Hungary, at €7, according to the German-Hungarian Chamber of Commerce. Hungary ranks fourth in terms of investment attractiveness for German investors, after the Czech Republic, Slovenia and Slovakia. However, wages in those countries are higher than in Romania.

As far as the auto industry is concerned, Romania has the lowest labor costs in Europe, some 17 times lower than in Germany, and these are also 13 times lower than in the U.S. and some 11 times lower than in Japan.

Costs
The average hourly labor cost for car producers in Romania was €2.54, compared to €39 in Germany, according to a study carried out by the German association of car manufacturers, Verband der Automobilindustrie (VDA).