Total hourly labor costs in the euro zone rose at an annual rate of 2.5 percent in nominal terms in Q2 2007, compared to 2.3 percent in the previous quarter. In the European Union, the annual rise was 3.2 percent in Q2 2007, compared to 3.6 percent in Q1 2007.
The two main components of labor costs are salaries and non-wage costs. In the euro area, salaries grew at an annual rate of 2.5 percent in Q2 2007, and non-wage costs by 1.8 percent, compared to 2.3 percent and 1.9 percent respectively in Q1 2007. In the EU, salaries rose by 3.3 percent and the non-wage component by 2.5 percent in Q2 2007, while for the previous quarter, the rates were 3.8 percent and 2.7 percent. In Romania, salaries and non-wage costs increased by 23.4 percent and 23.6 percent, respectively. In terms of field of activity, the construction segment registered the highest salary growth rate (26.2 percent), followed by the service sector (24.2 percent) and industry (21.9 percent).
However, personnel costs in the construction field register a downward trend, their growth pace is slowing down. Total costs in Q2 2007 rose by 26.2 percent, after soaring by 28.4 percent in Q1 and surging by 34.9 percent in Q4 2006. Costs increased significantly as January 1 2007, the date Romania joined the European Union, was approaching. This trend was observed in the industry and the service sector as well.
“This is the moment of truth. Profitability margins are dropping in several fields, such as the textile industry. Employees from these unproductive sectors will leave abroad or choose other sectors. Salaries will continue to increase as the personnel deficit reaches a very high level,” the President of the Businessmen’s Association of Romania (AOAR), Florin Pogonaru, told Business Standard.
