Salary costs double that of productivity

While salary costs rose almost 20 percent, the advance of labor productivity was only 9.9 percent in 2007, according to data from the National Institute of Statistics (INS). Furthermore, this can negatively impact on the inflation rate, analysts say.

“In 2007, labor productivity had lower growth compared to the salaries, which reduces competitiveness. For this year, I foresee salary increases of more than 15 percent, as this is an election year, while productivity could rise 10 percent," according to Raiffeisen Bank’s Macroeconomics Research Department Head, Ionut Dumitru.

However, employers say the increase in salary costs can be a result of expanding activities. Furthermore, they say that in several fields productivity exceeds salary growth.

“Our plan was to increase productivity by 2-3 percent above salary rises and we have managed to do that every year,” according to officials of pipe producer Teraplast Bistrita. The company’s President of the Board of Directors, Emanoil Viciu, indicated that its productivity rose 26 percent last year, while salaries increased 13.5 percent.