As of January 2023, Romanian nominal wages rose by 15% on year-over-year growth to 4,265 Romanian lei. It took some time for the nominal wages to rise to match the increasing inflation rates. During this same month, it was noted that inflation rose by a 15.1% year-over-year growth whereas now they match the wage rates from that of January 2022, reports ActMedia.
Average monthly wages for Romanian were projected to increase to RON 3,000 back at the beginning of 2023. The average monthly wage in the middle of December 2022 was RON 2,550. The average wage increase is the result of the recent rise in the Romanian minimum wage. Those working at this rate started taking home about RON 1,863 each month as of January 1 2023.
After lengthy discussions with Romanian labor unions and local employee associations, the Romanian government agreed to increase the national minimum wage. This will assist the 2.2 million individuals receiving this rate of pay in their work positions. Hence, the minimum wage will go from RON 15.24 for every hour as an 18% increase to RON 18 per hour.
While the rise in the Romanian minimum wage benefits the millions of individuals receiving the rate of pay, this will place very small businesses at a disadvantage. With more than 410,000 small businesses in Romania that employ at least nine people or less, raising the national minimum wage means that they will have to compensate.
While the wages and inflation rates were in equilibrium in January 2023, the balance teetered a a month later when consumer prices increased by 0.95%. This rise in consumer prices was not expected by Romanian financial experts.
Financial experts are now projecting that inflation will rise by an overall 7% by December compared to the originally projected value of 11.2%. Because business are increasingly flourishing in Romania and, what with the recent national minimum wage increase, a rise in overall consumer spending is notable. Hence, the prices of goods and services and raw materials utilized during production to bring them to fruition are rising to compensate for the demand.
Wage increases and inflation hikes are normal in any nation. For Romania, the minimum wage increase can interfere with the success of local small businesses. However, larger enterprises can benefit from the wage increase as the prices of their goods and services rise to compensate for it, reports ActMedia.