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Romania, Second Lowest Hourly Labour Cost in EU

Romania, Second Lowest Hourly Labour Cost in EU

Romania had the second lowest hourly labour cost in the EU in 2021, according to data published by Eurostat. The recorded value (€8.5) was higher than in Bulgaria (€7.0), but under the levels for Latvia (€ 11.1), Croatia (€ 11.2), Lithuania (€ 11.3) and Poland (€ 11.5). The highest labour costs were recorded in Denmark (€46.9), Luxembourg (€43.0) and Belgium (€41.6) (see infograph). 

Hourly labour costs in industry were €29.1 in the EU and €35.1 in the euro area. In construction, they were €26.0 and €29.3 respectively. In services, hourly labour costs were €28.8 in the EU and €31.6 in the euro area. In the mainly non-business economy (excluding public administration), they were €30.3 and €33.6 respectively.

The two main components of labour costs are wages and salaries and non-wage costs (e.g. employers' social contributions). The share of non-wage costs in total labour costs for the whole economy was 24.6% in the EU and 25.1% in the euro area. The lowest shares of non-wage costs were recorded in Lithuania (3.7%), Romania (4.9%) and Ireland (8.7%) and the highest in Sweden (32.0%), France (31.9%) and Italy (28.3%).

In 2021, compared to 2020, hourly labour costs at whole economy level expressed in € rose by 1.7% in the EU and by 1.2% in the euro area. Within the euro area, hourly labour costs increased in all Member States except Italy (-1.6%) and Spain (-0.3%). The largest increases were recorded in Lithuania (+12.5%), Estonia (+6.5%), Cyprus and Slovenia (+6.2% each) as well as Latvia (+6.1%).

For Member States outside the euro area, the hourly labour costs expressed in national currency increased in 2021 in all countries, with the largest increases recorded in Bulgaria (+9.1%), Poland (+8.2%) and Hungary (+7.3%). They increased least in Sweden and Croatia (+3.0% each). The exchange rate effect was higher in Poland and Hungary than in Romania (see infograph). 

Last year, most Member States extended the validity of support schemes introduced in 2020 to alleviate the impact of the COVID-19 pandemics on enterprises and employees. They mainly consisted of short-term work arrangements and temporary layoffs fully or partly compensated by government. Those schemes were generally recorded as subsidies (or tax allowances) with a negative sign in the non-wage component of labour costs.

In 2021, average hourly labour costs in the whole economy (see methodological note) were estimated to be €29.1 in the EU and €32.8 in the euro area, higher than compared with €28.6 and €32.4, respectively, in 2020. 

Methodological notes:

Total Labour Costs refer to the total expenditure borne by employers in order to employ staff. They cover wage and non-wage costs minus subsidies. They do include vocational training costs or other expenditures such as recruitment costs, spending on work clothes, etc. Wage and salary costs include direct remunerations, bonuses, and allowances paid by an employer in cash or in kind to an employee in return for work done, payments to employee saving schemes, payments for days not worked and remunerations in kind such as food, drinks, fuel, company cars, etc. Non-wage costs include the employers’ social contributions plus employment taxes regarded as labour costs less subsidies intended to refund part or all of employer’s cost of direct remuneration.

 
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