The purchasing power of Romanians has soared to a new record high in the first quarter, after the state raised the wages of public administration personnel and saw to a 10% hike in minimum wages. Specialists, however, say that a big part of the Romanian economy is not reflected in the official indicators, though the quoted data mirrors what happened in the stores, where sales indeed surged in the first quarter. At the same time, labour productivity has been lagging behind salary raises, posing risks to the economy.
Consequently, the real salary, which gauges the evolution of net average wages adjusted in line with inflation, has reached 75.6% in comparison with the real salary in October 1990, a record level since the 1989 Revolution. In other words, Romanians have a better life, but only three quarters of the purchasing power they had back in 1990. The growth was also prompted by the ROL's stagnation compared to the EUR and USD exchange rates. The increasing purchasing power was also felt in the sales logged by retailers, which even surged 50% in some cases when compared to the corresponding period last year.
The real salary index, which represents the ratio between salaries and inflation, has been spiraling downwards since price deregulation, namely since the timid beginnings of the reforms of the state-owned economy. The index's current value has only been exceeded once, in 1990 (reaching more than 81%), as price deregulation only began in October 1990. Since then it continued its downward trend, only posting a slight increase in 1995-1996 during the premiership of Nicolae Vacaroiu, when very large amounts of money were injected as subsidies for loss-making state-owned companies and as salary increases.
The lowest point of this evolution was seen in 1999, when purchasing power slumped to just over half the levels posted in October 1990.
Salaries have been on a strong growth trend since December 2003, climbing to 75-76%, up from 67-68% last year. This trend can be attributed to the fact that salaries were significantly raised, especially in the administration, but also in industry (mainly in the drilling and oil sectors).
For instance, the average salary paid in the industry went up 27% in January, but labour productivity only increased 8.7%. A significant gap was also apparent in the months that followed. This situation involves a big risk - if salary raises exceed the increases in productivity, the result is inflation and a soaring foreign deficit. In fact, the only reason for inflation not actually increasing was due to the National Bank's preoccupation with absorbing the liquidity from the monetary market by offering yearly interest rates of 22%, namely 2.5 times higher than the inflation rate projected for the next 12 months.
Economic analyst Matei Paun feels that the real salary index is not very important and he questions the official statistical data.
sorin.pislaru@zf.ro
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