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Monday, July 7, 2008

Romanian Wages Rise 23.3% in May 2008

Romanian net wages grew an annual 23.3 percent in May as increasing labor shortage lead to higher salaries and increased investment raised demand for workers. The average net monthly wage rose to 1,248 lei ($539), according to today's data from the Bucharest-based National Statistics Institute. The rate of increase was close to the 24.8 percent annual increase registered in April.

Romania's entry to the European Union 18 months ago sparked an increase in labor migration to western Europe, particularly to Spain and Italy, aggravating difficulties which were inevitably going to arise from the long term below replacement fertility the country has experienced. At the same time a boom in consumption and construction fuelled in part by remittances these very same migrant workers sent home has boosted demand for workers who just aren't available.

The Banca Nationala a Romaniei said wage growth is a main factor in inflation and is encouraging a lending boom as citizens' borrowing power expands. The central bank has increased its main interest rate at every meeting since October to slow inflation, which was close to the fastest pace in two years in May, at 8.5 percent.

Romanian unemployment fell to 3.8 percent in May, from the 5.2 percent level which prevailed when Romania joined the EU. The Romanian Association of Construction Companies has said builders need another 300,000 workers simply to stay on schedule with current projects.

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