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Sunday, May 25, 2008

Romania Unemployment and Wages April 2008

Romania's unemployment rate fell in April as farmers and construction companies boosted seasonal hiring because of favorable weather conditions. The unemployment rate fell to 3.9 percent in April from 4.2 percent in March, according to data from the National Labor Agency. Unemployment fell from 4.5 percent a year earlier.

Romania's jobless rate has been falling steadily since last year when it joined the European Union, increasing investment in the nation of 22 million and allowing many Romanians to emigrate to find better-paying jobs in other EU nations such as Italy and Spain. A growing labor shortage and a booming construction industry has helped boost average net monthly wages in Romania by an annual 17.7 percent in March.

Romanian labor costs rose in the first quarter from a year earlier. Labor costs for employers, including taxes and social contributions, rose 19.5 percent in the first quarter from a year earlier, although they fell 1.7 percent from the fourth quarter of last year, when employers paid holiday bonuses. I think it is quite clear from the chart (see below) that Romanian wages spiked in the last quarter before enetering the EU and that the pace of increase has been slowing steadily ever since. Basically the real value of these increases is also reducing as inflation has risen, so the sum total of all this is that we should expect economic growth to continue to slow, although we need to remember that the pace of borrowing can also offset this slowdown to some extent in the short term.

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