Pwc: Around 40% Of Private Cos In Romania Estimate An Average 6.8% Raise In Salaries In 2011

The level of salary raises in 2010 is 40% lower than the 7.2% level in 2009.

Around 70% of companies included in the survey either raised salaries so far or intend to raise salaries in 2010, while 30% of them have no intention to raise salaries in 2010 or haven’t made any decision in this respect.

Peter de Ruiter, Partner, Tax and Legal Services Leader, said companies have displayed remarkable similarity this year with respect to salary and benefits policy, considering that salary raises ranged from an average 2.9%, in the retail sector, to 5.9% in the IT industry. He also said this shows the fact that companies in Romania, regardless of their business core, remain cautious in the current economic context and have kept tight grip on costs, mainly staff costs.

The survey indicates that the highest salary raises in 2010 were registered in the IT sector (5.9%), the pharmaceutical sector (5.4%) and the auto-making sector (4.9%), while the banking and retail sectors saw salary raises of only 3% and 2.9%, respectively.

According to the survey, employees within private companies with turnovers of up to EUR50 million and companies with less than 500 employees register the highest salaries, namely, gross wages of 3,237 lei (EUR1=RON4.2648) and RON4,109, respectively. On the other hand, a company with a turnover higher than EUR300 million offers gross wage of RON2,929, while companies with 501 up to 1,000 employees, the gross wage amounts to almost RON2,377. Depending on the region, on average, the gross wage in Bucharest rises to RON4,039 in 2010, while outside Bucharest, the monthly average salary amounts to RON2,427.

As regards the extra-salary benefits, PayWell Romania 2010 concludes that 60% of the Romanian companies provide fix bonuses to all employees. These are granted mostly in connection with the winter holydays, Easter and the summer season vacations. The IT sector is the only sector where fixed bonuses are less frequent. These bonuses are usually offered as fixed amounts, ranging from RON150 to RON700.

The performance bonus is a common incentive for management, being offered by three-quarters of the respondents to the PayWell Romania 2010, while also being used by more than half of the respondents for their operational and support staff. The planned level of the performance bonus ranges between 10% and 20% of the annual salary, with the highest levels being allocated to Top Management.

The PayWell Romania 2010 study points out that the variable component of the income is on the decrease, from almost 30% in 2008 to an average of just 10% in 2010. In 2010, 87% of the yearly salary and benefits package was represented by the yearly guaranteed salary.

Companies also offer sales commission. The average planned level of the sales commission is 40% of the annual salary for sales managers and 32% of the annual salary for sales representatives. In both cases, the actual payouts of the sales commissions of last year were lower than the planned level: 25% for sales managers and 20% for sales representatives.

„We anticipate stronger pressures for wage increases in the near future, given the recent VAT hike from 19% to 24%, especially in the economic sectors that have a strong trade-union presence. Still, PwC does not expect much higher salary increases in 2011, taking into consideration the current economic environment and the balance between supply and demand on the labor market,” Peter de Ruiter also said.

The survey polled 150 companies in nine fields of activity.