Despite Romania's labor productivity being at 80% of the EU average, the country's wages only account for 35% of the EU average.
**Headline:** Romania Leads Central and Eastern Europe in Labor Cost Relative to Productivity, According to Erste Group Report
Romania, a country in the Central and Eastern Europe (CEE) region, is noted for its competitive advantage in terms of labor costs relative to productivity levels. According to an Erste Group report, Romania's nominal gross hourly wage is 35% of the EU27 average, while its labor productivity is around 80% of the EU27 average[1][2]. This favorable ratio of labor costs to productivity positions Romania as an attractive destination for businesses seeking cost-effective labor without sacrificing performance[2].
The report highlights that the CEE region as a whole offers a cost advantage due to low labor costs compared to productivity levels. However, Romania stands out due to its particularly favorable combination of low costs and decent productivity[4]. Compared to the EU27 average, Romania's labor costs are significantly lower, making it an attractive option for businesses looking to reduce operational expenses[5].
In the last decade, Romania has recorded the highest real productivity growth in the CEE region, with growth of over 30%. This growth has been closely followed by Serbia and Poland, both with approximately 30% real productivity growth in the CEE region[1]. The report does not mention any other factors contributing to Romania's competitiveness or any other countries in the CEE region with real productivity growth rates comparable to Romania, Serbia, and Poland[6].
The report does not specify the exact countries that make up the CEE region, nor does it provide a specific timeframe for the data it presents. It also does not provide any information on the nominal gross hourly wage or nominal productivity per employee for Serbia or Poland[7].
However, the report indicates that potential challenges such as labor productivity losses due to environmental factors like heatwaves could impact productivity in the future[3]. Despite these challenges, Romania remains an attractive location for businesses seeking to balance cost and productivity.
The report does not provide any predictions or forecasts about future productivity growth in Romania, Serbia, or Poland. It also does not specify the exact timeframe for the productivity growth data for Serbia and Poland, nor does it provide any predictions or forecasts about future labor costs or productivity in Romania.
[1] Erste Group Report, 2021 [2] The Romania Insider, 2021 (accessible with membership or sign-in) [3] European Commission, 2021 [4] Erste Group Report, 2021 [5] European Commission, 2021 [6] Erste Group Report, 2021 [7] Erste Group Report, 2021
- In the competitive business landscape, Romania's industry and finance sectors are attractive due to their cost-effective labor that remains productive, a characteristic highlighted in the Erste Group report.
- The report additionally underscores that the Central and Eastern European (CEE) region as a whole offers a beneficial business environment due to the cost advantage offered by low labor costs compared to productivity levels, with Romania being particularly noteworthy for its favorable combination.
