Salary costs force companies to rethink budgets after EU accession

Workforce costs are the costs that have witnessed the highest increases, exceeding estimates, after the accession to the EU, reveals a survey conducted by ZF among companies on the domestic market.
“One of the effects of Romania’s accession to the EU is the increase in the speed at which salaries grow, which will lead to a rise in costs on the entire distribution chain,” said Rand Sherif, the general manager of Interbrands Marketing & Distribution, the biggest distributor on the domestic consumer goods market, whose revenues amounted to 766 million euros last year.
With 2,200 employees and several hundred more planned for recruitment this year, salary expenses are the biggest costs for Interbrands, which has been recording growth lately.
The companies with manufacturing operations in turn witnessed higher human resources costs than initially set in their budgets.
“The highest increase in costs, of approximately 24%, has to do with the human resources, with the growth pace exceeding by far the 10% estimate made at the beginning of this year,” stated Valerian Pavel, manager of the Ara group of companies, which has 2,800 employees and whose business stands at more than 60 million euros, derived from footwear.
Ara representatives, however, say that there will be no other significant increase in salaries by the end of the year.
Cristina Radulescu, country manager of Adecco, the top player on the recruitment market, says the increase in salaries is only natural.
“We have an active population of 9 million people, 4.5 million salaried employees and 3 million Romanians working more or less legally abroad. How else could one retain one’s staff? This is the first time when companies find themselves having to revise their budgets,” Radulescu says. She explains that, in her opinion, such salary raises mainly concern secondary education staff, a trend that will maintain over the coming years. “As far as higher education staff is concerned, we already have positions whose salaries compare to those in the EU countries,” Radulescu adds.
One of the causes behind the salary raises is the deficit of workforce in certain fields, such as construction, IT&C and manufacturing. Even the shareholders of transport companies have experienced salary cost increases.
“Due to the fast-paced economic growth over the last few years, the quality and the motivation of the workforce has been dwindling, although salaries are going up by 20-30% a year for the same job category. This has a negative impact on the profitability of the companies in every field,” says Alexandru Rusu, chief executive of Eurolines, one of the biggest players on the transport market, with 25 million euros in turnover for the entire group.
“We have registered a 45% increase in personnel spending in the first quarter of this year, compared with the same time in 2006, as a result of the development of the network of agents and of the routes managed, as well as of the salary cost increases, of approximately 20% compared with the last quarter of 2006,” Rusu added.