Salaries to increase by 1.2% above inflation in 2005

Salaries in Romania will outpace inflation by 1.2% next year, when salaries will increase by 10.4% against an inflation rate of 9.2%, according to a study by Mercer Human Resource Consulting. Forecasts by the Romanian authorities for next year point to a 7% inflation rate for the December 2004-December 2005 period. According to the Mercer study, pay levels in many Eastern European countries are likely to rise significantly next year as multinationals compete for the same pool of talented employees. “Despite high pay rises in Eastern Europe, manufacturing is still migrating from west to east to exploit the much lower labour costs. Going forward, there will be greater wage pressure for key skills in Eastern Europe,” said Mark Sullivan, European Partner at Mercer. The top five countries in terms of expected pay increases above inflation include four Eastern European countries, including Lithuania (7.7%), Bulgaria (5.6%), Latvia (5.6%) and Serbia and Montenegro (5%). On the other hand, employees in Hungary and the Czech Republic, despite receiving significant pay increases of 6.7% and 4.2%, will also see inflation reaching 5.4% and 3.2%, respectively, next year. ZF