​​​​​​​​A citizen who worked for an average net salary last November could buy more than 1.8 tons of potatoes with his salary. A year later, the same citizen could buy 1.03 tons of potatoes, although his net salary increased, according to statistics provided on Thursday. Right, report The International Labor Organization shows that real wages fell in 2022 around the world.

I took potatoes as an example completely by accident, from the INS Price Bulletin, which publishes the prices of various food products in 48 settlements.

A worker in the tourism sector could afford the least amount of potatoes (about 580 kg versus almost a ton a year earlier), and IT workers could afford the most sacks of potatoes per net salary.

Winners and losers in terms of purchasing power

We’ve calculated annual wage increases since last November and compared them to the rate of inflation. Anything above the red line on the graph are the winners. Most are below the line, those whose wages have risen less than prices.

The rising cost of living puts not only employees, but also employers under the red line.

Real wages (adjusted for inflation) worldwide will fall in 2022 for the first time since the 2008 financial crisis, according to a report by the International Labor Organization.

While food or fuel price inflation affects the poorest in every country, the decline in real wages has been more pronounced in rich countries. In the US and Canada, real wages fell by about 3.2%, fueling fears of a wage-price spiral.

That’s right, the labor market has been thrown out of balance by the Covid-19 pandemic and its aftermath. Many people have lost their jobs (some unintentionally and others to care for other family members battling various illnesses).

In addition, people over 50 who lost their jobs during the pandemic are finding it difficult to find work again.

Deglobalization trends and demographic changes are also changing the labor market and compensation for work. Regardless of the reasons, the fact that wages are not keeping up with inflation is creating stress for government policymakers and employers.

In response to rising inflation, companies raise prices for consumers or prefer “shrinkflation”: either reduce the weight of the product, or make the packaging cheaper, or reduce the quality of the services offered.

In Romania, where consumer spending is the largest component of GDP, if people have less money (in real terms) to consume, neither business nor the economy as a whole can grow much.

According to the ILO, wage dynamics should take into account the “compositional effect”, which reflects changes in the composition of employment. According to official data, most of the workers who lost their jobs had low wages. Highly paid employees remained at the enterprises, so the average salary increased.

Before the outbreak of the pandemic, real wage growth in the EU fluctuated between 1-2%. After a temporary recovery in wage growth in 2021, the next year (2022) real wages fell to -2.4% as inflation “bitten” even harder.

In Eastern Europe, real wages grew relatively quickly before the pandemic, increasing by more than 5% between 2017 and 2019. The outbreak of the pandemic slowed real wage growth to 4.0% in 2020 and 3.3% in 2021, while accelerating inflation pushed real wages down to -3.3 in 2022

What else does the INS data show?

In November 2022, the average gross salary was 6,679 lei, which is 218 lei (+3.4%) higher than in October 2022. The net salary was 4,141 lei, which is 133 lei (+3.3%) more compared to October 2022.

The highest values ​​of the average net salary were recorded in the activity of providing information technology services (including the activity of IT services) (10,329 lei), and the lowest in hotels and restaurants (2,258 lei).

November 2022 compared to October 2022

In November 2022, in most types of economic activity, the level of the average net salary increased compared to October 2022 as a result of the provision of periodic bonuses (quarterly, annual, before the winter holidays, for special results or achievements, 13th salary), the right to in-kind and material assistance, amounts from net profit and other funds (including securities). Also, the increase in the average net salary was due to production achievements or higher revenues (depending on the contracts/projects).

The most significant increase average net wages at the CAEN Rev.2 section/department level was fixed as follows:

• by 56.6% in forestry and logging (including fishing and aquaculture) as a result of granting one-time bonuses (for special achievements or for winter vacations) and natural rights;

• from 10.5% to 14.5% in the manufacture of tobacco products, manufacture of machinery, machinery and equipment, n.e.s., manufacture of motor vehicles, trailers and semi-trailers, printing and reproduction on recording media, metal ore mining, paper manufacture and paper products;

• from 7.0% to 10.0% in the production of rubber and plastic products, activities in the provision of services in the field of information technologies (including computer maintenance activities), financial mediation (except for the activities of insurance and pension funds), activities in the field of cinematography, video and television production, audio recording and music editing activities (including broadcasting and program transmission activities), electrical equipment manufacturing, storage and transport support activities;

• from 3.5% to 6.5% in the production of furniture, postal and courier activities, auxiliary activities in the field of financial mediation, insurance activities and pension funds, tanning and leather processing (including the production of tourist and leather goods, harness and footwear ; preparation and dyeing of fur) , manufacture of substances and chemical products, water transport, manufacture of textiles, other industrial activities nca, research and development, manufacture of other vehicles, telecommunications.

The decrease in the average net salary compared to October 2022 is due to the provision of one-time bonuses, in-kind and monetary assistance, amounts from net profit and other funds (including securities) in the previous months. Also, the decrease in average net wages was caused by production disruptions or lower revenue (depending on the contracts/projects).

The most significant falls average net wages at the CAEN Rev.2 section/department level was fixed as follows:

• by 10.5% in air transport;

• from 4.0% to 7.5% in crude oil and natural gas production, publishing, insurance, reinsurance and pension fund activities (except for those included in the state social insurance system).

In the budgetary sphere, in November 2022, there was an increase in the average net salary compared to the previous month in education (+2.3%, due to the hourly wages of teachers), respectively, in public administration (+1.5%). . In the field of health care and social assistance, the average net salary decreased slightly compared to the previous month (-0.2%).