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April 21, 2021

BNR’s Isarescu: Wage increases – inevitable, must be kept under control

Wage increases are inevitable and this labor force movement boosts them, but they must be kept under control in a reasonable manner, said on Wednesday the governor of the National Bank of Romania (BNR), Mugur Isarescu, in a press conference.

“We monitor them (e. n. wage increases). Several trimesters ago I said that given the workforce migration, I presented here in front of you, if I’m not mistaken and in the last report on inflation also an indicator, I called it the indicator for the labor market tension, things get clear here. The lack of workforce manifests itself in various sectors. Consequently what we said and are repeating right now is that wage increases are inevitable and this migration of labor force emphasizes them. However, what we must do is be wise, keep them under control in a reasonable manner, correlated with several indicators … productivity is only one of them, I’ve mentioned this one, pertain to what is called macroeconomic balance and financial macroeconomic stability. These are very high-priced goods. Romania has achieved them at great cost and it would be wrong to loosen the grip of these macro balances,” said Mugur Isarescu.

He specified that these not only depend on the National Bank and for this reason a balanced policy mix is being discussed. Isarescu specified, however, that he does not believe that the monetary policy can balance or offset weaknesses in other areas, but if it does it, it will do it in a suboptimal manner.

“We do not have weak developments regarding the economy and the productivity. On the contrary. The evolutions are positive. (…) What we need at present is to keep the right measure, so to say, of things. (…) We have escaped some major risks. Last year the major risks were in the banking legislation.

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