“I don’t think employers will freeze their benefits policies, as they are clearly defined in the employment agreement. It is very likely to see legal actions proceeded by employees, if companies would resort to this cost-cutting measures”, said Alina Popescu, manager at Reward Information Service at Hay Group Romania.

Over the past few years, an increasing number of companies started to add benefits and perks to the Romanian employees’ base salary, PayWell-Salary and Benefits 2008 survey conducted by audit and advisory firm PricewaterhouseCoopers found.

If in 2004, the fixed salary accounted for 75% of the pay packages, the variable components had a 13% share, fixed components -5% and benefits – 7%, in 2008, the fixed salary would account for merely 65% of an employee’s monthly income. The most popular benefit offered to employees has become the lunch ticket.

However, the benefits such as gym membership or private nursery rooms or daycare facilities have been increasingly used by companies to retain workers. “Not even these less usual perks will disappear from the structure of the pay package, because it represents an important cost for employers. When a companies freezes its salary policy, taking away some of these perks would lead to lower levels of motivation and retaliatory behavior”, said Popescu.

More than a quarter of companies operating in the local market have decided to freeze salaries this year, in contrast with other European states where roughly 37% companies will act similarly, a recent Hay Group research found. “Freezing salaries is a good strategy amid financial crisis, especially because companies who choose to do this provide high severances to the discharged employees, above the market average”, Popescu added.

Nearly half of (80) of the companies within Hay Group Romania’s database have boosted salaries this year. “Most of the employers raise salaries at the beginning of the year, and the increase percentage is established following the January inflation rates or the full-year inflation projection”, said Alina Popescu. Hay Group survey also shows that Romanians will benefit of an average pay rise of 6.3% in 2009, while in other neighboring countries such as Hungary, Greece or Slovakia, the pay packages are expected to advance by as little as 3.5%.

The pay packages for middle and top managers in financial sector were raised by 4.7% in first quarter this year, while those for administrative positions increased by 4.6%. If until now, financial-banking field was among the highest paying hubs, employees in FMCG industry benefited of major salary increases this year.

As for management and administrative positions, the pay rises in FMCG stood at 8.1% while for top management at 7.6%. Even if processing sector has been severely hit by economic crisis, with an increasing number of employees losing their jobs, the pay packages of specialists and workers in the field increased by 6.3% this year while top management pay soared 6.1%.

The main competitors of Hay Group are the audit and financial advisory firms PricewaterhouseCoopers (PwC), KPMG, Ernst & Young and Deloitte, as well as Consulteam. Popescu refused however to disclose the last year’s turnover of Hay Group Romania, mentioning that “we are still among companies with annual business over 1 million euros”. In 2007, Hay Group Romania recorded a turnover of 1.3 mln euros and net profit of 100,000 euros.