Low productivity, big excuses: the problem of Romanian companies is not technology, but management
The productivity of employees in Romania has increased by 17.5% in the last four years, according to an analysis carried out by a business consulting company, based on official data from the Ministry of Finance and the INS, but the difference with the European Union average remains considerable.
The productivity of employees in Romania increased by 17.5% in the last four years. Archive photo
Currently, a Romanian employee generates approximately 6,000 euros per month, while the real productivity per hour worked is only 20 euros/hour, compared to 46 euros/hour in the EU.
Romania vs the EU average – labor productivity
Eurostat data, interpreted by TPC Concept, show that labor productivity in Romania has increased significantly in the last two decades, especially after joining the European Union. It is now at approximately 72–73% of the EU average, below the EU average of 100. However, Romania remains competitive on wages.
According to Eurostat data for productivity per hour worked (EU = 100):
• Germany: 103–104
• Italy: 104–105
• Spain: 98
• Czech Republic: 85
• Poland: 79
• Romania: 72–73
• Bulgaria: 70
Romania thus produces approximately 25–30% less economic value per hour worked than the EU average.
On paper, the numbers add up. In reality, the pace is too slow to close the gap with developed economies. And the problem is not one of context, but of mentality.
“In organizations where employees are seen primarily as a cost, management's primary concern is to reduce personnel expenses“, Sorin Spiridon, TPC Concept business consultant, told “Adevărul”, emphasizing that this is, in fact, the structural error: the obsession with costs instead of the focus on value.
According to him, there are companies that invest in machinery and automation not to increase performance, but to keep the number of employees as low as possible. Short-term accounting efficiency, but long-term safe capping. “This approach may bring efficiency in the short term, but limits the development of the organization's internal capabilitiesi”, points out Spiridon.
Employees must be seen as value creators
The contrast is evident in the firms that really perform. There, employees are not treated as an expense to be cut, but as a source of value to be multiplied. “Companies that see employees as value creators […] invest in skills development, talent retention and organizational culture“says the consultant. The difference is not subtle, it is fundamental.
And the numbers confirm this break in logic. At the company level, real productivity is not just measured in revenue per employee, but in labor productivity — how much value each euro paid in wages generates. A simple example: a company with a turnover of 10 million euros and 100 employees produces 100,000 euros per employee. If the annual gross salary is 15,000 euros, the yield is 6.6.
The problem is that this yield is below what is considered healthy.
“In many industries, a healthy level of this ratio is between 7 and 12”explains Călin Spiridon, managing partner at TPC Concept. In other words, many Romanian companies simply do not extract enough value from the human resource they have, because they try to compensate for the lack of organization with extra people.
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One of the most common situations is that of companies that grow faster than they can organize. The business is expanding, but the processes are lagging behind. The structure becomes unclear, responsibilities overlap, and the reflex solution is to hire new people, experts say, and not to create value, but to cover the chaos.
Equally problematic is the inability to manage complexity. As new products, new markets and additional processes emerge, organizations should simplify and optimize. Instead, many choose the convenient option: add staff. The result is a system where people work harder to compensate for what should be solved by processes, technology or structure.
On top of all that, another major brake is added: the excessive centralization of the decision. In companies where everything depends on the founder or a few key people, velocity decreases, bottlenecks increase, and the organization is constantly operating below potential.
The truth is simple and inconvenient: low productivity is not a market or employee problem. It's a management issue.
The companies that fall behind are not necessarily those in “weak” industries, but those that fail to turn day-to-day activity into real economic value. The difference is not how much people work, but how their work is organized.
What measures should companies take to raise the level of productivity
The increase in productivity is not the result of a single decision, but of a set of measures aimed at the way in which the company's activity is organized and managed:
• reducing organizational complexity – as firms grow, additional processes, levels of coordination and administrative activities emerge. If these elements are not streamlined periodically, the organization ends up operating with too many people to manage the same activity.
• investment in employee development – high productivity companies treat people as a value creator and constantly invest in professional training, skill development and increasing team autonomy.
• clear definition of work processes – well-structured processes reduce errors, eliminate redundant activities and allow the organization to operate more efficiently, without proportionally increasing the number of employees.
• team stability – companies that manage to retain employees retain the competence accumulated within the organization and reduce the costs generated by staff turnover.
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• investments in technology, IT systems and modern machinery – these can significantly contribute to increasing productivity, as they allow automation of some activities and more efficient use of resources.
In general, companies that succeed in combining these elements—simplifying the organization, developing people, well-defined processes, and investing in technology—are the ones that achieve, over time, a competitive level of productivity.
Productivity often becomes a topic of discussion only when external pressures arise: rising wage costs, shrinking margins or difficulties in finding labour. At that point, management begins to question whether the organization is operating at its true potential.
“In my consulting experience, productivity is rarely an explicit management concern. Most companies track indicators such as turnover, sales growth or profit, but much less the efficiency with which resources are used to generate these results“, concludes business consultant Sorin Spiridon.
In reality, productivity should be one of the central indicators of a company's performance, because it shows how much economic value each employee generates. Companies that consistently monitor this indicator generally manage to grow more healthily and remain competitive in the long term.
In the coming years, the competitiveness of Romanian companies will no longer depend so much on the cost of labor as on their ability to increase productivity.
