Average wage growth slowed to 6.9% y/y in Q4 from 7.7% y/y in the previous quarter, the stat office (NSI) reported. This was the lowest y/y growth rate of the nominal average wage since Q4’14, but we think the deceleration was due to a high base effect from the previous year. Real wage growth also eased to 4.9% y/y in Q4 from 6.0% y/y in Q3.
Overall, wage growth rates will remain stable in the mid-run given the labor market tightening trend and will keep supporting domestic consumption, in our opinion. Furthermore, we think the 9.8% y/y minimum wage hike, alongside the 10.0% and 20.0% increases in the public sector and teachers’ wages as of 2019, will give a solid boost to the average wage growth in the next quarters. On the other hand, the hikes will result in further expansion of the gap between the nominal wages in the public and private sectors in the next months. The average wage in the public sector in Q4 amounted to BGN1,222, up by 7.4% y/y compared to a 6.8% y/y increase in the private sector wage, which reached BGN1,154.
Average wage posted the highest y/y growth in the ICT and mining sectors, up by 13.9% y/y and 10.1% y/y respectively. The average wage in the real estate activities deepened its y/y decline to 6.9% y/y.
Total employment rose by 0.6% y/y in December to 2.3 million people, the NSI data showed. The construction and ICT sector posted the highest y/y increases in hired people — by 5.7% y/y and 5.2% y/y respectively, which we explain with the high orders in the construction sector and the continuous expansion of IT companies on the local market. The number of employed people in the mining and manufacturing industries fell by 3.0% y/y and 0.5% y/y.