• 28% of the responding companies, +11 percentage points more than in the previous survey, say that have increased salaries by 5% -10%, and 22% (+16pp) by 10% -20%
• The percentage of companies that froze employment this year has increased from 26% at the beginning of the year, to 48% at the end of the year
The 10th edition of the survey “The business outlook in Romania" conducted by Valoria in partnership with Doingbusiness.ro brings the perspective of how managers have adjusted now the forecasts made in early 2021.
„The V-shape recovery of the economy is beginning to be questioned by the directors of the Romanian companies. It is the first time in the last three editions of this survey when the perception regarding the favorable evolution of the business environment shows a setback. The certainty confirmed by the NBR and validated by respondents regarding the increase in inflation, the estimates regarding the evolution of the number of employees and investments demonstrate the beginning of confidence crisis in the economy. Important contributors to this loss are the political crisis, the effects of the pandemic, the rising prices of energy and raw materials, the crisis in supply chains, as well as the lack of skilled labor.”, says Constantin Magdalina, Emerging Trends, and Technologies Expert, co-author of the research.
Forecasts on turnover
Compared to the forecast at the beginning of the year, the outlook for turnover growth is slightly more positive now, at the end of 2021. Of the respondent companies, 18% in the second half, compared to 22% in the first half, expect lower turnover, and 5% compared to the previous 13% expect stagnation. However, 22% of companies forecast that their turnover will increase by 5%-10% in 2021, followed by 17% who forecast an increase of 10%-20%. On the other hand, the percentage of companies expecting increases in turnover of more than 20% is 18%, compared to 12% at the beginning of the year.
At the level of industries, an increase of 10%-20% is forecast by 28% of industrial production companies, 29% of professional service companies, 42% of IT companies and 49% of those in the pharmaceutical industry and of health.
Forecasts on profits
The forecasts for the evolution of profit in the second half of 2021 are in line with the trend on turnover, also being slightly more positive. Although now 33% of companies (compared to 26% at the beginning of 2021) expect their profit to increase by 1%-5% this year, we see a significant decrease on the level of 10%-20%, from 15% to 8%. It increases the percentage of companies that say the profit will grow by over 20%, from 6% to 21%. Also, the percentage of companies that predict a decrease in profit is reduced from 22% in the first part of the year to 18% now.
At the level of industries, a profit increase of 10%-20% is forecast by 29% of professional service companies, 34% of media and advertising, 43% of IT, 45% of agriculture and food, and 51% of those in the pharmaceutical and healthcare industries.
Forecasts on investments
From the findings of the survey we notice that almost doubles the percentage of companies that say they have reduced their investments in 2021, from 9% in the first part of the year to 17% in the second. Moreover, the percentage of companies that stagnated the level of investments this year increased from 27% to 39%, and the percentage of those that made higher investments decreased by 4 percentage points, from 56% in the first part of the year to 52% at this moment.
On the other hand, at the industry level, the survey clearly shows that most firms in trade (26%), energy and utilities (33%), IT (37%), agriculture and food (54%), and from the pharmaceutical and health industry (55%) say that investments have increased by 10%-20% this year.
Forecasts on the number of employees and wages
In the survey conducted at the beginning of 2021, we saw that 26% of the responding companies expected a stagnation of the number of employees, and now, at the end of the year, this percentage is 48%. At the beginning of this year, 26% of companies said they expected an increase in the number of employees, but only 37% did so. On the other hand, the data show that the percentage of companies that reduced the number of employees in 2021 was 15% compared to 28%, as estimated at the beginning of the year.
At the same time, the results of the study show that 36% of the trading companies, 37% of the information technology companies and 25% of those in the pharmaceutical and health industry had increases in the number of employees of 10%-20% in 2021, whilst 33% of the companies in construction and 27% of those in agriculture had increases of 20%-30%.
If at the beginning of 2021, 36% of the responding companies did not forecast salary increases, the maximum of the last 5 years, at this edition of the study the percentage of these companies decreased to 15%. Instead, the percentage of companies that say they have increased their salaries by 5% -10% this year increases from 17% to 28% and from 4% to 22% the percentage of those that have increased their salaries by 10% -20% in 2021. On the other hand, 34% of companies in industrial production, 37% in IT, 35% in construction and real estate increased their salaries by 10% -20% this year.
Top 5 challenges and opportunities
The most important challenges for companies in 2021, as revealed by the responses of directors and managers to this study, have been the following: rising costs (68%), lack of skilled labor (57%), maintaining cash flow (48%), optimizing the supply chain (46%) and changing consumer behavior (41%).
Also, according to the responding managers, the most important opportunities of 2021 for Romanian companies have included the following: development of new products/services and access to new sales channels (48%), digitalization and automation (43%), expansion in foreign markets (34%), access to non-reimbursable funds (31%) and the growing e-commerce market (24%).
„According to the results of the study The business outlook in Romania, the level of optimism or pessimism differs depending on the industry. The answers offered by the leaders of Romanian companies show that there are industries that are going through a period of accelerated growth, such as the agriculture industry, the IT industry, professional services, but also industries that are going through a difficult period. Concerns expressed by managers refer to skilled labor shortage, rising commodity prices and the inflation rate, while opportunities concern new products and services, new sales channels, digitalization and automation, and expansion in foreign markets.”, says Dumitru Ion, CEO of Kompass Romania and Doingbusiness.ro, co-author of the survey.
About the survey
This survey on managers' perception of the evolution of the Romanian business environment in 2021 is based on a questionnaire that analyzes the perceptions of 475 top executives from companies operating in various industries. The questionnaire was applied between 7 September 2021 and 7 November 2021. Of the respondents, 9% came from companies with a turnover of more than EUR 100 million, 14% from companies with a turnover between EUR 50-100 million, 13% with turnover between EUR 10-50 million, 38% with turnover between EUR 1-10 million and 26% below EUR 1 million in turnover. 33% of the respondents have the position of CEO/President/General Manager, 12% the position of Vice President/Executive Director and 12% are Members of the Board of Directors. This survey was conducted in partnership with Doingbusiness.ro.
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You can consult the main conclusions of the research in the docucument below: