My view about The Economist’s article ”What Britain forgets: Romania is booming”


I was very pleased to read in one of The Economist’s blogs a great article about Romania: http://www.economist.com/blogs/blighty/2013/12/what-britain-forgets. After all, there is somebody out there who is sharing my opinion – there is not a real reason for Romanians to emigrate in UK after the New Year’s Eve. It is true that I have different reasons for believing this. And that is why I felt the need to write this article.

First:  all my friends who would ever wanted to work in UK are already there. They are working at Barclays, HSBC, ING, other prestigious banks that have branches in UK. They did not have to wait for January 1st 2014. They are good skilled Romanians, probably better than the average working person in the UK banking sector, and, of course, they are paid less than the UK citizens (even if some of them are better).

Second: I do not believe that the people who ”missed” (voluntarily or not) the train of leaving Romania just before the visas for Europe were lifted are looking now at a second chance to leave Romania and they are looking at United Kingdom as a ”promise land”. No. The people who live in Romania belong to one of the following categories: too old, too young, too tired, people hired in the public sector, politicians  or people who still have dreams about Romania – entrepreneurs or optimistic people with a decent job (I include myself into the last category). The fact that some of us have a decent life (or, in The Economist’s article view ”the average Bucharest resident is comfortably better of than the average resident of Manchester) it is not what is holding us from emigrating. There is one major mistake into this comparison – what’s the need for comparing what is happening with about 10% of the Romanians (that’s the Capital population) with Manchester? What is more important is that 90% of the Romanian population is much worse than the average resident of Manchester. This is what really matters. But, again, I do not believe that the Romanians are hoarding Wizz Air or Tarom or British Airways to fly to London after January 1st. Not the Romanians that live in Romania.

I was a little bit confused about the title ”Romania is booming”. Hmmm… there are just 2 things that are booming in Romania: fist, the statistics, and secondly, the taxes. The author refers at a 4.1% quarterly economic growth in Q3. As a Romanian, I can say for sure that I am not feeling it. As a Romanian, I can tell for sure that this is more like a cocktail  of ”a base effect” and a strong and untaxed agricultural year, helped by the Romanian Statistics methodology. Not a sound real growth. That is what I perceive.

What the author should also know is that I am looking at the average Romanian. And, the European statistics tell us a few things:

a) almost 45 % of the Romanians are at risk for poverty and social exclusion. I do not believe that we have this kind of figure in Manchester City

b) 50% of the Romanians kids are at risk for poverty and social exclusion. That means, that if a family has two kids – one of them is going to end up in poverty. It is the same for Manchester City?

c) the GDP/capita. The author should already know that the GDP/capita is more like a level for economic activity. And there is no reason to adjust the GDP/capita to prices, because the unadjusted figure shows us that the GDP/capita in Romania was 6200 Euros, while in UK was 30.500 Euros . That means 5 times higher than the Romanian GDP/capita. Do not adujust this! Each UK citizen produces 5 times more than each Romanian. That means he has 5 times more reasons to  live much better than any Romanian.

d) And as the GDP per capita is more like a level for economic activity, I invite the author to look for a better indicator: the actual individual consumption. I want everybody to be informed: the actual individual consumption/capita is a better indicator than GDP/capita to describe the welfare of an individual. And that’s because AIC/capita includes all the goods and services consumed by an individual. It also includes what the governments ”offer” to their population in terms of public services – health services and education services. Mr. J.C. (why this guy doesn’t sign with his/her full name?) – the author of the article – omits to tell us about this indicator. That’s why I want to underline it: in terms of actual individual consumption, the average Romanian is at about 50% than the average European. Just the Bulgarians lag behind (their AIC/capita is 49%). So, the European average is at 100%. Do you know where does UK stand? They are at 114%

Does the author know how many years do we have to ”perform”  a 4.1 (artificial) growth in order to reach the average UK citizen in terms of AIC? Let’s do the math: if the UK won’t have a single growth in the next 19 years, and Romania will be growing  each and every year for the next 19 years at a 4.1% anual pace, by 2032 we will reach UK. But, UK won’t stay there and, with the nowadays politics, we do not have any chance to averagely grow by 4.1% each and every year in the next 19 years. Do you want another scenario?

Let’s still assume that the UK AIC won’t grow at all in the next years (it will stagnate). And let’s assume that the Romania will grow by 2% each year (which might be possible with the nowadays economic policies). If Romania will grow by 2% and UK will stagnate, do you have any idea when are we going to reach the UK average citizen welfare? Let’s do the math again: it will take 41 years. So, by 2055, the average Romanian citizen will leave like the average UK citizen. So, Mr. or Mrs. J.C, please take a break with the average Bucharest citizen who is better than the average Manchester’s citizen.

And, please, take 4 more brakes:

Brake #2: ”The wages are rising fast”. In October 2013, the average net (after taxes) salary was 1615 lei (364.51 Eur). In October 2012, the average net was 1552 lei (341.09 Eur). That means 6.8 growth. But most of the growth is induced by the public wages increase. In fact, the salaries in the private sector, stagnated. Do you know how many Euros/hour means 364.51? Than means like 1.9 Euros/hour. Do you know what is the bottom ten percent of wage earners in Manchester? Is 6.27 GBP, or 7,52 Eur. That means that the lowest wage earners in Manchester city are making 4 times more than the average Romanian. Qed. And, keep in mind, budgetary salaries rose fast (because of some compensation). It was like a dog that barked only once.

Brake #3: ”Unemployment there is relatively low – lower than in Britain”. Would you bet? If I will tell you that the unemployment rate will be soon up from 7% to 10% just because of statistics (after the latest census, about 2 million people are out of Romania, so, you will refer the unemployed at a different base”. And, dear author, do not forget that almost 3 million Romanians have left the country in the last 7 years. If they would have been here (not in Italy or Spain), and looking at the economy, we will have about 20-25% percent. Keep that in mind.

The last brake: ”It’s budget deficit puts Britain to shame”. Oh, really? Would you have liked to have our deficit and have a 25% salary cut and an increase of the VAT, overnight, form 19pp tot 24 pp?. And 4 times natural gas increase? And 4 times gasoline increase? And 4 times electricity increase? And more social contributions? And more local tax?  And, dear author, if everything is sew goooood, why does the Government wants again to increase the taxes? And, dear author, speaking of services, I have a personal question: while Romania is booming, where would you like to be taken care of in case of a medical emergency? In Manchester or in Bucharest? I really would like to know.

And one more thing: do you know what is the average time for paying a bill between Romanian companies? It goes above 250 days. And do you know that the Mighty State ”helps” this? Do you know that if a company you are working with is faking the restructuring process – a.k.a. insovlency, you have nothing to do? And, on top of that, even if you have not been paid by that company, you still own the VAT that you have never received to the Romanian state? Do you know that by this mechanism, you are hit at least twice? You will never get the money back from your commercial partner and on top of that, you will pay an extra 24% to the Romanian State? (the VAT that you have never got). Do you know that the arrears in Romania are at about 5% of GDP (which will increase the deficit to a ”respectable” 8%? Do you know that the Romanian government (not his one, all the last ones, including this one) are respecting the Courts decisions in tranches? If the Court decided that you have to be paid TODAY for some amounts that were discretionary omitted to be paid, you will get the money eventually in 2018? And so on…

I will end this opinion by saying: I agree there will not be a wave of immigrants from Romania to UK. Not from Romania. Probably some Romanians who are already out of the country (in Spain, Italy – about 2.9 million people) will be tempted. But not from Romania.

But, from this, to describe what is happening in my country as ”booming” or ”waging are rising fast”, or being better in Bucharest than in Manchester, is a big difference. If somebody from the Romanian government would have written this, I would have called it PROPAGANDA. But I am sure that the Economist’s article was not paid. It is just the author opinion. Who is looking in a superficial way on the Romania’s fundamentals. That’s all.

If you find this article as being interesting, please read another one, that was also inspired from ”The Economist”. It was written 2 years ago: https://soviani.com/2011/12/25/the-sum-of-all-safety-belts/. I am just curious if the things I described in that article, are happening in Manchester City…

Anunțuri


Categorii:Editoriale, Stiri

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3 răspunsuri

  1. Stimate domnule Soviani,

    Va urmaresc cu mare admiratie elocventa prezentarilor pe teme economice de actualitate si va consider un mentor al vremurilor pe care le traim.

    Permiteti-mi sa va fiu de folos cu doua observatii privind acuratetea gramaticala a frumoasei limbi engleze. O greseala tipica (repetitiva) in discursul dvs. este dublarea subiectului cu pronumele corespunzator. A doua schimbare la care m-as gandi este folosirea prezentului simplu pentru situatii permanente si a celui continuu pentru situatii temporare sau procese in desfasurare. Mi s-a parut ca folositi prezentul continuu pentru situatii permanente.

    In speranta ca sugestiile mele vor fi de natura sa va ajute in exprimarea fidela a consideratiilor dvs., va doresc mult succes in continuare si raman a dvs. cititoare,

    Aurora Moscalu

    ‘First of all, all my friends who would ever want to work in UK THEY(ati dublat subiectul) are already there. They are working at Barclays, HSBC, ING, other prestigious banks that have branches in UK. They did not have to wait for January 1st 2014. They are good skilled Romanians, probably better than the average working person in the UK banking sector, and, of course, they are paid less than the UK citizens (even if some of them are better).

    Second, I do not believe that the people who ”missed” (voluntarily or not) the train of leaving Romania just before the visas for Europe were lifted are looking now at a second chance to leave Romania and they are looking at United Kingdom as a ”promise land”. No. The people who are still living in Romania (are in) belong to one of the following categories: too old, too young, too tired, people hired in the public sector, politicians or people who still have dreams about Romania – entrepreneurs or optimistic (persons) people with a decent job (I include myself into the last category). The fact that some of us are having (Present Simple expresses PERMANENT SITUATIONS, so it’s more suitable than the CONTINUOUS, which emphasizes a TEMPORARY SITUATION) a decent life (or, in The Economist’s article view ”the average Bucharest resident is comfortably better of than the average resident of Manchester) it is not what is holding us from emigrating. There one major mistake into this comparison – what’s the need for comparing what is happening with about 10% of the Romanians (that’s the Capital population) with Manchester? What is more important is that 90% of the Romanian population is much worse than the average resident of Manchester. This is what it (‘it’ IS NOT NECESSARY- it doubles the subject)really matters. But, again, I do not believe that the Romanians are hoarding Wizz Air or Tarom or British Airways to fly to London after January 1st. Not the Romanians that are still living (Present Simple expresses PERMANENT SITUATIONS, so it’s more suitable than the CONTINUOUS, which emphasizes a TEMPORARY SITUATION) in Romania.’

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  1. Effects on Romania: What Britain forgets Romania is booming – Blogul lui Radu Soviani | Euro Economy

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