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Wage correlation with consumer price index – Compensation and indexing

Author

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  • Ana CARP

    („Artifex” University of Bucharest)

Abstract

Remuneration staff from public institutions is a priority issue for the Government. Salaries are set by law. The choice of payroll system is based on precise criteria. The problem of wage correlation with the consumer price growth index was generated by the galloping evolution of prices and the existence of a inflationary process in Romania since 1991. The concept of „base-salary compensation-indexation system” due to rising prices and tariffs was introduced by the Law no. 14/1991 on salary. Wage correlation was manifested by two methods: compensation and indexing. For the application of both correlation methods it starts from the cause, and this is common, respectively the increase of the consumer prices. Since the two methods are based on statistical indicators, it is necessary to know correctly the terms used by each method. In this article, the authors address the issue of salary, salary correlation methods, explaining the main concepts and formulas used to apply the methods.

Suggested Citation

  • Ana CARP, 2017. "Wage correlation with consumer price index – Compensation and indexing," Romanian Statistical Review Supplement, Romanian Statistical Review, vol. 65(11), pages 54-64, November.
  • Handle: RePEc:rsr:supplm:v:65:y:2017:i:11:p:54-64
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    File URL: http://www.revistadestatistica.ro/supliment/wp-content/uploads/2017/11/A3_rrss_11_2017_EN.pdf
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    References listed on IDEAS

    as
    1. repec:agr:journl:v:xxiv:y:2017:i:2(611):p:99-110 is not listed on IDEAS
    2. Constantin Anghelache & Ana CARP, 2016. "The Voluntary Contributions Model – Study Regarding The Completion Of The Length Of Service," Romanian Statistical Review Supplement, Romanian Statistical Review, vol. 64(12), pages 194-201, December.
    3. Kanagaretnam, Kiridaran & Sarkar, Sudipto, 2011. "Managerial compensation and the underinvestment problem," Economic Modelling, Elsevier, vol. 28(1), pages 308-315.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    wage; consumer price growth index; compensation; indexation; annual inflation rate; public institution;

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

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