The association of businessmen in Romania (AOAR), one of the largest employers’ association in the country, has denounced on Monday the government plan to increase minimum wage from November 1 by 9.5 percent up to RON 2,080 as being an arbitrary and populist measure.
AOAR points out to the economic slowdown in 2018.
“Under such conditions, the announcement of the advance of the increase in the minimum wage to November 1, 2018, from January 1, 2019, is a populist, arbitrary measure adversely affecting the private sector, especially the manufacturing industry,” AOAR said in a press release.
The government could increase the minimum gross wage in Romania by 9.5 percent from November 1, up to RON 2,080 (EUR 446), and implement higher minimum wage for university degree and seniority, according to the Labour Minister Olguta Vasilescu.
Romania currently has the third lowest gross minimum wage of RON 1,090 (EUR 416), after Bulgaria, EUR 261, and Lithuania (400 EUR), according to a survey of professional services firm KPMG.
But following the rapid increase of minimum wage decided by the government during the last couple of years, almost a half (46 percent) of all Romanian employees are paid with the minimum wage, while those who earn more than EUR 700 represent only 16 percent of total, according to a recent survey.
This year, Romania climbed one position compared to 2017 when it had the second lowest minimum wage across the European Union.
But experts say this change in position is only due to the artificial increase in the gross minimum wage as a result of the shifting of the employer’s social security contributions to the employee.
Romania has the second-lowest net minimum wage in the EU, of around EUR 240.
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