German group Kaufland, the biggest retailer in Romania in terms of revenues, is the first big company in Romania that reacted to the fiscal changes the Government approved on Wednesday.

Kaufland announced yesterday that it would increase its employees’ gross wages starting January 1, 2018, to compensate for the social contribution transfer from the employers to the employees, which was decided by the Government. The company said that all of its employees will see an average net wage increase of 1.5% at the beginning of next year.

“The company thus understands to appease the worries of its employees and their families and assures them that, beyond legislative changes, the company makes all the efforts for their financial security,” said Laura Iancu, Kaufland Romania HR manager, in a press release.

Kaufland is one of the biggest employers in Romania, with some 16,400 employees working in its 115 stores.

On Wednesday, Romania’s Government adopted a series of changes to the Fiscal Code that impact the salaries of the country’s 4.85 million employees. The social contributions that used to be split between employers and employees will all be moved on the employees starting January 1, 2018. At the same time, the individual income tax will be cut from 16% to 10%.

These measures should not have any impact on the employees’ net wages or the companies’ overall personnel costs, the Government explained. However, in order for net salaries to remain at the current levels, employers need to increase gross salaries by almost 20%.

Unions criticized the Government’s measure saying that it may result in lower salaries for many employees in Romania as some companies may decide not to increase gross wages.

PM Mihai Tudose commented on Kaufland’s announcement in a Facebook post in which he accused one of the union leaders who criticized the Government’s recent measures, of working for multinationals.

“We appreciate that people of good faith and union leaders haven’t let themselves fooled by their former colleague, Bogdan Hossu. He turned into the union leader of bankers and business people who want to get money out of the country, without paying taxes to the Romanian state, namely to us, Romanians, for healthcare, education, infrastructure,” Tudose wrote.

editor@romania-insider.com