Romania’s labor minister blames employers for wage declines in private sector

If some employees in the private sector got lower wages in January, it’s because their employers wanted to increase their profits not because of the new tax code, labor minister Lia Olguta Vasilescu said on Wednesday.

Her reaction came after unions and business organizations signaled that up to 2 million employees in the private sector may have got lower net wages in January after all social contributions were transferred from the employers to the employees and deducted from the gross wage.

“I repeat so that everyone understands, the social contribution transfer shouldn’t affect the net salaries of employees in the private sector, because the employers have the same expenses as last year. If some employees got lower wages, this means that their employers wanted to increase profits, so they stole from the employees, to say this more directly, it’s not the Fiscal Code’s fault,” Vasilescu said.

The government decided last year to move all social contributions from employers to employees starting January 1, 2018, despite critics from the business environment. The government promised at that time that net wages wouldn’t be negatively impacted by this measure. However, while most big companies increased their employees’ gross wages so that the net wages wouldn’t drop, many small firms haven’t done that yet. Thus, the employees whose gross wages remained the same, go 20% lower net amounts, while their employers reduced their personnel costs.

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