Romania could save over EUR 2 billion a year by actually keeping 1,000 jobs, found a recent analysis from the Casa de Insolventa Transilvania insolvency specialists. Saving 1,000 jobs means having 1,000 consumers, who have a positive impact on the local economy, and as they are part of families, the specialists estimate a positive impact via around another 2,000 indirect consumers.

When a company is reorganized and jobs are saved, the state budget is clearly under less pressure, as it will not need to give extra funding in unemployment benefits for the redundant workers.

The calculation made by Casa de Insolventa Transilvania shows that for 1,000 employees getting the minimum gross salary – RON 750 a month, the employers get RON 566 each a month. The contributions paid by the 1,000 employees to the state budget is of RON 184,000 a month, while the employers' contributions stay at some RON 210,000. In total, the state cashes in some RON 394,000 a month – or EUR 88,500. In case the 1,000 employees are laid off, the state will have to pay RON 375,000 in unemployment benefits per month – or some EUR 84,0000, which results in a loss of some EUR 172,000 a month for the state. In a year, by keeping the 1,000 jobs, the state would thus save some EUR 2 billion a year. The calculation only takes into account the state''s direct cashings, and not the indirect impact on the country's economy. The company's bankruptcy or closure will lead to a drop in turnover and in profits for its suppliers. When a company goes bankrupt, the average rate of debt recovery for suppliers who do not have real guarantees is below 20 percent, according to the specialists from Casa de Insolventa Transilvania.

So keeping a company which has 1,000 employees should be a priority for the Romanian state, which should be actively involved in giving tax reductions and other facilities, according to the insolvency specialists.

editor@romania-insider.com