IMM Romania (the Romanian SME association) will request that the Government keep the national minimum wage unchanged for 2027, arguing that a further increase could exacerbate economic difficulties and place additional pressure on companies, the organization's president, Florin Jianu, stated on Tuesday during a press conference.

'We will firmly and clearly request that the national minimum wage be maintained at its current level for 2027. We are acting as if we were in a growing economy, as if the economy were functioning well right now, and as if various business sectors were competing in terms of growth, while completely ignoring the precarious, truly dire economic situation we are actually facing. An increase in the national minimum wage would, in effect, deepen the crisis. It would mean that the state continues to extract funds from the private sector,' Jianu asserted.

He maintained that any increase in the minimum wage must be evaluated in relation to productivity and the trends of key economic indicators. 'How do we encourage companies to hire more people, and how do we foster an increase in the national minimum wage? We shouldn't just arbitrarily raise it, by a stroke of a pen, regardless of productivity, the economic situation, or whether macroeconomic indicators have actually improved. We've abandoned the established formula, simply because it doesn't suit us, even though it shows that the average wage hasn't grown this year, jobs have been lost, and productivity has declined due to soaring costs. (...) There is no serious discussion on this matter; instead, figures are just plucked out of thin air, it's as if there's an auction for the minimum wage. Someone throws out 5,000, 6,000, or 7,000, it doesn't seem to matter. We aren't taking any economic indicators into account,' stated the president of IMM Romania.

According to him, a 300-lei increase in the minimum wage would result in only an extra 100 lei in the employees' net pay, as the bulk of the additional cost is consumed by taxes and social contributions. 'According to our analysis, beyond a certain threshold, for instance, if we increase the amount by 300 lei, reaching a total cost of 4,729 lei, the state takes 68% of that 300-lei difference. The state receives 212 lei, while the employee gets 100 lei. Why? Because a series of personal deductions change above a certain level, resulting in the state gaining a larger share,' explained Jianu.

In his view, discussions should primarily focus on reducing the tax burden on labor.

'We have analyzed several potential solutions, which we intentionally omitted from this document to avoid any misinterpretation or speculation, but we have identified three distinct approaches. We could either reduce this burdensome labor taxation by a certain percentage, initiating a serious dialogue between employers, unions, and the government, or increase the deductible amount (currently 200 lei, though it is worth noting that there is talk of eliminating this deduction entirely). Alternatively, we could raise this deductible to 400 lei to boost net pay and put more money into people's pockets, or we could begin a serious discussion regarding the implementation of a differentiated tax system for minimum wages,' he stated.

The president of IMM Romania also called for a dialogue with social partners, grounded in analyses of the effects of increasing the minimum wage and reducing the tax burden on labor.

'We are requesting that the Government conduct a comparative analysis and engage in a genuine dialogue with social partners regarding these two public policy instruments: the increase in the national minimum wage and the reduction of labor-related taxes. We believe that three objectives must be met simultaneously: higher net wages for employees, the preservation of companies' competitiveness and investment capacity, and a tax system that is both predictable and sustainable for the state budget,' stated Jianu.

He also drew attention to the risk of an increasing number of job losses.

'The consequence is that we will deepen this economic crisis; more and more firms will close, in fact, over 125,000 businesses have already shut down in the first eight months of the year. (...) I believe we are heading toward 100,000 lost jobs this year, and we see no way out,' the representative of IMM Romania said.

Jianu announced that the organization will present its analysis of the impact of the minimum wage increase to the Government, and that the topic will also be addressed during a meeting scheduled for Wednesday with the Minister of Labor. 'The analyses I have presented to you are the same ones we will also present to the Government. (...) Tomorrow morning, we have a meeting with the Minister of Labor regarding various other topics, but we will also present our position on this matter,' he stated.

According to an impact analysis presented on Tuesday by IMM Romania, an increase in the gross minimum wage by 300 lei, from 4,325 to 4,625 lei, would result in a rise in the net wage of only 100 lei, while the total cost incurred by the employer would increase by 311 lei per month. These calculations were based on the assumption that the 200-lei tax relief applicable to the minimum wage will expire on December 31, 2026. AGERPRES(RO - writing by: Nicoleta Banciulea; EN - writing by: Bogdan Gabaroi)