Romania Steps Up to Implement European Minimum Wage by July 2024

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Photo: Romanian Banknotes

The Social Democratic Party (PSD) of Romania has taken a bold step, committing to implement the European minimum wage across the nation by the end of 2024. This initiative aligns with the EU legislation that mandates member states to integrate the Directive on adequate minimum wages within the year, with enforcement starting from November 15.

As it stands, Romania's gross minimum wage is at 3,300 lei, with a government-approved increase to 3,700 lei slated for July 1, 2024. This increment not only meets the European Union's directive but also aims to ensure that the minimum wage accounts for at least 50% of the national average salary. The average salary projected for the 2024 fiscal year, which is used for state social insurance budget calculations, is 7,567 lei.

The PSD is proactive, with specialists already drafting a proposal in collaboration with Labor Minister Simona Bucura-Oprescu to transpose the European directive into national legislation. The plan includes establishing a systematic, annual mechanism for predictable minimum wage increases.

As the European minimum wage is set to be standardised across the EU by the latest November 15, Romania anticipates introducing this new baseline from July 1. This strategic move is aimed at achieving the European objective that mandates the least paid employees to earn a minimum of half of the average economy wage.

To ensure a smooth transition and adherence to the European directive, the Ministry of Labor is crafting a regulatory framework for integrating the Directive on adequate minimum wages into Romanian law. This framework is expected to clarify the increments necessary for companies and employees earning the minimum wage.

Understanding Romania's Approach to Calculating the European Minimum Wage

The European Union has outlined two primary formulas for Romania to calculate the European minimum wage, presenting three practical options for legislative application:

  1. Average Salary Alignment: With the average gross salary in Romania at 6,400 lei, translating to a net ‘take-home' value of 3,974 lei, the minimum wage lags behind the minimum consumption basket for a decent living, which stands at 2,708 lei per person per month. Experts suggest that to meet the European minimum income standards based on the cost of living, the net minimum income should increase by at least 800 lei.
  2. Percentage of Average Earnings: Should the minimum guaranteed income be pegged at 50% of the gross average earnings, this would necessitate an approximate increase of 1,300 lei to the current minimum wage to bridge the gap effectively.
  3. Inflation Adjustment: Proposed by the National Institute of Statistics (INS), this method suggests adjusting the minimum gross salary based on the annual inflation rate. For instance, with an inflation rate of 7%, the minimum wage would need to increase by at least 200 lei this year.
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