Minister Vasilescu: No wage drops following contributions system change

No salary from Romania will diminish when the contributions system changes, on the contrary, the net salary will increase and the employee will have in his pensions account a higher amount, said last Sunday the labor minister, Lia-Olguta Vasilescu.

“This is written in the Government program and whoever read it saw six months ago that this will happen. For example, for a salary of RON 1,000 the contribution for pension system is 26.3 percent, but currently the employee’s contribution is 10.5 percent and 15.8 percent is the employer’s contribution. This 10.5 percent goes into the pensions account and the employer’s percentage goes to the national basket. What we do now is that for the same salary, the pension contribution will be 25 percent, not 26.3 percent, but it will enter directly to the employee’s account. This means a higher contribution. Currently the contributions are 39.25 percent, they will diminish to 35 percent and the tax per salary will diminish from 16 percent to 10 percent to cover this transfer of contributions from employer to employee, but not diminish the net salary of the employee,” said Vasilescu.

Although the minimum salary is currently RON 1,450, the minister said that the real minimum salary is RON 1,750, after the state contributions of 39.25 percent are paid.

„Basically, the real minimum salary in Romania is RON 1,750 because after are paid the state contribution of 39.25 percent, results the minimum salary. What we did was to transfer these contributions to the employee, so that you have more pension funds in your account and so that the minimum salary to still grow for the next years. In the Government program it’s written that the minimum salary will grow by RON 100 each year, so the next year it will be RON 1,550 and in 2019 RON 1,650, but the real salary will be RON 1,850 for the next year and RON 1,950 in 2019,” said Vasilescu.