The companies the most affected by this legislative measure will be the ones using unskilled labor, namely, those in the constructions, agriculture and garment sectors, said Madalina Racovitan, Tax Partner within audit and tax consulting firm KPMG.
A gross minimum wage of RON1,250 translates into a net wage of RON925 into the hands of an employee. For a gross minimum wage of RON1,250, an employer spends RON1,538 on an employee.
Racovitan said small and medium-sized enterprises (SMEs) are expected to be more affected than multinational companies, adding the Romanian state must adopt some fiscal relaxation measures considering that nearly 60% of the minimum wage gets into the hands of an employee and 40% into the hands of the state.
In December 2015, Romania’s government approved a raise in the minimum wage to RON1,250 from RON1,050 as of May 1, 2016.