Romanians spend EUR12 billion on food, EUR12 billion on non-food products and EUR10 billion on fuel a year.
The rise in net income by RON140 per month for each of the 1.6 million employees (whose take home pay goes up from RON785 to RON925) could drive up spending on everyday products.
Although the gross minimum wage is theoretically set at RON1,050, Labor Ministry data show 338,000 employees make RON1 to RON1,049 in gross amount per month, with an average of RON596 (RON450 in take home pay), and a projected 20% raise will increase their net wage to RON540 per month.
The Labor Ministry did not provide an explanation as to why the 338,000 people earning less than the RON1,050 minimum wage by press time.
A number of 649,000 employees are currently earning the minimum RON1,050 gross wage, 290,000 between RON1,051 and RON1,100 and another 331,000 between RON1,101 and RON1,200.
In all, 1,609,000 employees or one third of the total number of almost 5 million salaried employees in Romania, earned less than RON1,250 per month before May 1.
ZF calculated the impact of the increase in minimum wage for each group and arrived at an additional amount of EUR600 million for the 1.6 million employees, who will therefore earn EUR3.6 billion instead of EUR3.0 billion.
“Most of the extra money will go towards food and other everyday expenses, because the amount is low anyway and the living standard of the employees making minimum wage is low,” said Raluca Penes, HR Coordinator with HR services company Smartree.
“However, I have unfortunately noticed that there are still employers paying minimum wage under the employment contract and the rest the money under the table, which is probably why 5% of the minimum wage employees will see no impact from this raise.”
Some experts say that this wage raise may actually offset some of the raised costs of some goods and services, so the people may not see any benefits from the minimum wage increase. (EUR1=RON4.4875)
(English version by Loredana Fratila-Cristescu)