Romania: Latest working life developments Q4 2018

A rise in the minimum wage and a new social dialogue draft law are the main topics of interest in this article. This country update reports on the latest developments in working life in Romania in the fourth quarter of 2018.

Minimum wage rises – but remains below the living wage

On 9 November 2018, the government adopted an emergency regulation that changes several provisions in the Labour Code and allows authorities to set different minimum wage rates for some categories of employees. One month later, government decision no. 937/2018 increased the gross minimum wage from RON 1,900 (€400 as at 20 February 2019) to RON 2,080 (€437) from 1 January 2019. The minimum wage for employees with a university degree is RON 2,350 (€494).

Business organisations and employer organisations have criticised the proposed measures. The Foreign Investors Council (FIC), one of the biggest organisations representing the interests of foreign investors, argues that the minimum wage level should not be decided administratively, but negotiated among social partners through collective bargaining. National collective bargaining was abolished in 2011 following a change in the social dialogue legislation; since then, the minimum wage has been set by the government after consultation with social partners.

Several employer organisations, such as the National Council of Small and Medium-Sized Private Enterprises in Romania (CNIPMMR) and Concordia Employers Confederation, opposed the increase. According to CNIPMMR, increasing the minimum wage puts a burden on more than half of all small and medium-sized enterprises (SMEs). Concordia warned that increasing the minimum wage without a solid impact analysis would lead to job losses, non-standard forms of employment and inflation.

Trade union organisations welcomed the government’s initiative. However, several unions (including the Cartel Alfa Trade Union Confederation (CNS Cartel ALFA) and the National Trade Union Bloc (BNS)) claimed that decisions of this nature should be made through the mechanism of collective bargaining. According to CNS Cartel ALFA, if collective bargaining at national and sectorial level is not revived, the number of minimum wage labour contracts will exceed 50% in 2019 (currently 2 million of the 5.4 million employees receive the minimum wage).

Despite regular increases in the last few years, the minimum wage barely exceeds 40% of the average salary and is far from reaching the living wage level. New research from Friedrich-Ebert-Stiftung sets the living wage for a household of four people (two adults and two children) at RON 6,762 (€1,421) and for a single person at RON 2,552 (€536). [1] This is more than double the value of the actual net minimum wage (RON 1,065 or €224). Data from the Labour Inspectorate show that 85% of the labour contracts registered in September 2018 were below the level of the living wage. [2]

Draft law triggers disputes among social partners

A new social dialogue draft law, which brings substantial amendments to the current Social Dialogue Act, entered parliamentary debate in the final quarter of 2018. The draft law aims to lower the number of employees needed for setting up a trade union (from 15 to 3) and make collective bargaining compulsory in companies with at least 10 employees. It also prescribes new mechanisms for starting and solving collective labour disputes. Following debates within the Committee for Labour, Family and Social Protection of the Senate, the trade union organisations managed to negotiate other significant amendments such as lowering the representativeness thresholds, which would facilitate collective bargaining and social dialogue at company and sectoral level.

Following the acceptance of the amendments proposed by the trade unions, employer organisation Concordia publicly criticised the working procedure. The organisation claimed there had been a lack of transparency and social dialogue, and said the unions had tried to ‘impose’ sectoral collective bargaining and a return to the legislative framework of the 1990s. [3] In response, the unions claimed that the criticism from the employer organisations was an attempt to discredit any mechanism that could revive collective bargaining in [4]Romania.[5]

The draft law was rejected by the Senate at the end of November and sent to the Chamber of Deputies, which has the final vote. Since the revision of the social dialogue legislation in 2011, the trade unions have made repeated efforts to amend the Social Dialogue Act and unblock collective bargaining at all levels.

Outlook

Industrial relations are likely to remain tense in the first few months of 2019. Several collective agreements in key companies for the Romanian economy are due to expire and previous experience has shown that collective bargaining is often accompanied by protests or other forms of labour disputes. [6]

At national level, CNS Cartel ALFA has announced potential protests and anticipates open social conflicts in 2019. The parliamentary debates on the new social dialogue law will also be re-launched in February 2019 and are expected to remain a source of tension between social partners.


Footnotes

  1. ^ Guga, S., Mihailescu, A. and Spatari, M. (2018), Coșul minim de consum lunar pentru un trai decent pentru populația României , Friedrich-Ebert-Stiftung, Bucharest
  2. ^ Monitor Social (2018), Salarii si viata decenta in Romania
  3. ^ Adevarul (2018), Patronatele reclamă că se aduc modificări la legea dialogului social fără dialog social , 14 November
  4. ^ Cartel ALFA (2018), Dialogul social nu înseamnă discuții, ci asumarea unor decizii comune , 19 November
  5. ^ Blocul National Sindical (2019), Facem un apel public la confederația Concordia, cât și la celelalte organizații patronale reprezentative, să înceteze în a mai poza în victime pentru ceea ce a ieșit din votul dat de senatorii din Comisia pentru Muncă! , 13 November
  6. ^ Eurofound (2018), Romania: Latest working life developments – Q1 2018

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