The year 2007 will be the third year in a row for Romania to have two simultaneous national gross minimum wage levels: one set by the government and the other one set by the social partners.
Although national trade union confederations had demanded a national gross minimum monthly wage of RON 480 (€142) for 2007, the government has set the new level of the basic national gross minimum wage at RON 390 (€115) a month. At the same time, the social partners have agreed on a gross minimum monthly wage of RON 440 (€130) in the national collective agreement.
Two minimum wage levels
The year 2007 will be the third year in a row for Romania to have two simultaneous national gross minimum wage levels: one set by the government and the other one set by the social partners.
On 21 December 2006, the government issued a decision setting the level of the national gross minimum monthly wage, for a full-time employee working 170 hours a month, at RON 390 (about €115 as at 12 February 2007) (representing RON 2.29 or €0.67 an hour), compared to the previous RON 330 (€97). This wage increase came into effect on 1 January 2007 and ensures a nominal average wage increase of 18.2%.
On 29 December 2006, the national collective agreement for the period 2007–2010 was registered with the Ministry of Labour, Social Solidarity and Family (Ministerul Muncii, Solidaritatii Sociale si Familiei, MMSSF). The agreement sets the basic gross minimum monthly wage resulting from collective bargaining at RON 440 (€130) (representing RON 2.59 or €0.76 an hour) compared to the previous monthly RON 370 (€109), consequently ensuring an average wage increase of 18.9%.
Collective bargaining among social partners
Deciding level of minimum wage
In early February 2006, representatives of the trade union confederations took part in a meeting to discuss the level of the national minimum wage for 2007. Attendees at the meeting included the Minister of Labour, Social Solidarity and Family, Gheorghe Barbu, the Minister of Finance, Sebastian Vladescu, one of the State Ministers from the Prime Minister’s office and representatives of the National Institute of Statistics (Institutul National de Statistica, INS) and the National Commission for Prognosis (Comisia Nationala de Prognoza, CNP).
At the time, as on other similar occasions, it was agreed to set up a commission of experts responsible for drawing up ‘a technical report to substantiate the minimum wage’ and proposing a calendar of wage development following Romania’s accession to the European Union on 1 January 2007.
Protests were held by trade unions in May 2006 (RO0606019I) and, as a result, the government agreed to set up interministerial commissions to analyse the trade union demands and to propose solutions for resolving these issues (RO0607019I). The government had until the beginning of August to revise its offer of RON 390 (€115) as the gross minimum monthly wage for 2007, compared to the larger sum of RON 480 (€142) requested by trade unions.
Trade union confederations continued to issue threats of protest in response to the government’s decision and sent a joint letter expressing their discontent with the way negotiations with the government were proceeding.
Collective bargaining process
In October 2006, employers and trade unions began the bargaining process for the national collective agreement for 2007–2010, with both partners putting forward their points of view on various issues.
In relation to the minimum monthly wage, employers suggested a gross monthly minimum wage of RON 370 (€109) while trade unions demanded a higher monthly rate of RON 480 (€142).
Adjustment for inflation
In November 2006, the Standing Committee of the National Council of Small and Medium-sized Private Enterprises in Romania (Consiliul National al Întreprinderilor Private Mici si Mijlocii din România, CNIPMMR) proposed a gross minimum monthly wage amounting to RON 401.82 (€119), which effectively increases the minimum wage of the previous collective agreement in line with inflation.
Finally, the government announced the gross minimum monthly wage of RON 390 set by the abovementioned decision enacted on 21 December 2006, followed by the announcement of the minimum monthly wage of RON 440 resulting from collective bargaining on 29 December 2006.
Views of social partners
With respect to the minimum wage level, nationally representative trade union confederations have constantly maintained the idea that it lacks reasonable economic and social grounds. Among other things, they point to the fact that the government has failed to update the consumer’s basket of prices since 2000.
When the government announced its minimum wage offer at the meeting held in July 2006, trade union members suspended the meeting, declaring that ‘they had been made a mockery of’, according to a leader of the National Confederation of Free Trade Union Fraternity in Romania (Confederatia Nationala a Sindicatelor Libere din România Fratia, CNSLR Fratia).
The leader of the National Trade Union Confederation ‘Cartel Alfa’ (Confederatia Nationala Sindicala ‘Cartel Alfa’ (Cartel Alfa) stated: ‘Instead of judging according to EU standards, in other words to approve what social partners discuss and agree on, the government makes arbitrary decisions.’
In turn, employers considered that the level of the minimum wage ‘dictated’ by the government was ‘ludicrous’ for 2007; however, employers accepted an additional increase.
Commentary
This year will be the third year in a row for Romania to have two different and extremely low national minimum wage levels.
Compared to the gross amount set in the previous single national collective agreement, bargaining for sectoral and company collective agreements will also result in differing minimum wage values (RO0703019Q).
Constantin Ciutacu, Institute of National Economy, Romanian Academy
Eurofound recommends citing this publication in the following way.
Eurofound (2007), National minimum wage levels set for 2007, article.
