Unions threaten to call general strike over minimum wage level

On 2 November 2007, the five Romanian national trade union confederations jointly announced that a current labour conflict might lead to a general strike. The main reason for their dispute with the employer organisations and the government is their dissatisfaction with the level of the national minimum wage for 2008. The trade unions are also critical of the inefficiency of the tripartite social dialogue at national level.

Trade union concerns

In mid October 2007, four of the five national trade union confederations (RO0610019I) issued a joint press release to express their dissatisfaction with the draft state budget for 2008.

The trade unions are particularly concerned about the following issues:

  • level of taxation, which was raised by including, in the social security tax base, all the earnings of an employee, while maintaining the deductibles unchanged since 2005, without updating them to correspond with the inflation rate;
  • continuation of a flat income tax, which profits high income earners but is detrimental to low income earners;
  • reduction in social security contributions for employers only;
  • 50% reduction in employee contributions to the unemployment fund (from 1% to 0.5%), while employer contributions to the same fund were lowered by 75% (from 2% to 0.5%);
  • unilateral decision to increase the national minimum monthly wage to RON 450 (about €108 as at 17 January 2007) for 2008;
  • failure to involve the social partners in drafting the state budget.

Contentious minimum wage negotiations

After having stated their objections to the draft state budget and social security budget, the five national trade union confederations called a press conference at the offices of the Economic and Social Council (Consiliului Economic şi Social, CES) to announce that a labour conflict was likely to take place.

The trade unions highlighted that ‘soon, on 9 November 2007, 60 days would have elapsed since the start of the negotiations on the addendum to the national collective agreement for the years 2007–2010, and yet no progress had been made’. Initially, the trade unions had agreed with the employer organisations ‘to set straight a few errors in the agreement, and to negotiate the minimum wage at national level for 2008’.

The trade unions invoke European good practices, and called for a wage policy capable of stabilising and motivating the workforce.

For this purpose, the trade unions proposed an initial gross minimum monthly wage of RON 700 (€190), which is below the European minimum ratio of 60% of the average salary. Later in the course of negotiations, a new figure of RON 650 (€175) was proposed for discussion. The employers agreed to accept a level between RON 470 (€127) and RON 540 (€146); however, the government decided on RON 450 (€121).

Due to these developments, the trade unions notified all employer organisations of the impending declaration of a labour conflict at national level.

Position of employers and government

Already in September 2007, the Alliance of Employer Confederations in Romania (Alianţa Confederaţiilor Patronale din România, ACPR) (RO0705019I) issued a common position on behalf of the seven employer organisations affiliated to it, stating their disagreement to the existence, in parallel, of two national minimum wages. ACPR demanded a significant reduction of labour taxation, and proposed a possible minimum wage increase of 20%–30%.

The government, after having initially accepted a minimum wage rate of RON 450 (€121), changed its position as a result of discussions with the social partners. Moreover, on 5 November 2007, the Minister of Labour, Social Solidarity and Family, Paul Păcuraru, publicly announced that a minimum monthly wage of RON 500 (€135) had been agreed, which was 28% above the level of RON 390 (€105) established by government decision in 2006 (RO0701029I).

In a public speech, the Governor of the National Bank of Romania (Banca Naţională a României, BNR), Mugur Isărescu, urged for prudence and temperance in granting salary increases, as the 2007 inflation target had already been exceeded – from 3.9% to some 6.8%.

Trade unions unhappy with wage level agreed

At the end of this chain of events, the trade unions announced the start of the conciliation phase, due to their refusal to accept a minimum monthly wage of RON 500 (€135). Although, initially, the trade unions termed this offer as ‘encouraging but insufficient’, they will accept this minimum wage level for the first quarter of 2008, despite the fact that not all of the trade union leaders agree.

Commentary

An important result of these negotiations is that, for the first time in the last three years, the minimum wage established by government decision is similar to the minimum wage agreed as part of the national collective agreement. Under these new circumstances, the discrepancies between the minimum wage of public and private sector workers were eliminated.

, Institute of National Economy, Romanian Academy

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