European Trade Union Institute, ETUI.

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Romania

14 December 2017

Romania: protest against judicial and fiscal reforms

The Romanian government has adopted by decree a ‘fiscal revolution’, which transfers social security contributions for health and pensions (CAS and CASS) from the employer to the worker. The employer’s share will fall from 22.5% to 10 times less, while the worker’s share will rise from 32.5% to 45%. The move has brought people to the streets.

The acting government is confronted with serious problems; it had promised to increase the public servants’ gross salaries by 25% from 1 January 2018. However, in order to finance this increase, the government came up with several fiscal reforms, because otherwise the budget could never cover such an increase. The increase of public servants’ gross salaries is still planned, but only by making the public sector workers pay charges that had hitherto been the public sector’s responsibility as their employer.

The measures proposed by the Government include also a rise of the minimum wage, but contributions to a compulsory private pension fund scheme will be limited. The employer’s share on the compulsory pension fund will fall from 22.5 per cent to 2.25% (10 times less), while the employee’s share will rise from 32.5% to 45%, and small businesses with annual turnover below one million euro will have to contribute only 1% tax on turnover instead of the current 16% tax on profit, thus lowering social security contributions by employers and shifting their entire burden onto employees. This fiscal reform was adopted without any consultations of the social partners.

The gross minimum wage is due to increase on 1 January 2018 from 1,450 lei to 1,900 lei (375 to 490 euro). However, workers earning the minimum wage will barely notice the increase; in reality the fiscal reform means that workers will only earn an additional 96 lei, or 20 euro. This chaotic policy has led to massive protest. The protests, organised by civil society organisations, NGOs and trade unions, started first as a response to the announcement of the reform of taxation, but later on the demonstrations turned into an anti-government manifestation. The protesters want the parliament to vote against the government’s recent fiscal changes.

In August 017, the Government had framed a new emergency ordinance draft to amend the law on special pensions, which stipulated pensions could not be higher than the salaries earned during work and that their update should be related to the annual average rate of inflation.

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