Minimum salaries for foreign workers expected to rise

IMPACT – MEDIUM

What is the change? Romanian authorities are expected to significantly increase minimum salary levels for foreign employees as the country prepares for a new system in which employees, rather than employers, will be chiefly responsible for social security costs.

What does the change mean? Companies should prepare for the likelihood of increased salary minimums.

• Implementation time frame: Ongoing.
• Who is affected: Companies employing foreign workers, including seconded workers and EU Blue Card holders.
• Business impact: Businesses may see an increase in salary costs, but will also bear less of the tax burden for social security programs in 2018.
• Next steps: BAL will continue to follow developments in Romania, including any announcement of new salary minimums for foreign workers.

Background: Romania is planning to shift a portion of the tax burden to employees and away from employers as part of  a new social security program in 2018. Authorities recently announced that the domestic minimum wage would increase from 1,450 lei to 1,900 lei per month (from about US$372 to US$488), an increase of 31 percent. This wage is not applicable to most foreign workers, but the wage requirements for foreign workers are also expected to increase. Current wage minimums for foreign workers are 3,131 lei per month for standard work permit holders and secondments and 12,423 lei per month for EU Blue Card holders.                                   

BAL Analysis: Employers should adjust their budgets if necessary to prepare for the likelihood of increased minimum salaries for foreign workers. BAL will alert clients once additional information becomes available.

This alert has been provided by the BAL Global Practice group and our network provider located in Romania. For additional information, please contact your BAL attorney.

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