What news brings us 2009?

2009 started in Romania in force, with plenty of news.

Besides the economic crisis is being felt more and more, creating a turbulent economic environment, we have a new Government, which from the first steps took many decision, contested and generating multiple changes. Last but not least, from the 1st of January 2009 many legislative changes shall became effective, some already approved in previous years, but which take effect only after that date, others very fresh.

I will therefore try to review the main changes brought by the beginning of 2009 which are affecting the business environment.

In the following period, an International Monetary Fund (IMF) mission will come to Bucharest in order to evaluate the macroeconomic situation and to initiate the discussions with the view to conclude a support agreement to cover the financing deficit in 2009.

Economic forecasts for this year look pretty bad, and Romania needs external funding. This funding is needed to cover the external deficit and the budget deficit having in view the strong decrease of foreing direct investments, direct investments in productive assets by companies incorporated in foreign countries and decrease of the revenues at the state budget.

According to the latest estimations, the budget deficit at the end of the year is about 5% of GDP and external deficit increased in October to 14.4 billion euros, being almost 11% higher than after ten months of 2007.

National Tax Administration from Romania (ANAF) includes the amounts derived from the rental contracts within the category of incomes obtained from self-employment. Exceptions are contracts to lease agricultural goods. According to the Fiscal Code, are treated as income from rents all income, in cash and / or in kind, resulted from the giving up of the use of movable and immovable property acquired by the owner, beneficial owner or other legal owner.

On the charge, there will be:

• tax net income, the rate of 16% – compared with 12% share of the gross income from property disposal use;
• tax net income, the rate of 5.5% CASS – like any income derived from independent activities

Regarding the taxation, the person who derives income from property disposal use has the obligation to fill in, until the 15 of May next year, the form 200 “Declaration on income made”, code 14.13.01.13.

From the 1^st of January 2009, according to the GD 1051/2008, the basic national minimum gross salary , in Romania, has been increased from 540 lei to 600 lei per month for a full time working programmme of 170 hours per month, representing the 3,529 Ron/ hour.

At the minimum wage stated above, coefficients corresponding to each job are applied. For example:

• to employees that are qualified, the coefficient of 1.2 is applied so that they will have a minimum gross salary of 720 RON.
• to employees with University degree, the coefficient of 2 is applied, so that they will have a minimum gross salary of 1200 RON.

Failure to respect these provisions represents contravention and is punished by fine from 1000 to 2000 RON.

Tax rate for the incomes of the micro-companies increased from 2.5% to 3% from the 1st of January 2009, according to art. 107 of the Fiscal Code.

In order to benefit of the advantage of the fiscal policy for micro-companies, companies which choose this option should meet on December 31st of the previous fiscal year, cumulative, conditions laid down in Article 103 of the Fiscal Code:

1. to achieve revenue, other than those of consulting and management, the proportion of over 50% of total revenues;
2. to have at least 1 employee and maximum 9 employees;
3. to make annual income not exceeding the equivalent in RON of 100,000 euros
4. the registered capital of the legal person to be detained by natural or legal persons other than the State, local authorities and public institutions.

Return to pay tax

Unfortunately, the estimations from December 2008 regarding the contributions to the social insurances payed by the employer were partially modified, on the increase, beginning with 2009.

Thus, through the Emergency Ordinance no. 255 that refers to some budgetary-financial measures published on 30.12.2008, (that completes art. 18, second paragraph from Law 19/2000 regarding the public pension system and other social insurances rights), the quota of the contributions of social insurances are established beginning with the 1st of January 2009, as it follows:

The New Executive Body in Bucharest adopted on the 30rd of  December 2008 a series of measures agains the crisis effects, cancelling some of the measures against the crisis just promoted by the old Government.

One of the main provisions agains the crisis promoted by the new Government is the elimination of the new tax incentives, specifically the 5% bonus to prepay taxes, paid for fast payment of obligations to the state budget. Another measure of fiscal loosening eliminated is the one relative to the bonus received by the employers who create new jobs.

We are glad to announce that 2009 brings excellent news concerning the evolution of Identity Compass® on national and international level. March has a flying start with the licensing training organized in Arad and sustained by Adela Cristea during the 12th – 14th March, and also the first Worldwide Trainer & Consultant meeting.

This Worldwide Trainer & Consultant meeting will take place to Barcelona (Spain) during 21st – 22nd March, bringing together Identity Compass® trainers & consultants from Germany, UK, Spain, Italy, Russia, Sweden, Indonesia, India, Brazil, Poland, South Africa, Venezuela, Portugal, Croatia, Serbia, USA, Romania, who will have the opportunity to discuss with Arne Maus and Dr. Scheffer about latest insights.

Jordan Sheppard Romania, the local branch of the British headhunting company JordanSheppard, launches the program “Consultancy at Crisis Time”, targeting both companies who wish to better adapt their HR strategy to the current economic context, as well as professionals who wish to have a realistic insight into the labor market and to be assisted in their careers.

The program will be in place for two months. Further details about it can be obtained contacting the office of Jordan Sheppard Romania, tel: +40 21 569 3672 or by email, contact person: Elena Ionescu.

The moment when a new member of the team is being recruited within the company, the employer assumes, beside the salary, some other expenses as, for example, the assurance of a safe and well organized working place, expenses related to the materials he-she will consume and obviously the mandatory taxes for the state budget.

We will analyse further on the situation of the Republic of Moldova regarding the taxes which the employer has to support for his own employees.

Thus, in agreement with the legislation from the Republic of Moldova, each employer is obliged to calculate and retain each month different taxes regarding his own employees taking into account the exemptions claimed by the employee, the contributions or the bonuses calculated in accordance to the decisions made by the Major Fiscal State Inspectorate, The Medical Insurance National House and The National Social Insurances House of the Republic of Moldova.

Starting January 2009 the new manager of Ascent Group’s office in Bucharest is Elena Manera. From this position Elena will coordinate the whole activity of one of the most important Ascent Group’s offices. Elena took over the management of the office from Luciana Căciuleanu, recently promoted Group Training Manager of Ascent Group.

Elena Manera joined Ascent Group’s team in August 2008 as coordinator of the projects department.

Starting with January 2009 Elena Marina became managing partner of Ascent Group in Bulgaria.

Elena has a Bachelor’s Degree in Psychology and a Master’s Degree in Human Resources Management from the New Bulgarian University.

Her professional experience comes mainly from management consulting, executive search and training. Elena was working with JordanSheppard Eastern Europe delivering client services locally and across CEE and managing high-end recruitment and consultancy projects. She is a certified Human Synergistics® consultant in organizational diagnostics.

Starting December 2008 Luciana Căciuleanu became Group Training Manager of Ascent Group. From this position Luciana will coordinate the whole training activity of Ascent Group in Romania, Bulgaria, Republic of Moldova and Serbia.

Luciana joined Ascent Group’s team in 2006, holding during the time various positions within the organization, the most recent one being manager of Ascent Group’s office in Bucharest.

Luciana has an University degree in Economics and Public Administration within Ştefan cel Mare University in Suceava, her professional experience including 7 years of activity in various fields, especially company’s reorganization and restructuring processes, human resources, business consulting and training.

Ascent Group has constantly developed in the last years high quality training programs. As a result of the feedback received from the customers and also of the recurrent demands from the actual and potential customers, we decided to start some open trainings in all the countries where we have offices: Romania (Bucharest and Arad), Republic of Moldova (Chişinău), Bulgaria (Sofia), Serbia (Belgrade).

The trainings will contain many new topics for the Romanian training market such as: Operational management, Supply chain management, Transports management, Finances for sales people, Cost controlling, Performance as assistant manager.

The open trainings will also cover general topics such as: Communication, Presentation techniques, Leadership, Time management, Project management, Conflict management, Stress management.

The Administration of Timpuri Noi society that owns a 5 hectares plot of land in the center of Bucharest asked last week the approval of the shareholders to obtain finances either by selling plots, either by accessing of loans from institutiuons or from natural persons.

Bucharest’s provider of engines, turbines, equipments and spare parts is about to be relocated, thus he put up for sale the land on which there was the plant’s platform at the price of 100 million euros, without VAT. The plant’s managing board received last year many offers for the land situated in Unirii area after the shareholders authorized him to capitalize, by negociating, the Company’s building. But the offers were rejected because it did not carry out all the criteria.

Although the number of the transactions contracted on the real estate market diminished drastically in the second half of the year, the representative of Timpuri Noi declares that the demand for his lands did not decreased.

The state has decided to increase the capital of the CEC Bank with 900 million lei and Eximbank and the Guarantee Loans for SMEs want to fully ensure the loans for small business offered by commercial banks in order to relaunch the process of financing for SMEs .

The trend to generate new products for small and medium enterprises is a reason of joy for companies. These loans are specially offered to finance current business, not for major investments in such cases banks preferring to maintain a strict control.

These loans are coming to meet the needs of small business owners. For this reason the loans offered without any material guarantee provides, first of all, the advantage of obtaining the necessary amounts of a good management of current payments. Most entrepreneurs who are facing difficulties in this regard have available funds for short term expenses. The cost to access such a product bank is similar with the one of a normal credit.

Already for many years now I handle negotiations with trade unions. Especially when related to renegotiations of collective labor agreements, but in many cases throughout the year. I had the opportunity to meet many representatives of trade unions and to negotiate with them. And I do not want to hide the fact that very often I felt frustration, because of the total unconstructive attitude of union’s representatives, because the total lack of understanding of economic realities by some of these, but mostly because of a completely wrong understanding of the role that they should play as a Union…

The employer “must” give us! The employer “must” understand us! The employer was mostly for the trade unions the “black man” who should be charged for all our failures, who must solve all our problems, whether he has or not the capacity to do so.

The evaluation for oil barrel price made by Goldman Sachs analysts is very optimistic – the oil price could decrease till 30 dollars in the first quarter of the next year.

The orders decrease as a result of the global crisis and the recession from some very industrialized states are the main reasons of this evaluation.

Also, it’s possible that OPEC will reduce at the beginning of the next year the production with a million barrels/day over the expected decrease of this month.

Now, the oil is quoted at 46,28 dollars per barrel in New York and 46,41 dollars per barrel in London. The values are with approximately 100 dollars less than the record quotation from July, 147,27 dollars per barrel.

Starting 15th of December 2008 the value added tax rate decrease from 19% at 5% for dwellings transactions with a maximum value of 100 000 Euro.

The measures intends to unblock the real estate market and has a double target: to prevent spreading the effects of economic crisis and as social protection measure.

The new 5 % of VAT fated to relaunch the construction and real estate sector but is a difficult process without a sustained lending process, a first good step might be the restart of financing process by banks.

The decrease of VAT, on long term will actuate and diversify the offers for the low sector of real estate where now the request is high for 100 000 – 120 000 Euro dwellings.

On the 10th of December 2008 Romanian Government has adopted Decision no. 1682, that amends and supplements the Government Emergency Ordinance no. 148/2005 of family support to raise the child.

This decision brings a series of news for mothers or future mothers whom revenues exceed the amount of the fixed monthly allowance of 600 lei.

In this sense the rules for implementing the above Ordinance provides that from January 2009 the child allowance is granted in the amount of 600 lei, or optionally, the rate of 85% of average professional income achieved during last 12 months of last year before child’s birth or where appropriate, the date on which the child was given for adoption, or the child was adopted or child has taken in placement or in placement in a matter of urgency, as well as the date on which the person was appointed guardian, according to law.

Ministry of Environment and Sustainable Development (MMDD) launches the second selection session for projects in the field of nature protection, to provide non refundable financial assistance in the Sectoral Operational Program „Environment”, namely Priority Axis 4 – „Implementation of Appropriate Management Systems for Protection of the Nature”.

The projects should be developed in line with the objectives and strategy for financing related priority axis 4 – „Implementation of Appropriate Management Systems for Protection of Nature” of the POS Environment.

The requests for funding (the application form) and the Applicant’s Guide is available on the website of MMDD (www.mmediu.ro). The Applicant Guide contains details about the conditions of access the funding system and the instructions for completion and submission of funding requests.

According to a bill that is to be introduced within the Romanian Parliament, starting with next year the employees might receive vouchers for holiday from the employer. The maximum annual value that might be granted will represent the equivalent of six minimum gross wages per economy.

In accordance with the agreement between the Government, the syndicates and the associations of employers, beginning with the 1st of January 2009, the minimum gross wage granted will be 600 RON, therefore the employer might receive at the most 3600 RON per year for the holidays.

In this way, the law allows to the employer to offer a supplementary benefit to the employees, under the form of a payment for the holiday, out of which the state will return the taxes. The condition for the employer to benefit of this facility is that the company registers profit.

Starting with the 1st of December 2008, three types of contribution owed by the employers to the state budget have been diminished as follows:

• According to article 27 from Law 76/2002, with further alterations and completions, the contribution for the budget of unemployment insurances owed by the employer will diminish from 1% to 0.5%.
• According to article 258 to Law 95/2006, with further alterations and completions, the contribution for health insurances owed by the employer will diminish from 5.5% to 5.2%.
• According to Law 387 from 2007 concerning the budget of state social insurances, the contribution of social insurances owed by the employer will diminish from 19.5% to 18%.

In November 2008 Ascent Group signed in Padova a strategic agreement with Eurointerim Spa. Based on this agreement Ascent Group will represent Eurointerim in Romania, Bulgaria, Serbia and the Republic of Moldova for the whole typology of services offered by Ascent Group. The same agreement stipulates that Ascent Group recognizes Eurointerim as its exclusive partner for personnel leasing services in all the countries in the region.

Big corporates are often seen as distant and less caring than small family-businesses and medium sized enterprises (SMEs). An employee may never even meet the Managing Director of the company let alone to be directly motivated by him. The challenge for a bigger organisation then seems to be in communicating the company vision – “raison d’être”, and values from the top-management to all levels of employees, create trust, inspire and motivate all employees to work for the common goal.

A recent study exploring employee perceptions of organisational trustworthiness across Europe¹ indicates that organisations, big or small, are not doing this job very well…Employee trust in organisations seems to be alarmingly low when only 42% of employees believe that their organisation can be trusted, as the study shows. The study was conducted by training and coaching company Krauthammer on behalf of a specialist team representing seven European universities².