Official: Minimum wage changes from 1 July 2024

From 1 July 2024, the minimum gross basic wage in the country increases from 3,400 lei to 3,700 lei gross monthly and the non-taxable amount of the minimum gross wage from 200 to 300 lei.

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As from 1 July 2024, the basic gross national guaranteed minimum wage referred to in Article 164(1)(a) of the Treaty on European Union shall be the minimum wage. (1) of Law no. 53/2003 Labour Code, republished, with subsequent amendments and additions, is set in money, excluding allowances, bonuses and other additions, at the amount of 3,700 lei per month, for a normal working day of 168 hours per month, representing 22.024 lei/hour. The amendment follows the publication of GD No 598/2024 in the Official Gazette No 529 of 6 June 2024, following the announcement made by Prime Minister Marcel Ciolacu on 23.05.2024.

As a result of this change, from 1 July 2024, an employee paid the minimum gross wage of 3,700 lei will have a net salary of 2,363 lei (300 lei non-taxable), the total cost borne by the employer will be 3,777 lei. Employees will thus receive an additional 284 lei per month compared to the wage level in June 2024, when the gross minimum wage in the country guaranteed in payment was 3,300 lei from 1 October 2023, i.e. 2,079 lei net, the total cost borne by the employer being 3,370 lei.

At the same time, as a result of GEO no. 59/2024 published in the Official Gazette no. 534 of 7 June 2024, the non-taxable amount of the gross minimum wage will be increased from 200 to 300 lei from 1 July 2024. Specifically, employers will not have to pay income tax or social security contributions on this amount. This tax facility first appeared during 2022 and is the first time it has been increased. The validity of the facility was extended by the authorities first for 2023 and then for 2024. However, it is unclear whether the facility will continue in 2025.

This change applies to all sectors of activity except the agri-food industry and construction (these are activities with CAEN codes stipulated in the Tax Code), where the minimum wages set from 1 November 2023 remain at 3,436 lei (with a minimum net wage of 2,396 lei) in the agricultural and food industry sector and 4,582 lei (with a minimum net wage of 3,196 lei) in the construction sector.

The way in which the gross minimum wage in the country is set will change in the coming period, in the context of the European Directive No 2.041/2022, which should be transposed into national law by 15 November 2024. In practice, the minimum wage will no longer be set following negotiations between the Government and representatives of trade unions and employers in the National Tripartite Council, as before, but on the basis of a clear calculation mechanism which will take into account purchasing power, the cost of living, the general level of wages and their distribution, the rate of wage growth and productivity.

The increase in the minimum basic wage to 3,700 lei will benefit 1,871,266 employees. The state estimates that it will raise more than 2.3 billion lei from taxes and duties on wages raised to 3,700 lei this year, and next year the amount is expected to rise to more than 5.5 billion lei.

Increasing the country’s minimum gross basic wage always has a much more complex impact, with a boomerang effect for the whole economy. The increase in the gross minimum basic wage also has an impact on other obligations related to this wage: the contribution for unpaid disabled persons, the annual basis for calculating the social security contribution for persons earning self-employed income/intellectual property rights, the ceiling on the amount of social security and health insurance contributions payable by individuals earning non-wage income, etc.

According to the provisions of Article 4 paragraph 3 of GD no.905/2017 on the General Register of Employees, employers have a maximum of 20 working days from the date of their occurrence, i.e. until 26 July 2024 inclusive, to submit changes.