The Romanian government approved on June 21, 2024, the Law on Setting the European Minimum Wage, which ensures the transposition into national law of Directive (EU) 2022/2041 of October 19, 2022 of the European Parliament and the Council on the appropriate minimum wage in the European Union. The draft law is to be submitted to the Romanian Parliament for approval as a matter of urgency. The new piece of legislation introduces elements of instability into the fragile Romanian economy (e.g. it stipulates that the minimum wage must not be less than 50 percent of the average gross wage and cannot be maintained for more than 24 months etc) that could lead to difficulties for local companies in the medium term. As it is in the past and current experience of Romanian companies, every piece of legislation that raises the minimum wage bar is reflected in a demand by the maestracies for an across-the-board increase in wages. This means that regardless of the productivity of the labor factor, the worker will be entitled to demand a wage step in the proportion of the increase in the legal minimum wage compared to the previous legal benchmark. Further, as exposed by Professor Christian Năsulea (source www.digi24.ro): ” The first problem is that the minimum wage always leads to job losses, it has negative effects on the people it is supposed to help in theory. The second problem with the European minimum wage is the principle that if we raise the minimum wage, that pushes up the average wage. We have a mathematical calculation that never ends, a vicious circle that creates imbalances and drives up incomes and inflation. The increase is about 260 lei net for Romanians who now receive the minimum wage. The increase is different because it is one thing to live in Bucharest, another to live in Vaslui. That is why the very idea of minimum wage has fundamental problems, we are talking about purchasing power, the needs of a family. The government thought that this was a cost to be imposed by force on the private sector. When it comes to the private sector, the problem is that if companies don’t have money, they will end up laying people off, and we come to the fundamental problem of job loss. There will also be problems for the state, it seems that the politicians at the beginning did not do all the calculations to know how much this increase will cost the budget, because all public sector salaries are brought back to the level of the minimum wage,”

If private sector companies suffer a loss in profit, they will be less profitable for shareholders, less competitive with the European and world markets, forced to lay off, restructure business, close down.