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Poll shows 86.9pct of surveyed Romanian entrepreneurs unable to cope with increased minimum wage
As many as 86.9% of the entrepreneurs surveyed by the National Council of Romania's Privately-owned Small and Medium-sized Enterprises (CNIPMMR) say that they could not cope with increased minimum wage for employees, told Agerpres.
CNIPMMR conducted a survey between July 24-25, 2023 to find the opinion of entrepreneurs on an increase in the gross minimum wage - to which 887 entrepreneurs responded, 54.30% representing micro-enterprises, 31.5% small enterprises, 13.1% medium-sized enterprises and the remaining 1.10% large enterprises. Among them, 64.7% operate in services, 18% in trade and the remaining 17.3% in production.
According to a press statement released on Tuesday, among the reasons why they will not be able to increase the minimum wage are: high human resource costs (61%); limited sales that do not allow increases (55.8%); ongoing contracts with set prices (30%); the lack of European funds to ensure an increase in competitiveness (22.7%); lack of public investment that limits the existence of contracts for SMEs (16.2%); others (increase in VAT, political instability, lack of predictability, etc.) (7.5%).
However, in case the government makes the increase in the minimum wage mandatory, 93.2% of the entrepreneurs said they could comply from January 1, 2024 and only 6.8% from September 1, 2023.
Regarding the measures they would adopt in case the government makes the increase in the minimum wage mandatory, the entrepreneurs mentioned hiking prices for products/services (66.6%); redundancies (53.6%); curtailment of business (24.9%); closing down (10.2%); reducing the employees' working hours (9.9%), and others (loss of competitiveness, reducing profit, rethinking the company's business, etc.) (2.5%).
Thus, the entrepreneurs would need the following support measures to increase the minimum wage: additional deductions (reducing/rethinking the level of labour taxation and creating a new system for granting personal deductions that employees benefit from) (64.5%); zero taxes on additional workforce (55.3%); progressive taxation of wage income (21.8%); others (massive cuts in rates and taxes, lower taxation of lower wages, maximum taxation ceilings, maintaining VAT at the same level, etc.) (2.7%).
Finally, when asked what they think will be the percentage of staff redundancies as a result of an increase in the minimum wage, 35.8% of the entrepreneurs answered between 10%-50%; 34.8% up to 10%; 19.1% none, and 10.2% more than 50%.
