Government to oblige employers keep a certain level of the gross salary

Government will issue a directive obliging employers in the private sector to maintain a certain level of the gross salary, after the social contributions are fully transferred to employees, finance minister Ionut Misa said on Tuesday. The measure will be temporary and is aimed at preserving the employees’ net wages. This increase will lead to the increase of the retirement point in the same time, according to the Ministry of Finance.

Explanation

  • Romania will only have two social contributions starting next year, namely the Social Insurance Contribution – CAS and the Social Health Insurance Contribution – CASS, which will be paid only by employees. The unemployment contribution and other similar taxes will be eliminated.

  • The overall social contributions for employees will be cut from 39.5% of the gross wage to 35% of the gross wage since January 1st, 2018. The contributions will be paid exclusively by the employees and will not be shared by employees and their employers as they are now. However, the employers will continue to withhold the social contributions incurred by the wages they pay and will pay them to the state budget each month.

Current situation

  • There are three values paid by an employer for one employee’s wage: the net wage, the gross wage and, in addition, the total expenditure on an employee’s wage. The difference between the net and gross wage is the social contribution of employee, but the difference between the gross wage and the total expenditure of the employer is the main problem, because the money disappears into the state budget. Because of this, the pension fund has recorded an increasing deficit every year...

#Govt #Socialcontributions #CAS #CASS #grosssalary

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