Romania: Govt defends tax changes that led to wage cuts

BUCHAREST, Romania (AP) — Romania’s labor minister is defending a tax and wage overhaul that has created uncertainty and led to pay cuts.

Labor Minister Lia Olguta Vasilescu said Tuesday the overhaul was designed in part to address anomalies that resulted in some public sector workers receiving disproportionately high pay. She says 3 percent of public workers have seen wage cuts since Jan. 1, with some salaries dropping by 40 percent.

The most disputed change shifts social security taxes from employers to employees. Trade union leader Dumitru Costin says about half of Romania’s employers have increased workers’ salaries to compensate.

The tax provision also has been hard on people who work part-time. Employers have to deduct taxes as if they were working full-time on the minimum wage.

Last year, the ruling Social Democratic Party hiked pensions and the minimum wage.

Article Courtesy of CNBC