SOCOL CRISTIAN| MARINAS MARIUS MINIMUM WAGE AS A PUBLIC POLICY INSTRUMENT – PROS AND CONS The analysis of the increase in the gross minimum wage in the economy from H2 2012 to H1 2016 indicates an abrupt rise of the minimum wage in Romania(in EUR)(+48% – the third highest increase in EU after Lithuania and Estonia)(Figure 8). However, we should be cautious in drawing a conclusion, since Romania started from the second lowest minimum wage in EUR in the European Union. Figure 8. Increase of the gross minimum wage in selected EU/non-EU countries from H2 2012 to H1 2016 Lit h uania Estonia Rom a nia Bulgaria L atvia Turkey Slova k ia UK Pol and Czech Republic USA Portugal 9 Hungary 9 Croa t ia 9 Ireland 2 Franța 2 Spa in 2 Belgium 2 Gre ece 0 0 10 29 26 24 23 22 17 16 20 30 40 51 48 48 45 50 60 S ource: Eurostat, 2016 We propose the assumption that the optimum level of the minimum wage for Romania is 50% of the average wage, in line with studies showing that in the CESEE countries with a low minimum wage(in EUR), high tax evasion, deep inequality and poverty, an established gray market in point of reporting and payment of actual wages, etc., the 50% share of the minimum wage in the average one is equivalent to 45% in developed countries. Therefore, we will consider the 50% threshold of the minimum wage share in the average one for Romania as the level that maximizes the net benefits in the economy and society, stimulating the aggregate demand and, consequently, the economic growth, correcting the imperfections in the labor market(market failure caused by monopsony situations, high costs of looking for a job, structural rigidities in the labor market, asymmetrical information and poor transparency), improving productivity and the living standard and reducing inequality and poverty. 18