ROMANIA 2018 Social security Unemployment fund Health insurance Social security Health insurance SHIFTING THE BURDEN OF SOCIAL CONTRIBUTIONS FROM EMPLOYERS TO EMPLOYEES What might have generated confusion over whether Romania's growing economy actually translated into higher living standards for workers or not were the legislative changes of 2017/18. In April 2017, the Romanian Government came up with a proposal to dramatically amend the Tax Code and shift the burden of the social contributions payable by the employer to the employee.²⁷ The new provisions, while decreasing the income tax from 16% to 10%, provide now for 35% worth of mandatory social contributions compared to the total 16.5% in 2017. Taxes and contributions paid by the employee in 2017 100 90 80 70 60 50 40 30 20 10.5% 10 0.5% 0 5.5% Total contributions: 16.5% Income tax: 16% Taxes and contributions paid by the employee in 2018 25% 10% Total contributions: 35% Income tax: 10% The proposals became effective as of 1 January 2018 alongside the new legal minimum wage package. So the 31% gross minimum wage hike translated into a net increase of 9%, which has nevertheless been unable to make up for the real wage loss incurred over 2009 to 2013/14, when the minimum wage froze under the pressure of the lending conditions imposed by the IMF, the European Central Bank and the European Commission.²⁸ Experts warned that the changes in the law on mandatory social contributions and income taxation would not make economic, legal or social sense and that their real purpose might have been to hide the government's lack of capacity to ensure the real wage increases they had promised to voters.²⁹ LABOUR SHORTAGE The garment industry has the highest number of vacancies(2,450 of the 21,000 vacancies in 2017).³⁰ Factories routinely seek workers: in 2017, a clothing factory was trying to hire an additional 1,000 workers and was unable to ind any interested candidates.³¹ For about 10 years, employers in the garment industry have complained about the lack of workforce. This clearly relates to the inhuman working conditions and the poverty wages paid in Romania's garment manufacturing industry. However, the lack of workforce could not be invoked by the unions that struggle for higher wages. One reason is that the freedom of association is subject to certain legal limitations. Victoria Stoiciu explained it concisely:“ The 2011 labour law reform considerably restrained the employees' freedom of association and restricted their right to form unions to an extent that the ILO has criticized as non-compliant with its standards.“³² 8