freezing the minimum wage guaranteed for payment.The study includes calculations on three possible scenarios in 2017:
The three scenarios of increasing the minimum wage and their impact Overall, the empirical results showed that on long-term, the minimum wage has a positive and statistically significant impact on the informal economic activity in Romania, while on short term this impact is not supported by empirical evidence. The INCSMPS experts have identified a negative relationship, of substitution, between the two economies, formal and informal, which means that the black economy plays the buffer role (safety valve) for certain periods of time and certain categories of persons (young or low-skilled workers).
There is a relationship of “in tandem movement” between the changes in the minimum wage and the informal economy, says the study, which is seen from the analysis of the 2000 – 2015 period:Įvolution of the minimum real wage vs the informal economic activity (2000-2015) Raising the minimum wage guaranteed for payment will not though automatically led to an increase by the same amount of the total obtainable income of the household, because many families paid with at least one such salary are also benefiting from state support (guaranteed minimum income or family support allowance). It draws attention to the fact that “figures, although statistically valid, should be analysed cautiously because productivity might be influenced by many factors and the link between the minimum wage and productivity is not very close“, as shown in the econometric model used for the analysis. “ It seems that the increase of costs in Romania – caused by raising the minimum wage – is not counterbalanced by increased productivity,” is the conclusion of the study. The impact of the national minimum salary on the work productivity is negative – an increase of the minimum salary by 10% would have as result a decrease of the work productivity by 2.3%, according to a study conducted for the Government by the National Scientific Research Institute for Labour and Social Protection (INCSMPS).