ECONOMY FINANCE&BANKING

LabMin Vasilescu: Pension system next, as soon as we are done with Uniform Pay Law

Special pensions will be frozen until there’s a very serious approach to the Pensions Law, which will be initiated this year after the Uniform Pay Law is finally hammered out, Minister of Labor and Social Justice Lia Olguta Vasilescu said on Wednesday.

“We have frozen [special] pensions until a correct and serious approach to the Pension Law overall. When we are out of the woods with the Uniform Pay Law, we’ll take on the pension system, which needs correction because we have this minimum allowance in place which will reach 520 lei this year, and we plan it to be 600 lei as of January 1, because one cannot live in Romania on such an amount. But mind you, we are talking about people who have never worked in their life, have nil length of service, but we are now at the point where, as the minimum social allowance increased progressively, it caught up with the pay collected by people with 15 years length service. This is not fair and we want, just as we worked on the Uniform Pay Law, to make the separation by class, education, skills, etc., to have the same model implemented in the pension system,” Lia Olguta Vasilescu explained at Antena 3 private broadcaster.

She reiterated that special pensions are currently frozen and that the authorities plan to carefully correct the system, yet have no intention to lower any pension in Romania.

“We will freeze all special pensions. Those who are awarded such pensions collect 120 percent of the gross wage over the past months, which means a salary of 2,000 lei plus bonuses of up to 1,000 lei, so that their retirement pension is 3,000 – 3,500 lei – and this is a low, because there are pensions that get as high as 45,000 lei; many top 20,000 lei. Special pensions are frozen until we get to revise the entire pension system. We want to focus on the pensions system as soon as we are over with the Pay Law. I want to assure them that we don’t plan reducing any pension in Romania, but we want to very carefully correct the system, because if we further linger in this chaos, some will collect welfare and others will collect pensions that are excessively high for Romania,” the Labor Minister said.

The categories that collect special pensions include, among others, former prosecutors, judges, aviation flying civilian personnel, military personnel, external public auditors of the Court of Auditors, diplomatic and consular staff, lawmakers, prosecution office and court ancillary staff.

 

“Big companies must understand Romanians are not slaves, they must be paid decent salaries”

 

The big companies will have to understand that Romanians are no longer slaves to anyone and that they have to work on decent salaries, and the fiscal facilities provided by the Romanian state will allow them to increase the incomes of their employees, the minister of Labour and Social Justice, Lia Olguta Vasilescu also stated on Wednesday evening at Antena 3 private TV broadcaster.

“We want to provide the business community with as many fiscal facilities as possible, to have a friendly business environment, maybe better than everywhere in the European Union in terms of taxation, but at the same time, the money that does not get back to the state, for example from the Value added tax which lowered from 24 pct to 19 pct, the special constructions tax which is no longer collected, from the excise taxes that have decreased at the beginning of the year, from the corporate income tax, the tax on dividends, which has decreased from 16 pct to 5 pct and to zero starting with next year, so given that we provide the business environment with all these facilities, we expect the money to go not only to their profit, in their pockets but also to go to the investment part, to the payment side so as to bring as many Romanians as possible in the middle class,” said Lia Olguta Vasilescu.

Asked if the uniform pay law would not create a large pay gap between the state and the private system, the Minister of Labor said that the idea is not “to abandon the private sector”, but instead, the private environment to be forced somehow to increase employee revenue.

“In general, 98 pct of the State employees have a higher education diploma. It is logical, that in this respect at least, the wage system should be higher. However, the idea is not to abandon those in the private sector, who should remain with some very low salaries. On the contrary, we somehow force the private business milieu so that they increase as well their employees’ incomes and for that we carry out all sorts of incentive schemes for businesspersons (…) When we change the tax system next year you will see that the net salary of the private employee increases by 17 pct, even if the employer does not pay another leu as compared to what he is paying right now,” underscored Lia Olguta Vasilescu.

On the other hand, she mentioned that the bad news for employers is that it will not be possible anymore to work on the black market, and a special division will be created within the Labour Inspectorate to this purpose.

“We are reorganising the Labor Inspectorate and we will create a special division for the black market labour. The state loses a great deal of money because of that, but worse than anything is that those people are destroyed for life, because not having their medical insurance covered, they can’t benefit from medical services, pension contributions, they cannot take their pension when they retire (… ), they cannot apply for unemployment status to get their unemployment benefit. We will be merciless in this respect,” the Labour Minister said.

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