FIC Representatives: We cannot increase salaries first and hope the rest will follow

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The evolution of the minimum wage in Romania should be linked to productivity, not set by law, and productivity depends on many issues such as infrastructure, the quality of workforce, investment and employment in the productive sectors, said Steven van Groningen (photo), member of the board of the Foreign Investors Council (FIC).

“We need to focus on increasing the productivity. When productivity increases, it means producing more and then there will be no problem to pay higher wages. But people who are stuck in traffic produce nothing. Those who lose a day to change their identity card or address do not produce anything. (…) When we talk about Romania’s potential, obviously we are talking about a much higher GDP, but it does not come by itself. You need investments, technology, better infrastructure, better prepared workforce, more people employed in productive sectors. Additionally, when you look at things from the demographic perspective, it does not look good: low birth rates and high emigration,” van Groningen said on Wednesday during a meeting with the press, capital.ro informs.

These are problems to be solved in order to increase productivity. We cannot increase salaries first, and hope the rest will follow, said van Groningen.

He noted that in Romania, the minimum wage is 50% of the average wage, which places the country at the extremes of European averages. “We see that many Romanians leave the country and seek employment abroad. Has the minimum wage anything to do with this aspect: yes or no? What impact will have on taxation? There are many questions that need answers. This is another example showing that, in Romania, we fail to conduct a constructive dialogue between employers’ organizations on the one hand and the unions on the other hand,” stressed van Groningen.

In his turn, FIC President Eric Stab said that decisions on the minimum wage in recent years have not had a positive effect on the economy. Minimum wage increases in recent years were not reflected in higher productivity, the country’s competitiveness has fallen and, instead of improving the people’s situation it had the opposite effect, namely the return to rising unemployment, Eric Stab said.

In his view, policies on the minimum wage should be carefully adopted, because there is a risk, especially in low-wage sectors such as agriculture, to decrease competitiveness and to lose jobs.

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