Support for Employers and Employees

Romanian Government to cover 45% of base salary for furloughed employees

Daniela Budu, 29.05.2020, 13:50

The Bucharest Government has adopted a draft emergency ordinance that includes
several economic measures for employers and employees. One of the provisions stipulates
that part of the salary of those who come back to work on June 1st, after being
furloughed, will be covered by the Government.

Therefore, for a period of three
months, the state will cover 45% of the base gross salary, but no more than
45% of the average gross salary established at national level. The obligation on
the employer’s part is to maintain the jobs in question for at least another
six months. Also, the fields of activity that will still be affected after June
1st will be identified, and there furlough will continue to be supported by the
state.

The Labour Minister
Violeta Alexandru has stressed that all the entities that cannot resume
activity will continue to benefit from support, if their operations remain shut
at the request of the authorities. The minister says that, although some problems
have occurred, the requests for furlough and payments have been properly
managed so far.

Violeta Alexandru: As compared
to other EU member countries, Romania has managed quite effectively the
processing of furlough and payment applications. There have been some isolated
issues and some dysfunctionalities, but, in my opinion, we have acted relatively
well and the results can be seen in the actual payments that have been made. We
are now in full process of preparing payments for May. The applications can be
filed in early June for May and everybody is ready to make the payments.

The Labour Minister has
announced that some 430,000 employment contracts have been terminated since the
state of emergency was declared on March 16th. Most of them were in
the processing industry, in retail, vehicle and motorcycle repair and maintenance
and construction. Another 600 thousand contracts have been suspended.

According to the National
Institute of Statistics, in March, the unemployment rate in Romania went to
4.6% from 3.9% in February, because of the effects of the COVID-19 pandemic on
the economy. Fitch rating agency anticipates that unemployment will double in Romania
this year as against last year, getting to 8% from a historical low of 3.9%. This
would be the highest increase in the unemployment rate recorded in just one
year, Fitch has also said. (M.Ignatescu)