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Social security contributions reduced by 5%

Written by: Bridgewest

Social_security_contributions_reduced_by_5_percent.jpgRomanian authorities reduced the social security contributions by 5% according to a law passed earlier in September. This measure will encourage the creation of new workplaces and it will encourage foreign investors to open companies in the private sector. This change will have a significant impact starting with 2015.
 
The law aims to reduce the social security contributions paid by employees, according to the working conditions. A reduced rate of 15.8% will apply for normal working conditions, a 20.8% rate will apply for particular working conditions and a 25.8% rate will apply for special working conditions. The rates paid by employers before the cut were 20.8 for normal conditions and for particular ones and 30.8 for special working conditions.
 
New workplaces as a consequence of the legislative change
 
Romania’s Prime Minister, Victor Ponta, believes that this was an important project for Romania and that it will lead to the creation of more workplaces. Romanian and foreign employers will now be able to hire personnel more easily, according to the new legal provisions.
 
A positive reaction to this measure could also be an increase in the number of foreign investments in the country. In a recent press statement, the Romanian Prime Minister and Romania’s Minister of Finance have supported the idea that the state cannot directly create jobs, but it has to encourage foreign investors to do so and provide the necessary conditions for investments. These remarks have sparked new debates between individuals who believe that the Government should only encourage the creation of new workplaces and those who believe that the Government is entirely responsible for making this happen – Romania’s president included.
 
President Traian Basescu believes that the Government should do all it takes to create new workplaces and that Romania will only overcome current difficulties if the state creates new jobs.
 
For more information about the employment conditions in Romania and regular updates regarding changes in the current legislation, please contact our Romanian accountants