The correlation of the minimum wage in the economy with the minimum consumption basket in Romania

Abstract

The official statistics - the National Institute of Statistics (NIS) - has, among other activities, the calculation of the minimum consumption basket, the monthly update of its value with the consumer price index. NIS uses the European methodology to determine the poverty line. The minimum monthly consumption basket was introduced in Romania by "Government Emergency Ordinance no. 217 of November 24, 2000 regarding the approval of the minimum monthly consumption basket", for a household of average size considered to be 2,804 people, including all expenses necessary for living in a month through the purchase of: (1) food products, (2) non-food products and (3) services. In accordance with O.U.G. no. 217/2000 the minimum monthly consumption basket is the basis of the foundation of the minimum basic salary on the economy, the salary policy and other policies in the social field. The increase in the minimum wage was done without any objective criteria on the basis of which the increases should be made. The absence of such criteria creates a high degree of unpredictability for the business environment, companies being put in the position of not being able to estimate what the evolution of salary costs will be, which has a negative impact especially in the sectors of activity characterized by a high weight of minimum wage contracts.