October 4, 2017 / 12:06 PM / a year ago

State workers protest in Romania over social security payment shift

BUCHAREST (Reuters) - Thousands of state workers protested in the Romanian capital on Wednesday against the Social Democrats-led government’s plan to shift social security taxes to employees.

The government, which also aims to reduce income tax to 10 percent from 16 percent, plans to cut social security payments from Jan. 1 to 35 percent from 39.25 percent. But payments are now jointly made by workers and employers.

About 3,000 public sector workers in Bucharest demanded the cabinet scrap the plan to shift the burden of social security taxes to employees. Protesters blew whistles and some held banners saying: “We pay you to serve, not mock us.”

The Finance Ministry has yet to release a draft bill on its tax plans.

“The government’s proposal to transfer social security contributions to workers is an experiment whose negative consequences will again be carried exclusively by employees,” protest organizer, the Cartel Alfa union, said in a statement.

Romanian and foreign investors have criticized the Social Democrats’ plans for tax changes which they complain have been announced without prior consultation or impact assessment. They have urged more predictable fiscal policies.

The government’s plan for fiscal loosening has raised concerns in Brussels. The European Commission has said it expects Romania to run the largest budget deficits in the European Union this year and next.

The government has said it would keep the deficit below the EU ceiling of 3 percent of gross domestic product.

The government said a 25 percent wage hike approved for public sector workers for 2018 will cover changes to social security contributions. But net wages will stay virtually flat.

Finance Minister Ionut Misa has said the planned changes to social security contributions would mean private firms would have to raise gross wages but said this would not mean extra costs as companies no longer contributed to social security.

Reporting by Luiza Ilie; Editing by Edmund Blair

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