Romania has one of the lowest personal income-tax rates in the European Union, a flat 10%, and one of its most deregulated labour markets, following the 2011 amendments to the Codul Muncii (Romania's Labour Code). Fifteen years on, the result is not broad prosperity: roughly 40% of employees earn the minimum wage or just above it, and the minimum wage itself sits 23% below the minimum basket for a decent standard of living, as calculated by Romania's Institute for Research into Quality of Life (Institutul pentru Cercetarea Calității Vieții, ICCV).

In a recent interview with the Romanian daily Adevărul, Oxford University researcher and lecturer Vladimir Borțun describes the current system as a machine that generates GDP growth without raising the incomes of the people who produce it. The data back him up, and the implications go well beyond an ideological debate: they directly affect salary competitiveness, talent retention, and companies' ability to build stable teams in a labour market that is steadily losing workers abroad.

The figure that changes the conversation: 40% of employees at or near the minimum

Roughly 40% of Romania's workforce earns the minimum wage or slightly above it, according to data cited by Borțun. That is approximately double the EU average share of workers on minimum wages, meaning this is not a "vulnerable-sector" problem but a structural feature of the entire labour market.

The same source indicates that around 45% of the population lives in poverty or on the margins of poverty, and Romania has the second-highest in-work poverty rate in the EU. In other words, holding an employment contract is no longer a shield against poverty; for many workers, it is merely a legal wrapper around it.

"There is this mantra that you are poor because you are lazy and don't work. No, people work and are still poor, because wages are very low.", Vladimir Borțun

The flat 10% tax: an Eastern European outlier

Across the entire European Union, Romania and Hungary are now the only two member states still applying a flat personal income tax. The rest of Central and Eastern Europe has moved to progressive taxation: Croatia taxes high earners at up to 30%, Poland at up to 32%, Slovenia at up to 50%. Romania has stayed at 10% flat, whether a monthly salary is RON 4,000 or RON 40,000.

Corporate profit tax stands at 16%, among the lowest in the EU, an apparently investor-friendly environment. In practice, roughly 60% of foreign direct investment (FDI) has been concentrated in the Bucharest-Ilfov region, while the country's poorest region, also the one with the highest emigration rate, attracted only 2% of investment. The tax benefit is distributed highly unevenly across the country, and large parts of Romania remain little more than a labour reservoir for foreign markets.

Both the International Monetary Fund (IMF) and the World Bank have repeatedly recommended a shift to progressive taxation. Those recommendations have not been adopted.

What changed in 2011, and why it still matters in 2026

The 2011 Labour Code reform significantly liberalised the labour market and, according to Borțun, undermined the capacity for union organisation in the private sector. The effect is visible in today's structure: trade unions retain real power only in the public sector, while in the private sector collective bargaining is almost non-existent.

"We have relatively strong unions in the public sector, but in the private sector they barely exist. They are very fragmented and have no collective bargaining power.", Vladimir Borțun

The practical consequence for the average employee: salary negotiation becomes a one-on-one conversation with the employer, with no sector-level collective agreement to set a meaningful wage floor. Bargaining power shifts entirely to the company, and entry-level wages in many sectors remain anchored close to the legal minimum.

Emigration as a pressure valve: an estimated 5 million Romanians abroad

Romania's economic diaspora is estimated at roughly 5 million people, nearly a quarter of the country's population, making it the largest economic migration in Europe. This is no statistical accident; it is the market's response to a structural gap between what a skill set earns in Romania and what the same skill set earns in Spain, Germany, or Italy.

Over 20% of Romania's workforce is employed in agriculture, the highest share in the EU. For comparison, Poland's figure is around 10% and France's just 2.4%. It is a clear indicator that economic modernisation has not translated into a real restructuring of employment patterns.

The Spanish model as a point of comparison

The wider European context provides a useful counterpoint. Spain recently recorded the strongest economic growth in the eurozone, driven by policies moving in exactly the opposite direction: significant increases to the minimum wage, stronger employee rights, and a reduction in unemployment of roughly one-third. In parallel, the Spanish government announced the regularisation of 500,000 immigrants, integrating them into the formal economy and the social-contributions base.

The contrast matters because it refutes the assumption that higher wages "kill" competitiveness. Spain is not an isolated case; it is empirical evidence that a minimum wage closer to a living wage, combined with clearer worker rights, can coexist with a growing economy.

In the broader EU context, approximately 93 million people, roughly one in four EU citizens, live in poverty, according to Eurostat data cited in the interview. The problem is not uniquely Romanian, but Romania sits at the extreme end of the distribution.

For employees and job-seekers: what this means in practice

If you are early in your career or in a role with a salary close to the minimum, a few practical points are worth keeping in mind:

, Benchmark yourself against the market, not against colleagues. Companies often compare internal pay against an in-house "band" that can be 20–30% below the real market average for a given role. An external benchmark changes the negotiation entirely. You can check your position directly using the Salariometru for your role and seniority level.

, Always calculate net pay, not gross. Income tax is 10%, but social contributions, CAS (pension contribution) and CASS (health contribution), together total 35% of gross salary. Combined with income tax, approximately 40–45% of gross pay goes in taxes and contributions, according to calculations cited by Borțun. Use the net salary calculator before accepting any offer.

, Ask for details about the internal salary band. Without a collective agreement, the only comparison tool you have is the transparency of the company's offer. Ask at interview what the minimum and maximum of the band is for that role.

, Check the employer's reputation before you sign. In a market where collective bargaining is weak, internal culture and pay practices vary enormously. Reviews from former employees will tell you in ten minutes what you will never learn from a job advert.

For HR professionals and decision-makers: implications for retention and recruitment

The same data read differently if you are responsible for a talent strategy. A few concrete implications:

, The market has an artificial floor, not a ceiling. When 40% of employees are at or near the minimum, a company that pays only "at market rate" for entry-level roles will attract exactly the most mobile segment, the people most likely to emigrate or switch jobs within six to twelve months. Turnover costs quickly outweigh the difference between a minimum-anchored offer and one that is 15–25% above it.

, The diaspora is your direct competitor, not just other local companies. The roughly 5 million Romanians who have left represent a potential repatriation pool, but also a benchmark for salary expectations among those who have returned. A candidate with three years' experience in Spain will not accept the standard local offer.

, The concentration of investment in Bucharest-Ilfov is a strategic opportunity. Regions that receive only 2% of FDI have available workforces willing to relocate or work remotely for salaries significantly below the capital's average. Distributed hiring policies can open talent pools that are entirely inaccessible to companies concentrated in Bucharest's Pipera business district.

, Pay transparency is becoming a competitive advantage, not a risk. The EU Pay Transparency Directive, which requires larger companies to publish salary bands, takes effect in 2026. Employers who prepare now will gain in employer branding over those who are forced to comply at the last minute.

What comes next

The debate about the flat tax, the minimum wage, and collective bargaining is not new in Romania, but the context in 2026 is different. The budget deficit, demographic pressure, and EU directives on adequate minimum wages and pay transparency are shifting the political balance. The low-tax, low-wage model attracted investment for two decades; the open question is whether it can retain the talent needed for the next two.

For employees, the most useful habit is to check their market position regularly and negotiate with data, not emotional arguments. For HR, the most useful habit is to stop conflating "market salary" with a dressed-up minimum wage, they are different things, and the difference is paid either in recruitment costs or in turnover costs.