Stepping up Into a Future Minimum Wage Setting Mechanism in Romania: General Framework, Set of Indicators and Impact Evaluation

Under current European legislation, Romania is required to implement a minimum wage setting mechanism that relies on consultative bodies to advise the competent authorities on the socioeconomic impact of minimum wage adjustments.Comparative analysis of best European practices on minimum wage setting mechanisms does not indicate a universally applicable minimum wage setting mechanism for all member states.Therefore, in this paper, we accept the challenge of designing a mechanism proposal for Romania regarding the legal framework for implementation and operation.We also identify a minimum set of criteria and socioeconomic indicators for monitoring and impact assessments.Next, we propose a scenario for adjusting the annual statutory minimum wage for the Romanian economic context and perform an ex-ante socioeconomic impact assessment to check its applicability.In terms of methodology, we rely both on microsimulations and econometric analysis to test the micro and macroeconomic impact of several alternative minimum wage adjustments.The novelty of the paper consists mainly of the recommendations proposed to support the design of a minimum wage setting mechanism for Romania, where the national literature review is rather scarce.