MINIMUM WAGE INSTITUTION IN THE FINANCIAL AND
          ECONOMIC CRISIS. POLICIES AND PRACTICES.

         Valentina Vasile, Institute of National Economy of the Romanian Academy


ABSTRACT: The economic and financial crisis became apparent in Romania somewhat
delayed but persists and is aggravated due to the weak sustainability of the economic growth
recorded in the last few years. The considerable diminishment of output because of reduced
exports and domestic demand compression for goods and services generates new unemployed
contingents and triggers the diminishment of employees’ earnings. Additionally, the
distribution of employees on income brackets places the median under the level of the average
wage on economy and heightens incomes’ inequality. In this context, the economic and social
significance of the minimum wage increases from the perspective of sustaining domestic
demand and from the social one of maintaining an adequate living standard, as well. In spite
of the sizeable increase of the minimum wage during the transition period, it remains one of
the lowest in EU and it does not exceed the minimum subsistence level. The paper presents the
crisis impact on the labour market from the viewpoint of using the minimum wage as
instrument of maintaining/stimulating domestic demand and social protection of employees
and identifies the elements of adequate policies for the crisis situation and to the
particularities of labour market and economic conditions in Romania.

Key words: minimum wage, financial crisis, labour market

JEL classification: J30, G01, J40