Bulgaria has the lowest gross minimum wage in EU and EEA, KPMG study shows

Bulgaria has the lowest gross minimum wage in EU and EEA, KPMG study shows
By bne IntelliNews May 17, 2018

Bulgaria has the lowest gross minimum wage (€261) in the EU and the European Economic Area (EEA), while neighbouring Romania climbed one place to rank third, an analysis from consultancy KPMG showed on May 17.

Bulgaria is followed by Lithuania (€400) and Romania (€416) in terms of lowest gross minimum wage. The highest minimum wage was reported by Luxembourg (€1,999), followed by Ireland (€1,843) and Germany (€1,818).

Compared to last year, Romania climbed one place in the ranking. However, KPMG noted that the increase is artificial and was the result of the shifting of the employer’s social security contributions to the employee.

"This can also be observed by looking at net amounts for 2018, as Romania is one place lower, with the second lowest net minimum wage (€243), after its neighbour, Bulgaria (€202)," the consultancy said.

The effective tax rate in Romania is 44%, the seventh highest compared to the effective tax rates in the 20 member states which have a minimum wage established at national level. The effective tax rates within the member states range between 15% in Ireland and 87% in France, the study noted.

"Surprisingly, countries where the minimum wage is relatively low (including Romania) have high effective tax rates (over 40%) while countries with a high minimum wage (like Luxembourg, Ireland and the UK) have effective tax rates below 30%. When calculating the effective tax rate, the income tax rate as well as social security rates are taken into account, relative to the gross minimum wage," KPMG said.

 The survey is in its third edition and it shows the evolution of the minimum wage and the tax burden related to it in each of the countries under review.