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| FOM120A - Structural indicators of earnings and labour cost statistics |
| Definition |
Gender pay gap - in unadjusted form, express the difference between men's and women's average gross earnings as a percentage of men's average gross earnings.
Tax wedge on labour cost - is defined as share of total tax rates and social security contributions payable by the employee and employer in the gross labour costs for an AW who earns 67% of the average gross earnings of the activities on industry, construction and commercial services.
Unemployment trap - measures the financial consequences of an AW, earning 67% of the average gross earnings of the activities on industry, construction and commercial services, who moves from unemployment to employment.
Unemployment trap measures what percentage of gross earnings is ''taxed away'' by higher tax and social security contributions, and also the withdrawal of unemployment and other social benefits, under the conditions where a person is no longer unemployed and become employed person.
Unemployment trap express a report between the gross earnings and the growing of net incomes (when the employee moves from unemployment to employment).
The indicator is calculated for two particular cases:
- without rehiring during unemployment period - when there are evaluated financial consequences in case of unemployment transfer in labour field, but not during unemployment period, at a subsequent time moment not specified.
- with rehiring after two unemployment months - when there are evaluated financial consequences in case of unemployment transfer in labour field, after two unemployment months. In this case, according to legal stipulations, person benefits from hiring moment till the end of period due to receive unemployment indemnity, of an additional monthly amount. This case is introduced according to OECD revised methodology and it is relevant for policies encouraging the unemployed rehiring.
Low wage trap - measures the financialconsequences for a person or a family when the employed person increases his/her work effort and implicitly the achieved earnings, i.e. it measures the share of amounts taken over from the gross earnings for the payment of taxes, insurance contributions, social protection and any other deductions or ceased social allowances, under the conditions of increased gross earnings. The indicator represents the weight of the difference between gross earnings increase and net income increase (entailed by the increased labour effort) in the gross earnings increase.
Low wage trap is computed for two particular cases:
- single person without children moving from 33% to 67% of the average earnings of an AW;
- one-earner couple with two children moving from 33% to 67% of the average earnings of an AW.
Tax wedge on disposable earnings - is defined as share of total retentions (tax rates and individual social security contributions) applied to gross earnings that contains the gross earnings and cash transfers from the government as family allowances. For determining the indicator the gross and net earnings are taken into account for 13 different family situations. Differences exist with respect to marital status, number of workers (in the family) and number of dependent children:
- single person without children, earning 67% of the average gross earnings of AW;
- single person without children, earning 100% of the average gross earnings of AW;
- single person without children, earning 167% of the average gross earnings of AW;
- single person without children, earning 50% of the average gross earnings of AW;
- single person without children, earning 80% of the average gross earnings of AW;
- single person without children, earning 125% of the average gross earnings of AW;
- single person with 2 children, earning 67% of the average gross earnings of AW;
- married couple with 2 children, only one parent is working and earns 100% of the average gross earnings of AW;
- married couple with 2 children, both parents are working, one earns 100% and the other earns 33% of the average gross earnings of AW;
- married couple with 2 children, both parents are working and earn100% of the average gross earnings of AW;
- married couple with 2 children, both parents are working, one earns 100% and the other earns 67% of the average gross earnings of AW;
- married couple with no children, both persons are working, one earns 100% and the other earns 33% of the average gross earnings of AW;
- married couple with no children, both persons are working and earn 100% of the average gross earnings of AW.
The indicator is calculated as a difference from 100% and the report between the disposable earnings (takehome pay) and gross earnings for each of the 13 family situations.
The disposable earnings (take-home pay) is calculated as a sum of the net earnings and cash transfers from the government as family allowances (according to national legislation: state allowance for children, supplementary family allowance, sustaining allowance for single parent family). |
| Periodicity |
Annual |
| Data sources |
Labour cost survey details
Statistical survey on salaries in October details |
| Last update |
SEP 28, 2023 |
| Observations |
The structural indicators (tax wedge on labour cost, unemployment trap, low wage trap, tax rate on disposable earnings) are calculated - according to the Eurostat and OECD methodology - for an average worker (noted further on as AW) who is a full-time employee working in activities of industry, construction and commercial services (sections C - K of CANE Rev.1, respectively sections B - N according to CANE Rev.2 since reference year 2008).
For computing the social security contribution, the health insurance contribution and tax, the national legislation in force on January 1st of the reference year for period 2001-2007 and starting with 2018, respectively July 1st of the reference year for the period 2008-2017, according to the OECD methodology is used.
Data are available starting with 2001.
Starting with 2013, the indicator ''Gender pay gap'' is no longer comparable with the previous years due to the change of data source, coverage and reference periods.
It covers all the employees working in the whole economy enterprises and their average gross earnings correspond to the whole reference year.
For 2011 and 2012, data were recalculated using the results obtained from the Labour cost survey.
According to the national legislation provisions in force (GEO No. 79/2017, as subsequently amended and supplemented), the social security contribution and the social health insurance contribution paid by the employer were transferred to the employee; thus, starting with January 2018, these contributions are borne entirely by the employee, and reflected in the gross amount of the nominal earnings. Consequently, starting with the reference year 2018, the structural indicators (except for the indicator "Tax wedge on labour cost") are no longer comparable with the previous data series. |
| Responsible person |
Cotirta Doru-Alin, e-mail:alin.cotirta@insse.ro, int 2281; Popescu Diana Elena, e-mail:diana.popescu@insse.ro, int 2281 |
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