In search of additional profit, the employers are ready to pay a part of the salary “in envelope”. The tax evasion on salaries is consequently especially large in the Republic of Moldova. The state mechanisms for counteracting this phenomenon, such as tax inspections, penalties and the minimum salary, are not very efficient and the business community accepts the risk in return for immediate financial gains. In such conditions, the firms that pay salaries illegally are disadvantaged from competitive viewpoint, especially in sectors where the salary costs are decisive for winning contracts, like the building sector, for example, shows a study carried out by the Friedrich Ebert Foundation in partnership with Syndex Romania, IPN reports.
According to the study, as the salaries are very low, the employees are ready to accept a modest raise if they get the pays “in envelope”. The distrust in the public medical and social protection systems explain the very low level of voluntary fiscal compliances. The lack of collective contracts at enterprise level and the very reduced negotiation power of employees only contribute to such a state of affairs.
Given that the fiscal revenues of the state are low, the salaries in the budgetary sector remain very low, service with the state is not attractive and the state institutions, including those that can contribute to the rise in fiscal revenues, are less efficient. The common pay system introduced in the budgetary sector is welcome given the simplification of the pay increase mechanisms, by indexation, and the harmonization of the remuneration of employees serving with the state, but cannot solve the problem of very low salaries.
The study authors said not only the salaries are very low, but the government also does not seem to have resources to increase considerably the pays and wish to more efficiently tax the capital and profits so as to fuel salary raises. Instead, in search of immediate solutions, the government takes unpopular decisions and criticizes the employers and trade unions, which directly affects the salary earners in the competition economy, as it happened to the meal vouchers as of January 1, 2020.
