A small but permanent increase in their net earnings will see from 1 April 2027 about 2.5 million private employees As the new reduction in insurance contributions is introduced by 0.5 percentage points.
The change will be seen directly in the payroll, through lower insurance bookings, and will concern all employees regardless of their salary. The basic rule is simple: for every 1 000 euros of gross premiums, the reduction in the contribution corresponds to around 5 euros per month.
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Thus, the higher the insured wage, the greater the nominal relief. For example, at 1,500 euros gross the reduction in reservations reaches 7.5 euros a month, 2,000 euros 10 euros and 3,000 euros a 15 euros.
However, this amount will not go into the net wage as the reduction in insurance contributions increases taxable income and therefore part of the benefit is absorbed by the tax.
Half unit less contributions
This intervention differs from previous reductions in insurance contributions, as the whole reduction of half a percentage point is directed at workers and is not shared between employees and employers.
From 1 April 2027, the rate of insurance contributions borne by workers will fall from 13.37% to 12.87%. On the contrary, employer contributions will remain unchanged at 21.79%. With the new intervention, the total rate of insurance contributions in the private sector will be reduced from 35.16% to 34.66%.
This is the next move in the gradual deescalation of the non-wage costs of recent years. It is typical that in 2019 the total insurance contribution rate was 40.56%. After the new reduction, the cumulative decline by 2027 will have reached 5.9 percentage points. In particular, workers' contributions, which in 2019 were 15.75%, would have been limited to 12.87%, while employers' contributions had fallen from 24.81% to 21.79%.
How booking is reduced – Examples
The practical impact of the new reduction in insurance contributions is directly reflected in payroll. The basic rule is that for
Every 1,000 euros of mixed earnings insurers, the employee will have about 5 euros less insurance bookings per month.
Analyticalally:
- A salary of EUR 1,000 gross: insurance bookings are reduced by EUR 5 per month or up to EUR 70 on an annual basis, calculating 14 salaries.
- A salary of EUR 1,200 gross: the reduction in reservations reaches EUR 6 per month or up to EUR 84 per year.
- Salary 1,500 euros gross: the employee will have 7.5 euros less reservations per month, i.e. up to 105 euros per year.
- A salary of EUR 1,800 gross: the deduction from insurance contributions is fixed at EUR 9 per month or up to EUR 126 per year.
- A salary of EUR 2,000 gross: insurance bookings are reduced by EUR 10 per month, with the benefit of reaching EUR 140 on an annual basis.
- Salary EUR 2,500 gross: the reduction corresponds to EUR 12.5 per month or up to EUR 175 per year.
- A salary of EUR 3,000 mixed: insurance bookings are limited by EUR 15 per month, i.e. up to EUR 210 on an annual basis.
The above amounts concern the reduction of insurance bookings rather than the final increase in the net salary payable. The amount that will eventually remain in the employee's pocket will be lower, as the reduction in contributions increases the taxable income and therefore part of the benefit is absorbed by taxation. A typical example of a 40-year-old worker, with a child and a gross salary of EUR 3,000. His insurance reservation is reduced by EUR 15 per month, but after the effect of the tax his net earnings increase from EUR 2,109 to EUR 2,119. The real benefit in the pocket is therefore limited to EUR 10 per month.
The final net benefit is therefore not uniform for all, but varies according to the level of salary, family status and tax burden of each worker.
Small benefit but on a permanent basis
Although the increase is not significant on a monthly basis, the importance of intervention lies mainly in its permanent nature and in the range of beneficiaries. The reduction concerns not only those who receive the minimum wage, but about 2.5 million private sector employees. Once implemented, lower insurance bookings will be permanently incorporated into payroll.
Who covers the cost
The half percentage point deducted from workers' detentions relates to contributions directed to the DYPA. In order not to limit the Agency’s revenue and, by extension, the resources available for unemployment benefits and employment programmes, the loss will be covered by the state budget through a permanent increase in the grant to the IUPA.
The financial cost is estimated at EUR 163 million for 2027, as the implementation starts on 1 April and does not cover all
the year. As of 2028, when the reduction is implemented on a full 12-month basis, the cost is estimated to be EUR 218 million per year.
Businesses, on the other hand, remain outside this particular relief. Employers' contributions remain at 21.79%, as the government this time chose to channel the entire reduction to workers, so that intervention would be reflected directly in the reservations and net payable salary of around 2.5 million employees.
