Romanian PM: A 50% Pay Hike For Teachers ‘Cannot Be Done!’

“I feel compelled to say a few words, because there is a state of anxiety, of uncertainty that affects the Romanian economy these days and that is transposed into nervousness on the bourse and at the currency exchange level, etc. And this is the result of certain gestures or decisions the Parliament made recently, namely the well-known intention to have salaries in the educational system increased by 50%. I want to be very clear on the subject, as I have discussed the issue with my colleagues in the Government and PNL (National Liberal Party – e.n.) and the only responsible attitude is to say clearly, upfront: «It can’t be done!»,” Tariceanu told at a meeting with representatives of the Foreign Investors Council.  

 

Tariceanu pointed out he is not against salary increases, but that they should be done in a responsible manner.

 

“For those of you who think that increasing salaries in education would have no consequences regarding the other employees, you are obviously wrong. Should we attempt a 50% salary hike in the public sector, surely the private sector will not stand aside. I cannot think of a company in Romania that can afford to make a business plan for 2009 to include salary hikes of, let’s not say 50%, but 30%. I simply cannot think of one. If you can do that, very well, but I doubt it,” Tariceanu told investors.

 

He reiterated that potential wage hikes for all employees in Romania’s public sector would require total budget expenses of EUR10 billion, which could only be covered by taxing all 5 million employees with additional EUR2,000 each.

 

This would ruin the country’s economy, Tariceanu said.

 

Last week, the Romanian Parliament has adopted a 50% wage increase of the education system employees. Following the announcement, other categories of state employees threatened strike actions if they did not receive the same increase.

 

A 50% increase of salaries in the public sector would increase Romanian labor costs by 40%, as any increase in the public sector pressures the private one, Economy and Finance Minister Varujan Vosganian said Tuesday.

 

"Any request for salary increases in the budget sector triggers requests from private sector employees, and that will affect the Romanian economy competitiveness. The companies will finally have to choose between diminishing their investments and laying-off people,” Vosganain said.

 

Vosganian said that, under these circumstances, an estimated slowdown in the economic growth for next year might force companies to lay off 300,000 employees.

 

"If the investment rate will be affected, we will see a recession in the Romanian economy, with a growth of below 3%, against the initial forecast of 6%," the minister said.