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Romanian Salaries Should Not Rise Above Inflation To Avoid Price Hikes- Ctrl Bk Adviser

Adrian Vasilescu, adviser of the central bank’s governor, stated Thursday that the salary hike in 2009 should not exceed inflation rate, estimated at 4.4% for this year, adding that unjustified hikes should be avoided as they would only trigger price hikes.
Romanian Salaries Should Not Rise Above Inflation To Avoid Price Hikes- Ctrl Bk Adviser
14 mai 2009, 12:11, English

Vasilescu added that the unionists’ salary hike requests are justified but “the government also has the right to wonder: where to get the money from?".

As regards the potential political pressures for the increase of salaries in an electoral year, Vasilescu said that the International Monetary Fund would watch carefully the correlation of indicators and may put pressure to hinder this step.

Vasilescu also stated that, despite various opinions, nobody could forecast exactly the duration of the financial crisis.

"Some say it will be over this year, others, next year. Nevertheless, the effects of the crisis can even last 20 years, like it happened in Japan starting with 1990. This means economic growth followed by slowdown over and over again," the advisor stated.

The International Monetary Fund sees Romanian salaries up 5.9% in nominal terms in 2009, up 3.9% in 2010, and up 3.5% in 2011, a growth pace similar with the average consumer price index projected increase.

Nominal wages in the public sector will grow by 5.1% in 2009, while in the private sector they are seen up 6.2%, according to IMF forecasts.

Romania agreed end-March with the International Monetary Fund, the EU and other international lenders a EUR19.95 billion financial package to help it cushion the effects of the financial crisis.