About 35% Of Romanian Public Servants With Low Wages To Lose Jobs – Union Leader

The union leader said the spending cut program announced by President Traian Basescu will affect pensioners, unemployed people and employees that have low salaries.

Basescu said Thursday, after talks with International Monetary Fund officials, pensions will decrease by 15% and salary funds in the public sector by 25%, which will also impact minimum wages, adding subsidies will also be drastically reduced. He said minimum wages will not decrease below RON600 lei (EUR1=RON4.1833).

The head of state also said the Government will transfer EUR1.7 billion to the pension fund, adding that extra EUR500 million are needed to pay pensions at their current level. Basescu said the EUR500 million fund for pensions is not available and pensions must be reduced by 15% to keep the system sustainable.

The head of state also said subsidies will be drastically reduced and mentioned subsidies for heating. He also said unemployment aid will decrease by 15%.

The president said the money obtained after subsidy cuts will be allotted to those who really need financial help. He also pointed out Romania's 16 social aid programs will be reanalyzed so that they do not become income sources to render work unnecessary.

Basescu added the difference between state budget revenues and expenditure needs to be covered by lowered spending in the public and social sectors. Basescu highlighted the Government needs to amend the Labor Code in order to render workforce more flexible, and analyze taxation.

Basescu said that talks with the IMF resulted in the "trust variant", where the Government will continue its program to massively reduce spending.

Basescu said the other variant, the "distrust variant" entailed an increase of the value added tax to 24% from 19%, an increase of the flat tax to 20% from 16% and to decrease salaries in the public sector, to fit within a budget deficit target of 6.7 - 6.8% of the GDP.

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