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IMF, Romanian Govt Talk On Freezing Wages, Pensions, Laying Off 10% Of Public Servants

The IMF is negotiating with the Romanian Government the layoff of 100,000-150,000 state employees until the middle of next year, freezing pensions in 2009 and 2010 except the minimum social ones and wages, until the unitary pay law produces its effects, government sources told MEDIAFAX.
IMF, Romanian Govt Talk On Freezing Wages, Pensions, Laying Off 10% Of Public Servants
08 aug. 2009, 19:28, English

“At this moment the problem is laying off 100,000-150,000 employees in central and local administrations and in decentralized authorities. This entails saving 0.35% of the GDP for next year’s budget. The 2% pension hike scheduled for October is also suspended. Pensions will be frozen in 2010 too, with the exception of the minimum social pensions,” government sources told MEDIAFAX.

Talks led to the agreement that all public servants are to be on an unpaid holiday for two or three weeks between September and November, which entails savings worth 0.3% of the GDP.
Currently, Romania employs 1.4 million public servants.
 
Romanian President Traian Basescu said on July 30 on public radio that the Government should hurry and lay off many public servants working for the state apparatus, suggesting that 20% of them are “useless”.
 
According to official sources, the government is in talks with the International Monetary Fund (IMF) to reduce the planned budget spending by EUR1 billion, mainly through closer surveillance and a limit on the sums used by the local administration and the large state companies.
 
The IMF accepted a hike of the budget deficit to 7-7.2% from 4.6%, on the backdrop of an economic contraction revision for this year from -4% to minus 8-8.5%.
 
The gross domestic product will reach some 500 billion lei (EUR1=RON4.2186) compared to the initial estimation at RON531 billion.