IMF Advises Against Romanian Public Sector Wage Hikes In ’11

Romanian authorities could increase public sector wages next year, depending on the restructuring process, but the International Monetary Fund would recommend that salaries remain at current levels, Wednesday said Jeffrey Franks, head of the IMF mission to Bucharest.

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The Romanian government reduced public sector salaries by 25% starting with July 1, within a plan of austerity measures meant to contain the budget deficit and meet the targets set in the loan agreement concluded with the IMF.

Franks said that, if spending is kept in tight check, there might be room for some salary hikes, but the IMF recommends maintaining the 25% reduction of wages.

Under the agreement signed with the IMF, Romania's budget for 2011 has to keep personnel expenditure below 39 billion lei (EUR1=RON4.2371). The local authorities also committed to lay off 70,000 public sector employees.

Romanian finance minister Sebastian Vladescu recently said public sector wages could rise by 10% next year, if all austerity measures are implemented in a timely fashion.

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