Romania Ctrl Bk: Govt Spoke Too Soon About Public Sector Pay Hikes

Romanian authorities spoke too soon when they said public wages might increase by 10% on average in 2011, because there can be no pay raises without a reshuffling of the sector, central bank governor Mugur Isarescu said Friday.

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Speaking in a news conference, Isarescu said the government must first honor its commitment to reduce the number of public employees before discussing pay hikes.

Prime Minister Emil Boc said Wednesday that public wages could increase by 10% on average compared with the July level, provided the 13th bonus wage is eliminated. Boc added additional pay hikes may be decided once the restructuring process is completed.

The government decided to cut public salaries by 25% as of July, part of an austerity package aimed at reducing expenditure and keeping the budget deficit below 6.8% of the gross domestic product.

According to Romania's letter of intent to a EUR13 billion loan agreement signed with the International Monetary Fund, the authorities also pledged to slash the number of public employees by 74,000 people by year-end and further reduce their number by at least 15,000 over the course of 2011.

The government already sacked 27,000 staff in the public sector so far this year.

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