Romania Fin Min Says 25% Wage Cut Will Be Law-Regulated Like Any Salary Raises So Far

Romania’s Finance Minister Sebastian Vladescu said that the recently announced 25% cut in the salaries of public sector employees will be made individually and on the basis of a law, the same way salary raises have been established so far without anybody challenging them in court.

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Vladescu stressed there is no law stipulating that salaries cannot be reduced the same way they are raised. He added there are European countries which reduced salaries in the public sector and even eliminated several salary rights, such as the 13th monthly salary, and nobody deemed such measures illegal.

Vladescu reiterated that this measure has immediate impact and resolves a short-term problem, which, he pointed, has a quicker impact than layoffs in this period. He also said that public sector restructuring will continue and this will be the solution on a long run.

Vladescu went on saying that pension cuts will reduce social assistance costs by 3.2 billion lei (EUR1=RON4.1878), namely, approximately 0.8% of the gross domestic product, stressing that the Labor Ministry is forced to take complementary measures meant to save 1% of GDP.

Economy Minister Adriean Videanu on Monday said the Government will have to use confidence votes in Parliament to adopt the measures agreed with the International Monetary Fund, which is leading a EUR20 billion rescue loan for the country.

Transport Minister Radu Berceanu and Interior Minister Vasile Blaga also said the Government might have to ask for confidence votes in Parliament to adopt the recent measures meant to cut expenditures in the public sector.

Romania is set to slash public sector wages by 25% and pensions and social benefits by 15% and has also pledged to fire 70,000 state employees this year, to tighten its ballooning budget deficit and meet the requirements of the IMF-led loan.

Romania's Economic and Social Council, a body consisting of union and employers' representatives and government officials, is expected to approve Monday the most recent letter of intent of the Romanian authorities under the agreement with the IMF, before the Government and Parliament give it green light.

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