Romanian Union Head: Raising Public Sector Wages By More Than 10% Impossible In 2011

Hossu stressed that sacking 70,000 up to 80,000 employees in the public sector, in ratio with the number of positions, translates into an 8% cut, plus another 2% cut by reducing the number of positions which are stipulated in the budget, but vacant.

Hossu underscored that the salary fund will be reduced to 39 billion lei (EUR1=RON4.2547) in 2011, compared to RON47 billion in 2010, which translates into a 15% - 20% cut. Given the situation, he added, public sector wages cannot be raised more than 10% in 2011.

He went on to say that the 10% wage raise would be due to the restructuring of the public sector, not to the enforcement of the unitary salary law in the sector.

According to Hossu, there could be a significant raise in low salaries in 2011, fueled by the enforcement of the unitary salary law, which aims to reduce salary gaps, and by the fact that the minimum wage should be increased 17% - 18%, to at least RON700.

Prime Minister Emil Boc said Wednesday on public radio that public sector wages in Romania will increase about 10% next year compared to the slashed levels in July if the Government eliminates the 13th monthly salary.

He said any additional wage increase will be decided after the country's public sector is restructured, depending on results of the process.

"In 2011, public sector wages will rise compared to the current levels resulted from a 25% cut. If we eliminate the 13th salary, as we plan to, we can have a 10% wage growth from the start. Depending on the success of the restructuring process, we may have wage raises of more than 10% but we'll see about that when the restructuring process ends," Boc said.

Romania cut public sector wages by 25% as of July 1 and has promised to sack around 70,000 public sector employees this year, within a plan of austerity measures meant to contain the budget deficit and meet the targets set in the loan agreement concluded with the International Monetary Fund.

The IMF, however, recommended Wednesday that the country should keep salaries at current levels. Jeffrey Franks, head of the IMF mission to Bucharest, 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.

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