Romanian Union Leaders Plan Ample Protests Over Country's Austerity Plan

Basescu said Thursday, after talks with International Monetary Fund representatives, that salary funds in the public sector will take a 25% cut, which will also impact the minimum wage. The cuts will take effect starting June 1 and will last six months. Heads of central and local administration institutions must evaluate all employees and decide whom to lay off by the end of 2010.

The head of state also said pensions must be reduced by 15% to keep the system sustainable. Subsidies will be massively reduced, and the money obtained will be allotted to those most "in need of financial help".

Sources close to the negotiations told MEDIAFAX Thursday that over 140,000 of Romania's 1.4 million public sector employees will be laid off by early 2011, in order to maintain staff spending at the level agreed upon with the IMF.

Basescu said Romania is forced to drastically cut public spending to avoid raising its main taxes and called on unions to assume their part of the responsibility for the allotting of funds in public institutions.

The leader of the "Cartel Alfa" National Union Confederation Bogdan Hossu said Thursday that about 35% of all low-paid public sector employees will lose their jobs because of the upcoming 25% cut of salary funds.

According to Hossu, the measures will mostly affect low-income earners, while the state will keep its privileges, since the austerity plan will not change VAT and flat tax levels.

Hossu and the leader of the "Sed Lex" Union Alliance Vasile Marica said that the President and the Government should focus on fighting tax evasion and political clientelism.

"Cartel Alfa", the farmers' union "Agrostar" and three education unions had scheduled protests throughout May, prior to the president's announcements.

Romania's recession-hit economy contracted by 7.1% last year, after three years of annual growth of nearly 8%. This year's budget gap must be narrowed to 5.9% from 7.2% last year, to meet the terms of a EUR20 billion IMF-led bailout loan.

The IMF mission is currently in Romania to decide whether to disburse a fifth installment worth EUR850 million of a total stand-by loan of EUR13 billion.

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