Friday, July 11, 2008

Romania govt to invite c.bank to minimum wage talks

BUCHAREST, July 10 (Reuters) - Romanian Prime Minister Calin Tariceanu said on Thursday he will invite the central bank to join ongoing talks with trade unions about their demands to raise the minimum wage in the overheated emerging economy.

Like other countries in eastern Europe, Romania is struggling to ease poverty while combating pressures stemming from global price rises and rampant spending that have taken Romanian inflation as high as 8.6 percent this year.

The central bank, which targets 2008 inflation at 2.8-4.8 percent, sees double digit wage growth as a key threat to long-term economic stability and has repeatedly urged the centrist minority cabinet to tighten fiscal and wage policies.

While the government has pledged to cap wage growth in the public sector to around 10 percent this year, trade unions are demanding a rise in the minimum wage which government officials said would trigger a flurry of pay claims across Romania.

Last December, the cabinet approved a 28 percent rise in the minimum monthly wage to 500 lei after months of negotiations.

"I will invite the central bank to participate to the dialogue ... to express its point of view concerning the evolution of inflation and the risks that certain wage policies can pose," Tariceanu said after talks with trade unions.

"The central bank has a responsibility along with the government to meet inflation targets because we are talking about a correlation of monetary policies with the economic policies put forward by the government, including wages."

The government, unions and employers' associations agreed late last year that minimum wages would rise to 540 lei ($240) from the current 500 lei as of July 1, should the economy and productivity continue to grow while inflation remained in check.

The only unfulfilled goal has been inflation.

Other political parties, under pressure to boost popular ratings ahead of parliament election later this year, have sided with unionists. The powerful opposition Social Democrat Party has said minimum wages should rise to 600 lei this year and to 640 lei from 2009.

Unionists have staged small protests across Romania urging the Liberal government to endorse hikes, which they say would help cushion the impact of soaring food and energy costs. They warned larger demonstrations would take place should talks fail.

Local media quoted a top union official saying there are roughly 88,000 workers receiving minimum wages in the economy. (Editing by Ron Askew)

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