Thursday, October 16, 2008

Romania embroiled in salary turmoil

16/10/2008

The Romanian Constitutional Court has upheld a law giving a half-million teachers a 50% raise. Less than two months before general elections, other civil servants are making similar financial demands that could devour the state budget.

By Paul Ciocoiu for Southeast European Times in Bucharest - 16/10/08

Romania's Constitutional Court on Wednesday (October 15th) upheld the constitutionality of a law awarding a 50% pay raise to 500,000 teachers. The Chamber of Deputies unanimously passed the opposition Social Democrats' bill earlier this month. The vote caught the government by surprise less then two months before general elections.

President Traian Basescu, though, must approve the law for it to take effect.

Prime Minister Calin Popescu Tariceanu denounced Wednesday's ruling, warning the law's implementation would be disastrous. "Raising the teachers' salaries by 50% won't do anything besides plunging Romania into a major crisis," Tariceanu said.

"The parliament should have thought of the necessary funds for such a salary hike," he continued, adding such a "hyper-populist" bill was not financially sustainable as it did not correlate to economic growth.

Then-Education Minister Cristian Adomnitei went against his own government by advocating the salary increase in the Chamber of Deputies on October 1st. Ignoring criticism from within the ruling Liberal Party, to which both men belong, Tariceanu fired Adomnitei.

Encouraged by the deputies' vote, more than 100,000 civil servants employed in various departments staged a two-hour warning strike on October 9th to demand a similar 50% salary increase as of January 2009. Unionists argue the country, which enjoyed an annualised GDP growth of 9.3% in the second quarter, can afford to pay civil servants more.

Labour Minister Mariana Campeanu warned a 50% salary increase for the whole public sector would accelerate inflation, destroying the purchasing power of pensioners on fixed incomes.

Economy Minister Varujan Vosganian, echoing Campeanu, raised the prospect of the budget deficit exceeding 7% of GDP, which could endanger Romania's hopes of joining the euro zone in 2014. The EU says budget deficits cannot exceed 3% of GDP.

International media noted the furor in Romania. AFP suggested the government "has fallen prey to its own generosity", alluding also to a recent increase in the minimum monthly salary from 132 to 142 euros and a 20% pension raise, both of which Bucharest enacted allegedly for political reasons.

Basescu called on the government, unions and parliament to act responsibly, saying the struggle over the pay hike has caused the leu to depreciate.

"It is necessary to appeal to responsibility … because the depreciation of the national currency last week was generated by several factors, the most important being the struggle between the government and the parliament for votes, both mistaking the campaign budget for the state budget," said Basescu .

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