Romania Mulls Cutting Budget Gap In 2012-2014 Through Layoffs

04.17.2011 ZF English

Romania's Government will reduce the budget deficit over the next three years through layoffs, suspending payment of the 13th salary and holiday bonuses, as well as freezing the hierarchical coefficients provided by the public sector wage law.

Romania's Government will reduce the budget deficit over the next three years through layoffs, suspending payment of the 13th salary and holiday bonuses, as well as freezing the hierarchical coefficients provided by the public sector wage law.

The new austerity measures are included in the draft fiscal-budgetary strategy for 2012-2014, obtained by MEDIAFAX.

The government wants to reduce the budget gap to 3% in 2012, 2.4% in 2013 and to 1.9% in 2014.

The document says the public sector salary fund in 2012 must amount to no more than 42.5 billion lei (EUR1=RON4.1021) or 7.1% of the gross domestic product.

This will be done by eliminating the 13th salary and holiday bonus, cutting jobs down to 1.24 million (replacing only one employee for every seven who leave the system), freezing the pension point and implementing wage legislation.

Salary expenses will be limited to 6.7% of the GDP in 2013 and to 6.4% in 2014.

The government will continue to apply the public sector wage frame-law "gradually." The reference value corresponding to hierarchical coefficient 1.0 will remain RON600, while the coefficients matching the various wage classes will not be applied.

The value of personnel expenses included in the general consolidated budget has been determined taking into account "wage raises provided in two installments," so that the salary cuts of 2010 can be recovered in 2012.