Government Ups Personnel Spending By 5% In Election Year 2012 - Bill

05.25.2011 By Ioana Tudor

The Romanian Government will increase staff spending by 5% in election year 2012, above the cap set for this year, to 42.59 billion lei (about EUR10.33 billion) or 7.2% of the gross domestic product, one percentage point above inflation and economic growth estimates.

In 2013, staff spending will be set at 6.9% of the gross domestic product.

According to a draft act setting public sector spending caps for 2012, staff expenses will increase from RON40.5 billion in 2011 to RON42.59 billion.

In 2010, staff expenses amounted to RON42.15 billion.

The National Prognosis Commission takes into account a DGP of RON599 billion (3.9%) in 2012 and of RON659.4 billion (4.5%) in 2013.

The Romanian central bank has recently revised upwards its forecasts for 2011 and 2012 annual inflation to 5.1% and 3.6%, respectively.

The European Commission sees Romania's economic growth at 3.7% in 2012, close to estimations made by the International Monetary Fund (3.75%-4%).

Fiscal Council president Ionut Dumitru said in April the salary fund may increase by 5% next year and the pension fund by at least 7% if the country registers a 1.5% and 3.9% economic growth in 2011 and 2012, respectively.

The Romanian Government pledged in negotiations with the IMF to reduce by 7,000 the number of jobs in state companies this summer.

Public sector staff spending increased significantly between 2005 and 2008, when the salary fund was up 1.5 percentage points of the DGP. The average wage in the public sector increased by 63% in the interval mentioned above.

In the summer of 2010, the Government was forced to implement a series of fiscal and social measures to save the economy. Employees in the public sector had to put up with a 25% wage cut.