Government commits to freeze public sector pay

For 2010, Romanian government has committed to the International Monetary Fund that on the public expenditure side, to put in place “measures to further reduce wage bill, including a freeze on wages (0.3% percent of GDP), a continuation of the replacement of only one of seven departing workers and cuts in overtime and bonuses (0.25% of GDP) and structural changes to reduce employment and restructure the wage system”, reads the letter of intent.

Public sector workers earning less the 705 lei are not subject to Government’s pay freeze measures.
Savings from implementation of the pension reform law should feed another 0.1 percent of Gross Domestic Product.

A freeze on goods and services, pensions (excluding social pensions) and certain transfers, together with increased application of electronic procurement systems and some cuts in goods and services and other expenditures, are expected to yield another 0.9 percent of GDP.

On the revenue side, revaluation of the tax base on property taxes and increased excises on tobacco and fuel in line with legislation will contribute 0.3 percent of Gross Domestic Product.

In addition, all measures aimed at producing significant reductions in public sector wage bill are expected to feed 0.68% into the state budget, namely 3.585 bln lei, in line with the country’s commitments to IMF, “that will be achieved by applying standardized norms for personnel costs and for goods and services spending, to be applied in the coming months at all levels of government and by restructuring state agencies in the government sector by either abolishing or incorporating them into relevant ministries”.

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