Romania decided to adopt very strict austerity measures which have especially hit the public sector in order to receive a €20bn bailout from the European Union and the International Monetary Fund.
General information and figures
Romania decided to adopt very strict austerity measures which have especially hit the public sector in order to receive a €20bn bailout from the European Union and the International Monetary Fund.
Unemployment rate (June 2010): 7.1%
GDP (bn euro – 2010): 123.13
General Government debt (2009 - % GDP): 23.9
Public deficit (2009 - % GDP): 8.6
Source: Eurostat
Public Employees
Cut of public sector wages by 25 per cent.
In 2010 100,000 civil servants were laid off, and 15,000 more will be laid off in 2011. According to estimates, the total number of public job lay-offs will be around 250,000.
The thirteenth-month salary will be eliminated and scheduled wage increments have been cancelled.
Cuts in social benefits
Cut of social benefits by 15 per cent.
Cuts in maternity benefits are being considered.
Pension reforms
Pensions will be adjusted to inflation instead of the average wage.
Retirement age will be increased to 65 by 2030 for both women and men (current ages are 58 years for women and 63 for men).
Some special pensions given to certain public job categories have been abolished.
In 2011 pensions will be frozen.
Collective bargaining and labour reform
The Romanian government is in the process of changing the labour code and the law on the social dialogue with the support of IMF and the EU.
The changes would further diminish the protection of workers in Romania. The reform is far-reaching and covers several key areas of labour law including conflict resolution, collective bargaining, labour courts, the legislation regarding employer’s organizations as the status of trade union organizations, as well as changes to individual labour law. In practice this means a comprehensive reconstruction of the very pillars of the industrial relations system in Romania.
Tax changes
The government’s original plan to cut pensions by 15% was declared illegal by the Romanian Constitutional Court and it was replaced by an increase in Value Added Tax from 19 to 24%.
The government rejected the possibility of raising the country’s 16 per cent flat tax because they say it would inhibit economic growth.