Romanian government will raise state wages to rectify inequities

BUCHAREST - Romania's technocrat government will raise state wages over the next year and a half, the prime minister said on Wednesday, chiefly to rectify discrepancies in pay among the lowest-paid workers.

Currently, public-sector workers with similar responsibilities might earn different salaries, Prime Minister Dacian Ciolos told reporters, because they got their jobs at different times.

Starting in the second half of this year, the government will raise wages "to correct pay dysfunctionalities that have led to overlapping of salaries in the low grades area," Ciolos said.

Wages will rise by about 5 per cent on average, government spokesman Dan Suciu said, with the biggest 20 per cent hike set aside for workers in the social assistance sector. The state budget will provide about 500 million lei (S$172.5 million) this year and 1.5 billion lei next year to pay for the increases.

Romania has shrunk its budget and current account deficits and posted some of the European Union's highest growth rates after getting aid from the International Monetary Fund from 2009 to 2015.

Analysts have said recent wage increases and tax cuts, along with a bill that would allow Romanians to walk away from mortgaged properties and stop paying loans, have put fiscal targets at risk.

Next year's fiscal deficit might reach 3.3 per cent of gross domestic target, according to the IMF's mission chief for Romania, Reza Baqir. That would exceed the government's 2.8 per cent target and above the EU's ceiling of 3 per cent of GDP.

Ciolos said the pay scheme was drafted by the labour and finance ministries in his five-month-old cabinet. He expects it to be approved next week, after talks with trade unions.

Late last year, the government agreed with trade unions and employers to raise the minimum wage by 19 per cent to 1,250 lei per month before tax, starting in May.

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