Finance Ministry: salary costs growing quickest

Employee costs in the consolidated budget have seen the fastest growth this year among all other items of expenditure, announced the Public Finances Ministry (MFP).

The information comes as a reaction to the announcement by trade union organisations that they would begin strikes in September, following the government decision to push back the indexing of salaries for state employees to 2006.

The Finance Ministry maintains that despite the decision to postpone salary indexation and suspend new appointments, employee costs for 2005 are 20% higher than in 2004, an increase of 23,000bn ROL (2.3bn RON or around 667m euros). By comparison, total budget expenditure rose by only 13%.

“Employee costs are surging as a percentage in GDP, so far from 4.9% to 5%. No other expenditure category is growing from this point of view,” reads the Finance Ministry statement. Moreover, the ministry also pointed out that the budget approved by the former government foresaw employee costs rising by only 7% compared to 2004.

“Nonetheless, in the autumn of 2004 there were some fairly big pay rises awarded with no budgetary cover. At the same time, with the intention of levelling salary growth in public administration, the last government did not stipulate the necessary funds. As a result, they had to be supplemented by around 14,500bn ROL during the budget rectification,” the statement explains.

In real terms, salary costs went up by 11.2%, nearly double the projected economic growth rate of 6%.

In line with Finance Ministry data, against the overall economy, average net salaries rose 23.5% compared with January-April 2004 to 7,122,990 ROL (712.1 RON). At the same time, average net salaries in public administration and defence rose by 34%, while in education the increase was 35.9%, and in health and social security 31.5% over the first four months of the year in comparison with the corresponding period of 2004.

Discussions between the government and trade unions began after an emergency ordinance last week approved a set of measures to cut employment cost to 5% of GDP, a level agreed upon with the International Monetary Fund and stated in the rectified state budget. georgiana.stavarache@zf.ro