IMF: Public sector wage raises are to blame for inflationary pressure

Excessively rapid wage increases in the public sector are believed to be responsible for an increase in demand and for the reappearance of inflationary pressure, experts of the International Monetary Fund (IMF) believe. Public sector wages (administration, health, education) have seen a faster growth rate than private sector wages, resulting in excessive demand and inflationary pressure, IMF experts say. Their conclusions are contained in a report published in the wake of the annual consultations between the IMF and the Romanian authorities. The Government’s excessive wage policy has been influenced by the Trade Unions and the Government’s modest strength. Compared with initial sums allocated in the budget, which for instance entailed a 9%-15% wage increase in the administrative sector, wages for civil servants increased by as much as 36% at the beginning of this year, states the IMF report. Since the beginning of this year, public administration wages have risen by 25% (in RON, for the first four months of the year against the same time last year), along with the average wage for the overall economy, which increased by just 20%.