Net public sector wage raise cost: 1.4 billion euros

In order for net salaries to increase by 15%, another 100,000 public sector employees should be made redundant, calculations show.

Will a state employee with a net salary of 1,000 RON at present collect a 1,150-RON net salary, 15% higher, as of January next year? Sources from the Finance ministry say yes, but Valentin Mocanu, secretary of state within the Labour Ministry says the increase refers to gross salaries.

However, other sources from the Finance Ministry say the state needs an additional 1.4 billion euros to boost the net salaries of public sector employees, and it is very difficult to establish where this extra money will come from.

“We don’t have information about the sources of funding for boosting net salaries by 15%,” says Ionut Dumitru, chairman of the Fiscal Council.

Dumitru Costin, leader of the National Trade Union Bloc, says this wage increase by 15% is already accepted by IMF experts and included in next year’s budget, being based on macroeconomic projections put together by experts.

For next year, the Government has allocated a budget of around 9.3 billion euros (39 billion RON) for state employee salaries, with state institutions set to be left with 1.29 million employees, 26,000 fewer than at the end of September.

Sources close to the Finance Ministry say this 15% increase would only be possible by significantly raising the number of redundancies in 2011 from the 15,000 announced.

Amid an average net salary of 500 euros of a public sector worker, the state’s overall costs amount to 1,000 euros, so for 1.4 billion euros in savings to be made in order to allow salaries to increase by 15%, another 115,000 public sector workers earning the average wage would have to be made redundant.