The Government is launching the tough restructuring measures for the public sector, saving the private sector from a tax hike or from the abrupt depreciation of the RON for the time being, which would have pushed businesses that finance the public sector even further down into recession.
Premier Emil Boc announced yesterday that, besides personnel cutbacks, every expense on goods and services in ministries would be cut by 20%, while the monthly fuel cap allocated to public institutions for their vehicle fleets would also go down by 20%.
The business environment sees the steps taken by the government as positive, and believes the salary and personnel cuts in the public sector would help balance the budget.
“I took the reins of Argus factory right after the Revolution. Out of the 530 employees it had then, the factory only has 290 left today, and production has gone up. Had we kept the number of employees unchanged, we would have probably been bankrupt by now. The number of budget-paid employees, however, has risen by several hundred thousand people since the beginning of the nineties, and salaries have gone up, too, which is not normal. That is why the public sector restructuring is welcome,” said Vasile Leu, general manager of Argus Constanta, one of the main local producers of vegetable oil.
Although Finance Minister Sebastian Vladescu said yesterday that more than 100,000 public sector employees should be made redundant, economists say that in order to a revert to a less than 3% budget deficit, even more people should be laid off. Nicolae Chidesciuc, ING Bank Romania’s chief economist, says the figure is more like 200,000.