Massive hiring in the public sector and the unsustainable raises granted to employees thereof during the economic boom has driven the budget into a critical condition.
During its first public outing, the representatives of the Tax
Council yesterday urged a cut in the public salary fund, explaining
that without fiscal consolidation, Romania cannot have sustainable
economic growth.
“The social invoice needs to be cut by reducing the salary fund in
the budget-paid sector, and by conducting the reform of the pension
and welfare system. The reduction will free up fiscal space for
higher capital expenditures,” said Ionuț Dumitru, Tax Council
chairman.
The Council believes the risks for the macroeconomic stability
largely come from the public finance area.
Personnel expenditures rose very fast while the Tăriceanu Cabinet
was in office, because of both the increase in the number of public
employees, and the fast-paced increase in their salaries, which
amounted to 150% from 2004 through 2008.
Whereas personnel expenses stood at 5 billion euros in 2004 and
accounted for 8.1% of the GDP, in 2008 they reached 14 billion
euros (10% of GDP).
The explanation provided by the representatives of the government
back then was that salaries and personnel increased when the
economy was going well and they could afford such steps.
Yet, even in the crisis year 2009, when it was obvious money for
public sector salaries no longer in sync with the economic reality
and for oversized personnel count had run out, the Boc Cabinet only
pretended to take restructuring steps.