EDITORIAL

Ode to public expenditure

The economic crisis has brought to the attention of the public a specific language otherwise exclusively used in technical discussions by economists academicians or banking&finance practitioners. News programmes, talk-shows, etc. exude reference to deficits, public budget, social security budget, current account deficit, balance of payments, so on and so forth. To the understanding of the masses or not, it looks like the citizen has understood that the situation is bad, that (again) he will have to punch another hole in the belt (which has already happened) and that, while yesterday he was dreaming about taking out a loan to buy furniture or a car, today he sees his job in jeopardy.


The icing on the cake was that, more or less ‘stimulated’ by the Foreign Investors Council and other organisations representing foreign capital in Romania, the Boc Government has adopted a new Labour Code.


We have published countless views and comments on the matter, trying to depict the clearest possible picture of the ramifications of the new legislative act. Apart from the passionate answer of the street, precipitated by labour unions, the heavy words thrown during the various TV talk-shows or in Parliament by the representatives of the various parties or the (grounded or not) defences of the Government, the new Code drives a fundamental change – job stability becomes dictionary term, without being supported by actual facts. Of course that the labour market will be more ‘flexible’ as the Executive argues. Workers will be easier to hire under the new conditions. But they will also be easier to dismiss. The business owner, entrepreneur or manager (or whatever name private company heads may be called) become local gods, in front of whom the employee’s only solution will be to accept their opinions and moods if he doesn’t want to have to start reading the ‘Vacancies’ newspaper pages. Whoever says the opposite (government factors included) either has never worked in the private economy – Romanian one, especially – or is an agent of propaganda.


So we have a PM, Emil Boc, devoted to the modernisation of the labour legislation, of the legislative framework in general, who relentlessly searches for effective ways to manage public funds. He cut public sector wages by 25 per cent to salvage the economy in 2010 in the sense of meeting the budget deficit target prescribed by the IMF. He introduced the obligation for retired persons to pay 5.5 per cent health insurance. All vacancies in the public sector are virtually frozen, while lay-offs are the word of the day, the argument being expenditure cuts. A responsible prime-minister and Government – an independent observer might say. In the context, something the PM said a few days ago strengthens the general feeling of correctness. Some of the few dozens Romanian nationals repatriated from Japan complained about having been made pay part of the air fare and were surprised to learn that the state had not flown them back from the disaster area free of charge. But the PM was prepared with an answer: ‘We cannot do charity on public money. There has to be a balance when we spend public money’.


Fair enough, considering that it was an extra effort for the budget. The budget of the Foreign Affairs Ministry had been supplemented by the Government with RON 1.1 M on Sunday, to pay for the transport and consular assistance expenditures in connection with the Romanian citizens who wished to be flown back from Japan.


While Mr. Boc is very accurate in his answers and mindful of the management of public expenditure (another term Romanians have had to learn because of the crisis, as I was saying before), there are also some question marks about the way in which the state (whose executive and temporary representative Mr. Emil Boc is) spends the same tax-payers’ money in other departments.


The prime-minister does not appear to be as concerned about the construction of 30 multi-purpose halls in the next six years, on which the Ministry of Regional Development and Tourism is going to spend a total of EUR 320 M. On the other hand, a recent governmental report shows that, in 2010, the Government spent RON 403,828 (ROL 4,038,280,000) on lodging the PM’s advisers and Government General Secretariat (SGG) employees in Bucharest, the sum being similar to the one spent in 2009 and double compared to 2008. On the list of people working for SGG whose accommodation was paid for by the state in 2010 there are 53 secretaries of state members of the PM’s team, under-secretaries of state, prime-minister’s advisers and private secretaries, office directors and government inspectors – the report states.


According to the same document, the sum spent by the state on the accommodation of the advisers of Liberal PM Calin Popescu Tariceanu and SGG staff in 2008 – 20 people in total – was RON 178,530.
If we draw the line and count we will see that the Boc Cabinet spent (during years of crisis!!!) almost three times more for accommodating PM’s advisers than the Tariceanu Cabinet had in much better economic circumstances. Wasn’t Mr. Boc accusing the previous Cabinet of irresponsible spendings? We can understand up to a certain point why, coming from Transylvania to take over his term as a prime-minister, the former Cluj-Napoca mayor brought along some of his close collaborators he felt he could fully trust. But as many as 53?!!


PM Boc argues that the figures illustrating the accommodation expenses with his advisers and SGG staff cannot be compared with those made by the Tariceanu Government, because the latter had fewer advisors, and that expenditures with all the state secretaries must be calculated in order to obtain ‘the result’.


Should we count the state secretaries then? In the ministries’ case, if they simplified their staff schemes, that is their merit and not the Executive’s. As for the Boc Government apparatus, it has become exceptionally bushy and prodigal compared to the previous one, with the figures presented above speaking for themselves.


Since we are talking about ministries and public expenditure, we are wondering if the various bonuses and incentives are not taken into account (in this period of crisis). The authorities loudly announced in 2010 that bonuses and pay incentives had been scrapped. But, surprise! The ministries still receive incentives in the value of EUR 110 M for the employees working in ‘harmful conditions’ for which they need to receive proper compensations. The biggest amount went to Finance Ministry staff, who cashed net incentives of RON 30 M and bonuses for audit, Ph.D., preventive financial control, difficult labour conditions and public management in the amount of RON 634.094, an official document says.
And, for the joke to be round, the seconded magistrates operating within the Ministry of Foreign Affairs (MAE) received bonuses for ‘toxicity’ bonus (RON 22,228), special labour conditions (RON 59,022), a per-person risk and ‘neuropshychic stress’ compensation, confidentiality (RON 53,329), etc.
When listening to the ‘ode’ brought to the defence of public expenditure by the Executive, we cannot help asking under which heading the MAE toxicity bonus goes.


And, yet, most of that ministry’s employees surprisingly survive until the retirement age…

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