FinMin admits document sent to EC, says tentative budget scenarios include freezing public sector wages, earlier enforcement of wage law
Minister of Public Finance Eugen Teodorovici and Liberal Senator Florin Citu traded fire over the next state budget draft, following a document the Ministry of Public Finance sent to the EC listing a set of measures pondered in order to keep the budget deficit within the limit of 3 percent of GDP.
Senator Florin Citu published a fragment of the document on his Facebook account, blaming the government that it plans to default on its promises. In reply, Finance Minister Teodorovici on Saturday told Digi24 TV channel that the document on the tentative freezing of public sector wages, presented by Liberal Senator Florin Citu, is public and was sent to the European Commission as a working document, as a variant to consider.
According to the document sent to the European Commission and that was also posted by Liberal Senator Florin Citu on his Facebook page, the measures contemplated for drafting the 2019 budget blueprint include freezing wages in the public sector at the level of 2018 (the uniform wage law would no longer be applied) and keeping the value of holiday vouchers the same as in 2018, respectively at 1,450 lei / employee. Another possibility is to keep the average number of employees in the public sector the same as in 2018.
Florin Citu posted on his Facebook page on Saturday that PSD and ALDE are thus no longer enforcing the unitary salary law and are admitting the failure of the governance programme.
“PSD has betrayed and lied to Romanians. Romania in economic crisis – PSD introduces austerity measures in 2019. In a document remitted to the European Commission a few days ago, PSD+ALDE promise the freezing of public sector salaries in 2019 at the level registered in December 2018. PSD+ALDE are no longer enforcing the unitary salary law (thus admitting the failure of the governance programme and confirming me). This means salaries are cut by the equivalent of the inflation rate. Moreover, the interest rate hike will also cut the purchasing power even more,” the Liberal Senator said.
Florin Citu also claims that the pensions law is a lie.
“It’s clear that the pensions law is nothing but a lie. There isn’t money to enforce the unitary salary law and PSD+ALDE lie that they will double the pensions,” the PNL Senator writes.
The document excerpt presented by the Liberal Senator points out that the Romanian Government is taking these measures “to ensure a cash deficit of 2.58 percent of GDP in 2019 and, implicitly, to correct the deviation from the medium-term objective (by lowering the structural balance from 3.17 percent of GDP in 2018 to 2.71 percent of GDP in 2019).”
The Medium-term Objective (MTO) represents the budget deficit target of 3 percent that Romania committed itself to observing at the European Commission’s request. This target was established as a result of the imbalances registered by several countries during the recent economic crisis, its purpose being to maintain government expenditures as low as possible, especially during other economic crises. Last year, Romania registered a budget deficit of 2.96 percent of GDP last year, and the budget deficit was close to 3 percent in 2016 too.
The Liberal added that, given the PSD-ALDE promise included in the document remitted to the European Commission, the ruling coalition will in fact cut salaries by the equivalent of the inflation rate.
“This means salaries are being CUT by the equivalent of the inflation rate. Moreover, the hike of interest rates will lower the purchasing power even more. In the picture, the measures that PSD promises to take when forming the budget for 2019. It’s clear that the pensions law is nothing but a lie. There isn’t money to enforce the unitary salary law and PSD+ALDE are lying that they will double the pensions,” the PNL Senator explained.
Florin Citu also announced that in the following days he will make public a report on the country’s economic situation.
The public sector salary law was adopted by the House in early June 2017, during the Grindeanu Cabinet.
Teodorovici: The authorities are also weighing in on enforcing the wage law ahead of term, by 2020 instead of 2022
In response, Teodorovici says that the authorities are also weighing in on enforcing the wage law ahead of term, by 2020 instead of 2022.
“It is a document sent to the European Commission, a working document, so to say, a possible variant sent to the European Commission because this is the way the government has been working for years, and all member states are doing this: send the European Commission debates, scenarios, calculations for a final decision to be made one way or the other. In a few weeks we will table to the government the 2019 budget bill where the final version will be put on paper. This is a discussion, a scenario proposed by the Ministry of Finance, based on calculations, and there is even a proposal to apply the wage law not until 2022, but by 2020, just to clearly show that we are very sure of what we are doing, that we are not applying measures beyond the term of this government, ie 2020. Moreover, I must emphasize once again that the PSD-ALDE government has put into practice everything it promised. It didn’t cut the Romanians’ incomes,” Teodorovici explained.
With regard to the possible freezing of public sector hiring, the Finance Minister said that freezing the number of employees in the central public administration is indeed a working scenario, as a way to resettle, restructure, render efficient the central public administration, because a long-term common sense observation is that a much more efficient administration is needed. “As an example I gave in previous interventions, I said that in the Ministry of Finance, support jobs are somewhere at 18 percent of the ministry’s personnel, and in other ministries they are somewhere at 30 percent or more, which needs to change, because the administration should not be oversized or indulge in unjustified public spending. That is, provided that the government has respect for taxpayers, for the Romanians in general,” Teodorovici said.
The FinMin also assured the money is definitely in place for the promises related to the higher pension point to be carried out and said that the Pension Bill approved by the government and sent to Parliament provides for a 15 percent increase of the pension point next year, and that the minimum wage could be raised even before January 1, 2019.
“There are no issues with the money in the budget coffers and we, as a responsible party and government, respect our promises. As a principle, that’s what we, as a government are required to do, effectively manage public money. 2019 must be for us, for the entire country, a year of investment in the private sector and especially in the public area. Large infrastructure projects and small local projects need to continue and especially increase their speed and volume. Raising the minimum wage means there is money available,” the head of Finance said.
He says that he has already discussed this option with Labour Minister Lia Olguta Vasilescu, but he refused to say whether PSD leader Liviu Dragnea agress.
“You’ll see several weeks from now how the budget law will look like, because it will stipulate the final formula for 2019, meaning we keep our promise to raise pensions by 15 percent. As for salaries, it’s not that it won’t be enforced, but it will be enforced earlier. It’s a formula being considered,” Teodorovici added.
The minister says that the promises concerning the pension point and the hiking of the minimum salary on January 1st will be kept. At the same time, Teodorovici accused Florin Citu of misinformation: “It’s the misinformation of the public opinion. He’s done this ever since he became Senator. That’s why he was kicked out from the banking system.”
Olguta Vasilescu optimistic about salary law: Just as we didn’t stall so far, and we found funds, that’s what will happen next year too
On the other hand, Labour Minister Lia Olguta Vasilescu wrote on her Facebook page on Saturday that the Government did not stall as the Opposition claims, and that it will find the funds needed to pay pensions and salaries next year. The Minister added that the salary law will be enforced as adopted.
“The Government ‘has stalled’ again, ‘there is no longer money for pensions and salaries’ again, ‘the salary law is not being enforced’ again. I keep hearing this from the Opposition every two months. And we answer again: just as we didn’t stall so far, and just as we found the funds needed to pay pensions and salaries, that’s what will happen next year too. The salary law will be enforced as adopted by Parliament, even though these months there was another scenario, namely to enforce the 2022 salary grid in 2020, as several trade union federations have repeatedly demanded. However, we consider that the law must be enforced as adopted by Parliament and as it is in force, with phased enforcement until 2022 and 25 percent annual hike from the difference up to the 2022 grid,” Labour Minister Lia Olguta Vasilescu wrote on Facebook.
According to the minister, according to data relayed by the Prognosis Commission, the Labour Ministry is working on hiking the minimum salary “as early as the end of this year, and to differentiate the minimum salary based on education level or seniority of more than 15 years.”
Ludovic Orban on salary freeze: Two-faced liars. They say one thing at the EU, the opposite in Romania
Referring to the document that Finance Minister Eugen Teodorovici sent to the EC, which mentions the freezing of public sector salaries in 2019, PNL President Ludovic Orban stated that the Social Democrats are “two-faced liars,” telling EU institutions one thing and publicly stating the opposite in Romania.
“These two-faced liars… they show one face when they communicate with EU institutions, and an entirely different face the moment they talk before the Romanian public opinion. They are still electioneering. They boast that they are doubling the pensions, they boast that they are doubling the salaries, and they send to Brussels a document in which they say that the freezing of public sector salaries is possible in 2019. They feign hiking salaries and pensions, and, in the meantime, they let loose the inflation,” Ludovic Orban stated at a press conference that took place on Sunday at the headquarters of PNL Dolj.
He added that PNL will probably not promise a pension hike level during the campaign, like the PSD did, but when they hike the pension the Liberals will make sure it rises simultaneously with the pension’s purchasing power.
“Maybe we won’t raise pensions in the campaign by as much as the PSD boasts doing, but when we raise the pension we will surely raise the pension’s purchasing power too. What happens here happens in no other country. You can’t raise public sector salaries if your private sector salaries are not rising,” Orban explained.
Citu: Liviu Dragnea must answer! Did PSD leadership agree with the freezing of salaries?
Senator Florin Citu (PNL) wrote on Facebook on Sunday that Liviu Dragnea and the PSD leadership must tell Romanians whether they knew about and agreed with the freezing of salaries in 2019, with personnel cuts in local administration, and the lowering of salary expenditures.
“Dragnea must answer! Liviu Dragnea and the PSD leadership must answer an essential question for Romanians: Did you know about and agree with: the freezing of salaries in 2019 and the non-enforcement of the law; the 30 percent cut in city hall and county council personnel; the lowering of expenditures on salaries, goods and services each year until 2022?” Florin Citu wrote on Facebook on Sunday.
The Senator asked people to demand explanations from Liviu Dragnea and the PSD leadership on this topic.
