Statements by Romanian prime minister Ilie Bolojan about cutting by 10% the total personnel budget for all ministers and other similar contracting units, as opposed to only the central administration of the respective bodies, prompted on November 19 a radical reaction from the Social Democratic Party (PSD) and trade unions in the public sector. No final form of the document was circulated or surfaced, however.
If approved, the 10% payroll cut would come on top of another measure that impacts the incomes of the employees in the country’s budgetary sector: their wages (as well as the public pensions) were frozen at the level of November 2024, until the end of 2026 – under the first package of budgetary reforms legislated in July. In real terms, this freezing already translates into a (roughly) 10% reduction in their incomes through 2025 as the inflation remains close to the double-digit area at the end of the year. More, yet lower, inflation is expected in 2026.
Social tensions and a break-up in the ruling coalition would become possible if another 10% cut is enforced across all employees. Alternative personnel reductions would be possible.
It remains unclear whether this step, vaguely announced by PM Bolojan, likely to bring some 0.5% of GDP budgetary impact, is really needed for achieving the 6%-6.5% of GDP deficit target next year. The rating agencies, European Commission, IMF, and the Fiscal Council have all agreed that the measures in the first package would be enough for a smooth fiscal consolidation towards the desired target in 2026 – while indeed further measures would be required for further progress.
“In the public administration reform package, this recommendation envelope was included, that all ministries should consider, for next year, a reduction in expenses compared to this year, up to 10% of the salary envelope. This means that some can make staff cuts, […] others can cut the bonuses or other spending that will keep salary expenses at a reasonable level,” Bolojan said in an interview given to ProTV, as reported by News.ro.
Ilie Bolojan said that no exceptions will be accepted but stressed that the 10% payroll cut can be achieved by various means other than wage cuts: no more hirings, no more bonuses, “reorganisation” of activity (supposedly with fewer employees).
The PM previously said the public administration draft law would be inked this week and legislated next week in Parliament.
Under the form announced by PM Bolojan and confirmed by the Hungarian party (UDMR) president Kelemen Hunor – whose party is managing the Development Ministry supposed to draft the bill through minister Cseke Attila – would thus reduce the personnel expenditures with all public employees, except those in local administration (subject to a distinct law envisaging a similar 10% payroll cut). Initially, it was assumed that only the staff in the central apparatus of the ministries and similar contracting bodies would be subject to the 10% payroll cut.
There will be no exceptions, but for the Ministry of Education at the local level, where the first package of budgetary measures legislated in July already provided a 6% reduction of the payroll, so that this time a 4% reduction would suffice, Kelemen Hunor explained.
PSD president Sorin Grindeanu firmly rejected any reduction in the incomes of the public
“As long as PSD is in government, salaries will increase, not decrease. We will not be part of any government that decreases salaries. If someone intends to do this, PSD will leave the government, and we will not support such a thing,” Grindeanu said, according to News.ro.
“The amount the state would save if it applied a 10% spending cut is somewhere around RON 10 billion (EUR 2 billion), which can be saved in other ways, and there is no need to cut the salaries of teachers, doctors, police officers, or military personnel,” Grindeanu added.
iulian@romania-insider.com
(Photo source: Gov.ro)
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