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| THE ECONOMIC AND SOCIAL SITUATION IN ROMANIA |
| (2009-05-06) |
| Last updated: 2009-05-07 14:54 EET |
One thing is certain, though, namely that half of the owners of small and medium sized companies say their businesses have already been seriously affected by the crisis, while a quarter have reported disastrous effects.
According to data compiled by the National Council for Small and Medium Sized Companies, 300,000 such businesses out of the existing 600,000 are expecting much lower turnovers than first estimated at the end of last year. Only 2% of these companies hope to make a profit this year. The social consequences of this will become increasingly visible. The International Monetary Fund, which has recently opened a credit line of 13 billion euros for Romania, out of a total of 20 billion also covered by the European Union and other international financial institutions, is expecting a dramatic rise in the unemployment rate, from 5.8% in 2008 to 8.9% this year and 9.7% in 2010. Less pessimistic, the labour minister Marian Sarbu, believes this projection to be somewhat exaggerated and counts on only 8% in 2009, which means 60,000 less people unemployed than the Fund expects.
President Traian Basescu, on the other hand, hopes for a 6 to 6.5% unemployment rate. Having assumed responsibility for the installation back in December of the large majority government of the pro-presidential Liberal Democratic Party and the left-wing Social Democrats, he is also ready to take on responsibility for the performance of the government and says that if the unemployment rate reaches 10%, then it becomes clear that “we will have big social problems”.
The president calls on business owners and investors to think ten times before making people redundant and proposed them to join hands with the government to diminish the effects of the crisis. He also says that the government must resist the social pressure regarding salary increases because if they yield in one area then the “avalanche can no longer be prevented”.
In this respect, however, political analysts, unlike their economy counterparts, are more willing to risk a forecast. They find it hard to believe that in a year with Euro-parliamentary elections next month and presidential elections in autumn, the political class, dominated by the two components of the “grand coalition government”, can resist the temptation to give away electoral hand-outs.
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