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| COMMON PRINCIPLES FOR PUBLIC SECTOR SALARIES 26/08/09 |
| (2009-08-26) |
| Last updated: 2009-08-27 18:38 EET |
Designed to put some order into the public-sector, the law on the single payment system for state employees is yet to be finalised, although negotiations have been going on for months now, and the government has announced its intention to assume responsibility for it before Parliament early next month.
Although everybody agrees that the current 1 to 29 ratio between the lowest and the highest salary in the public sector must be reduced, trade unionists are unhappy with the quotients that will be used in calculating salaries. With budget revenues on the slope and forced to meet the terms of the loan given by the IMF and the World Bank, the government has reduced the quotients agreed on with the unions by 25 %, after having slashed them by another 40% only one and a half month before.
Which is unacceptable, unionists argue, threatening to take to the streets. Under the new law, no salaries in the public sector will be reduced. Instead, the huge gaps will be tackled by gradually increasing smaller salaries, so that by 2015 the ratio between the lowest and the highest salary in the system will have reached 1 to 15. Prime Minister Emil Boc:
“Enactment of the single salary system law will not lead to any decrease in salaries. Employees at the base of the salary pyramid will see their wages go up at a faster pace until 2015, while those at the top of the pyramid today will have their salaries frozen for a while, to as to ensure equity in the payroll system.”
Also until 2015, the number of employees in the public sector – 1.4 million at present – is to be reduced by 326 thousand. Some 150 thousand are to be made redundant in 2010, when the government intends to freeze the salaries of all public sector employees. This is another reason for unionists to be disgruntled. By laying off close to 30 % of the employees paid from the state budget, policy makers aim to save a monthly 230 million euros.
On the other hand, according to employers' associations, an increase in the national minimum wages, that the government plans to operate next year, will have a major impact on the private sector, particularly on companies that hire unskilled workers. They argue that the single payment law is well designed, but an increase in minimum wages without economic growth would generate inflation and reduce the capital of business operators.
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