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| AUSTERITY MEASURES AND REPERCUSSIONS 27/05/2010 |
| (2010-05-27) |
| Last updated: 2010-05-28 14:21 EET |
Meanwhile the government announced it would ask Parliament for a vote of confidence on the tough austerity measures which it considers essential. The government will also ask parliament for a vote of confidence on the pensions law, which will considerably diminish pensioners’ incomes.
Salaries in the state system will drop by 25% while pensions, unemployment benefit and maternity leave payments by 15%. There’s no other way out of the crisis, the government claims, and these measures are aimed at achieving a budget deficit of 6.8% - this being a condition agreed upon with the IMF in order for Romania to receive the 5th payment of the loan contracted with the financial body last spring.
They warn that, without continuing the agreement with the IMF, Romania risks failing to obtain the money necessary for the state to continue to function. However, the government has decided to leave those on small incomes untouched, in order to protect the most vulnerable social categories. Emil Boc:
“These reductions do not affect the minimum average salary. Nobody in Romania will get a salary smaller than 600 lei. We have maintained the minimum guaranteed social pension at 350 lei. And the austerity measures will not affect the child allowances”.
Contested by trade unions and the opposition, which threatened to lodge a censure motion after the government asks parliament for a vote of confidence on the austerity measures, the measures are preferable to increasing VAT and the flat rate of income tax, which would prevent the recovery of the economy.
This, at least, is the explanation given by the PM, who said that increasing fees and taxes would mean a 2-digit inflation rate figure; this would have seriously affected Romanians, and their purchasing power would have been considerably diminished.
The austerity measures are rejected by the opposition. The opposition claims that Romania is being pushed towards a solution that will deepen poverty, will make the economy shrink and does not actually tackle the essence of the problem.
“Teachers, public servants and employees from the prison system will initiate the general strikes” writes the daily paper EVENIMENTUL ZILEI, recalling that, as of May 31, these social categories will stop work for an indefinite period of time. The same paper adds that “students have themselves threatened to organize rallies, because the teachers’ strike will prevent the Baccalaureate exam from taking place, as well as the high school entrance examination and the closure of the school year”.
Under the heading “The Government writes the bill of the crisis” the daily GANDUL calculates how much money people will lose, saying that the austerity measures announced will be followed by “higher taxes on buildings, taxes on meal tickets, programmers will be deprived of fiscal facilities and employees paid through author rights contracts will end up paying taxes from their own pockets.
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