Struggling With Deficit, Romanian Premier Confronts Wage Demands

(Bloomberg) -- Romania’s premier came under renewed pressure to lift wages amid protests from his own staff, who pilloried civil-servant pay levels in the Black Sea nation and said an approved 10% increase so far isn’t enough.

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Prime Minister Marcel Ciolacu confronted raucous protests in front of the government building in Bucharest Thursday as unions shrugged off the increase in two installments. With Romania’s Social Democratic leader struggling to find ways to rein in the budget deficit, a fiscal watchdog warned that a hike could imperil an already ballooning budget deficit.

Ciolacu’s staff bridled at his assertion that an average wage of €1,500 ($1,620) a month for public administration workers is sufficient, with union leaders calling the increase proposal unacceptable. Last week, the premier was confronted with a swathe of umbrellas emblazoned with slogans demanding fair wages and a halt to “mockery.”

“The wages in the public administration are a disgrace considering that these people handle the country’s most important issues,” said Bogdan Hossu, a union leader.

Ciolacu’s room for maneuver narrowed after the budget deficit surged to 3.2% of gross domestic product in the year through April, a record for that period and a warning for policymakers in Bucharest seeking to meet European Union fiscal demands.

The premier attributed the jump to infrastructure investment and co-funding for EU-financed projects — and urged his cabinet to accelerate reforms and reduce staff levels by the end of next month.

“The increase in the structural expenditure is way too big, so it makes the job of correcting them in the coming years even harder,” said Daniel Daianu, the head of the Fiscal Council, an independent body of experts commissioned to review fiscal policy.

The Romanian government has pledged to reduce the budget gap to 5% of GDP this year, but most economists and rating agencies warned that the shortfall will exceed 6% once pledges made ahead of presidential, parliamentary and local elections this year are factored in.

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