Loading ...A 50% rise in salaries in education would suppose a budget effort of 200 million euros in Nov and Dec 2008, and a similar rise in the entire state-run sector would mean expenses of up to one billion euros, FinMin Varujan Vosganian told a TV station.
He explained that the additional expenditures would account for 0.5% of the budget deficit, the same level the European Commission added when it revised the prognosis about the budget deficit of Romania.
The EU Commission believes that the budget deficit of Romania should be revised from 2.9%, to 3.4%, there exists three major risks, the first is related to the rise in salaries in the public sector, in 2008, which could be higher than estimated, the second is connected to revenues, which could be considerably lowered, the third is related to the pressure for the rise in public expenditures, against the background of the elections in 2008 and 2009.
“The effect in 2008 is fiscal in nature, because in the entire year, the economic growth will be high. If we accept to raise salaries so much now, next year, the rises will continue, and we will have to operate a massive transfer from investment to salaries, with effects hard to estimate now. We are now facing salary pressure.
This poses threat not only for this year, it is a long-term threat, because the application of a measure in the entire state-run sector, I am speaking of a 50% rise in salaries, would transfer much of the funds for investment to salaries, would diminish economic growth and raise inflation. This is a signal we explicitly gave at the level of the Government, our position is very clear.
So, the responsibility of the Government is as high as it needs to be. If we do not apply these measures this year, we avoid part of the risks, “ said Vosganian.
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