Romania Introduces Limit on Rewards for Jobs with Adverse Work Conditions
The Romanian Government has unveiled an austerity plan aimed at reducing public spending and addressing the country's significant budget deficit, which reached 9.3% of GDP in 2024.
Key to this plan is the proposed capping and cutting of bonuses for public employees, particularly those working in hazardous conditions. Under the proposed changes, hazardous working conditions bonuses for public employees will be capped at 300 lei gross, a substantial reduction from previous levels. Additionally, the number of extra vacation days granted due to working in harmful conditions will be reduced.
The government is also looking to reduce overall public expenditure by cutting bonuses for budget employees more broadly. This is part of a larger package that involves state expenditure cuts and tax increases.
These austerity measures have not been without controversy, with protests from employees in various public institutions. In response, Prime Minister Ilie Bolojan has engaged in discussions with trade unions, committing to analyse union proposals and include feasible suggestions to mitigate social tensions.
The austerity package, including the cuts on bonuses, is part of a broader effort to lower the budget deficit and increase credibility with financial markets and investors. The proposed fiscal measures are expected to have a total impact of about 10.7 billion RON in 2025, with 9.49 billion RON on the revenue side and 1.25 billion RON on the expenditure side.
In addition to bonus cuts, the government is considering temporary caps on public sector wages and pensions for 2025 to counter recent sharp increases, further illustrating the scale of austerity.
In 2020, a total of RON 12.4 billion (EUR 2.5 billion) in bonuses were granted, according to the Ministry of Finance. The bonuses for harmful working conditions in public administration will decrease from a maximum of RON 1,500 (EUR 300) per month to RON 300 (EUR 60) per month, effective from July.
The Government aims to present a package of measures by July 8 ECOFIN to avoid EU sanctions, as previously mentioned. The estimated budgetary impact for the six months of this year is RON 1.34 billion (EUR 265 million). The annualized impact of these changes would be RON 2.7 billion (EUR 530 million).
It's important to note that the committee's opinion in the consultation is not binding. The Labour Ministry has published a draft emergency ordinance that, if endorsed, will make these changes.
This news comes as Romania navigates economic challenges and seeks to strengthen its financial position. The government's austerity plan, with its focus on reducing public spending, is a significant step in this direction.
The government's austerity plan, including the reduction of bonuses for public employees, particularly those in hazardous conditions, is a response to Romania's significant budget deficit and a step towards strengthening its financial position in the business and political arena. This plan is also part of a broader effort to increase credibility with financial markets and investors, and is expected to have a substantial impact on the country's general-news landscape.
