Romania’s parliament endorses unified public wage law

Romania’s parliament endorses unified public wage law
Liviu Dragnea (head of Romania's ruling coalition) is one of the authors of the controversial wage bill
By bne IntelliNews June 8, 2017

Romania’s Chamber of Deputies endorsed the unified public wage bill on June 7 with 188 votes in favour and 28 against and 47 MPs abstaining from the vote. 

The impact of the bill remains largely unknown, but the Fiscal Council estimates it will cost in the region of some 6% of GDP by 2022, when the bill would be fully enforced. However, the absence of a formal evaluation of the impact on budget (the final draft of the law has not yet been published) makes it potentially unconstitutional.

The authors of the bill are MP Liviu Dragnea (head of the ruling coalition) and MP Calin Popescu Tariceanu (head of the senate), while the bill was also backed by government labour minister Lia Olguta Vasilescu. Finance Minister Viorel Stefan and Prime Minister Sorin Grindeanu were not active in promoting or explaining the bill. When asked, Grindeanu mentioned some public payroll targets that the bill will have to comply with. But Stefan has advocated a Fiscal Code amendment that would result in significantly lower wage hikes, by raising the social security contributions paid by the employee. But no bill has yet been sketched to do this yet.

Neither of the two attending deputies voted on the bill. And, notably, Stefan and Grindeanu have not attended the deputies’ debates and voting on the bill. Liviu Dragnea, the head of the ruling coalition, commented on the “unfair” behavior of the two, but refused to discuss the rumoured forthcoming cabinet reshuffle.

The only party that voted against the bill was Save Romania Union (USR), informed. The other opposition party, National Liberal Party (PNL), abstained from the vote. The USR announced its plans to object to the bill and send it to the Constitutional Court on June 6, after the bill had been discussed by the expert committee of the chamber. The bill includes no specifications in the mandatory section about its impact on the budget, USR MP Cristian Seidler explained. In a note sent to deputies, the government estimates that the public payroll (including holiday and meal tickets) will increase by RON43bn (€9.6bn, 5.3% of this year’s projected GDP) between 2017 and 2022, to a total of RON106.9bn in 2022, according to the document about the unified public wage bill submitted by the executive to lawmakers and published by Revista 22. This evaluation is broadly in line with the Fiscal Council’s estimates of 6% of GDP. 

Related Articles

EC opens in-depth investigation into Romanian energy producer CE Hunedoara

The European Commission announced on March 12 that it has opened an in-depth investigation to assess whether various public support measures from Romania in favour of energy ... more

UAE investor poised to take over Romania's largest farm in €200mn deal

United Arab Emirates company Al Dahra is close to taking over Romanian Braila Farming, the largest farmer in Romania that operates under concession contracts 56,000 hectares of land owned by the ... more

British paper group DS Smith completes €208mn takeover in Romania

British group DS Smith announced it has completed the acquisition of Romanian paper and cardboard factories EcoPack and EcoPaper, ... more