The head of the IMF mission to Romania, Jeffrey Franks, believes"there could be room" for an increase of the minimum wage, but saysthe decision needs to be carefully analysed because anunsustainable increase would have negative effects.
As far as the possibility of increasing the budget deficittarget for 2011 the signals are not very optimistic so far.
"Any increase of the minimum wage should be studied andcalculated very carefully, because in case the increase is too big,it could have negative effects. There could be room for anincrease, but we have to see by how much," Franks was quoted assaying by Mediafax.
The issue was discussed on Monday by the IMF delegation withseveral trade union representatives.
Last Wednesday, on the first day of the review, Franks explainedafter a meeting with the labour minister, that an increase in theminimum wage could have detrimental effects and could discouragehiring and said caution was needed. It is not very clear why theIMF has slightly altered its message. Some analysts said onprevious IMF visits that the Fund would also take intoconsideration what happened in Hungary, where the Governmentsuspended the arrangement with the international financialinstitution and levied tax on banks and on big companies in orderto balance out the country's finances.
The minimum wage has stayed at 600 RON in gross amount in 2010,although the enforcement of the uniform pay law as of January 1stshould have seen it rise to 705 RON.
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