Massive hiring in the public sector and the unsustainable raisesgranted to employees thereof during the economic boom has driventhe budget into a critical condition.
During its first public outing, the representatives of the TaxCouncil yesterday urged a cut in the public salary fund, explainingthat without fiscal consolidation, Romania cannot have sustainableeconomic growth.
"The social invoice needs to be cut by reducing the salary fund inthe budget-paid sector, and by conducting the reform of the pensionand welfare system. The reduction will free up fiscal space forhigher capital expenditures," said Ionuţ Dumitru, Tax Councilchairman.
The Council believes the risks for the macroeconomic stabilitylargely come from the public finance area.
Personnel expenditures rose very fast while the Tăriceanu Cabinetwas in office, because of both the increase in the number of publicemployees, and the fast-paced increase in their salaries, whichamounted to 150% from 2004 through 2008.
Whereas personnel expenses stood at 5 billion euros in 2004 andaccounted for 8.1% of the GDP, in 2008 they reached 14 billioneuros (10% of GDP).
The explanation provided by the representatives of the governmentback then was that salaries and personnel increased when theeconomy was going well and they could afford such steps.
Yet, even in the crisis year 2009, when it was obvious money forpublic sector salaries no longer in sync with the economic realityand for oversized personnel count had run out, the Boc Cabinet onlypretended to take restructuring steps.
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