Trade unions reject austerity measures in public sector

In an effort to reduce the budget deficit, the Romanian government adopted, in November 2009, a new act providing for substantial reorganisation and rationalisation measures in the public sector. The new law provides for significant job cuts, along with the possibility of compulsory unpaid leave of 10 days for public sector employees and reduced working hours. Trade unions remained strongly opposed to the law, while opposition parties questioned its constitutionality.

Emergency decree rejected

Due to budget constraints, the Romanian government (Guvernul României) issued, on the last day of 2008, an emergency decree forbidding the right to accumulated pension earnings and salaries from public funds. The measure triggered protests by both sectoral and national trade union confederations. At the same time, the Ombudsman (Avocatul Poporului, AP) referred the decree to the Constitutional Court of Romania (Curtea Constituţională a României, CCR), claiming that it violated the right to work and the right to a pension (RO0909019I).

Following the decision of the CCR, which ruled that the order was unconstitutional, and due to pressure from the social partners, the government took the initiative of drafting a new act. The draft narrowed the scope of the restriction on retirees whose pension is above the national gross average salary.

Government reorganisation

At the beginning of March 2009, after having announced its intention to restructure the entire government, the country’s Prime Minister, Emil Boc, requested that his cabinet members make proposals for a reshuffling of over 240 agencies and institutions in their subordination.

The first step towards reorganising the government’s personnel was made on 4 March, when, under an emergency decree, the Chancellery of the Prime Minister was dissolved.

After a government meeting on 15 July 2009, the prime minister once again raised the subject of closing down, restructuring and/or merging some government agencies, as well as reducing the staff of dignitaries’ offices by 20%.

In August, when various proposals for budget rectification were made, the Minister of Finance, Gheorghe Pogea, stated that the government was examining the option, if permitted by law, of placing public servants on 10 days’ unpaid leave of absence during the period September to November. According to the minister’s estimations, this would result in a budget saving of 0.3% of gross domestic product (GDP).

Public sector opinion poll

Meanwhile, in March 2009, the National Alliance of Budgeters Trade Unions Sed Lex (Alianţa Naţională a Sindicatelor Bugetarilor Sed Lex, Alianţa Sed Lex) – counting over 65,000 members, all of whom work in the public sector – published an opinion poll on the importance attached to workplace safety and/or salary earnings. The poll revealed the following results:

• 70% of respondents placed job security at the top of their priorities;

• 11.5% would have accepted job cuts, provided that the salaries of the remaining employees be raised accordingly;

• 9.2% demanded that the safety of their jobs be ensured and that low salaries be increased;

• 3.8% requested that fringe benefits be maintained by all means;

• 3.5% wanted secure workplaces and payment to be proportional to skills;

• only 2% accepted a cumulated pension and salary.

New alliance formed

Disenchanted with how the national trade union confederations were representing their interests to the government, 11 public sector trade union federations formed the Budgeters’ Alliance (Alianţa Bugetarilor, AB) on 10 September 2009. The new alliance announced a heavy schedule of protests if the government failed to renege on its restructuring proposals affecting public sector workers.

The measures contemplated during 2009 were eventually combined under Law No. 329/2009 regarding the reorganisation of public authorities, the rationalisation of public spending, the encouragement of the business environment, and observance of the framework agreements with the European Commission and the International Monetary Fund (IMF). The law was adopted by the government on 15 September, without any parliamentary debate.

Subsequently, AB and the national trade union confederations held a one-day general strike on 5 October, bringing together over 700,000 protesters. A protest rally and march were also held on 7 October.

Constitutionality of new law questioned

The protest initiatives were supported by the opposition parliamentary parties – namely, the National Liberal Party (Partidul Naţional Liberal, PNL) and the Social-Democratic Party (Partidul Social Democrat, PSD). PNL and PSD approached the CCR, arguing that the new law was unconstitutional as it made unpaid leave compulsory.

In response, however, the CCR declared that the law was in line with the country’s Constitution. It based its ruling on the rationale that the decision to restrain the public sector employees’ right to work was ‘motivated by the world financial crisis which, failing adequate measures, could affect the economy of Romania and, further, the country’s national security’.

On 9 November 2009, the President of Romania promulgated the final version of the law, and it was published in the Official Gazette (Monitorul Oficial).

Main provisions of law on public sector reform

The reorganisation measures envisaged in the law will result in the loss of 7,959 positions, 1,268 of which will disappear after the dissolution of various structures; a further 6,691 job losses will be caused by the merging of institutions or direct layoffs.

Under the law, the persons whose positions will be removed from the workforce will be chosen based on criteria established by agreement between the management of the institution concerned and the employees’ trade union or representatives.

The new law provides that, by the end of 2009, the management of public institutions and public authorities must reduce personnel expenses by a monthly average of 15.5% through any of the following means:

• assignment of compulsory unpaid leave of up to 10 business days to each member of personnel;

• reduction of working hours;

• a combination of the former two or by any other means producing a similar effect.

The method must be agreed on with each employee, after consultations with the employees’ trade union or representatives. Retirees earning salaries paid from public funds may enjoy both a salary and pension, provided that the latter is below the national average gross salary – that is, RON 1,680 (about €405 as at 22 January 2010) – which is used as the basis for calculating the social security budget for 2010.

Another means designed to strengthen the financial practices of state-owned companies is the obligation to bargain collective agreements only after the approval, under the state budget law, of their budgetary revenues and expenses, and only subject to the limits and conditions provided therein.

Trade union opposition

After the law was enacted and made public, AB issued a press release on 12 November, outlining that the alliance:

• rejected the law’s provisions compelling public entities to reduce their personnel expenses by 15.5% a month;

• announced the refusal of its members to sign the individual agreements for the enforcement of the austerity measures;

• was ready to stage specific protest actions;

• refused to take part in the debates of the social dialogue committees, whose agendas included the application of the new act;

• would approach international organisations with regard to the consequences of the new law.

AB summoned the government to make public the funds saved in 2009 through its recruitment freeze, layoffs, negative budget rectifications, and abolition of fringe benefits and bonuses owing to public employees.

The trade union federations drew the government’s attention to the dangers entailed in the application of the law in some sectors, including: healthcare, where the shortage of personnel has reached a critical level, due to the already existing 26,000 vacancies; education, where the compulsory unpaid days off, if not recuperated, will jeopardise the quality of teaching; administrative services overseen by one person, where such persons’ absence would be tantamount to providing no services.

In view of the upcoming presidential elections, which were scheduled to take place on 6 December 2009, the trade unions suspended their protest actions, promising to resume them after the election of the new president.

After that date, with an interim cabinet at the helm, and in the absence of valid partners for dialogue (RO0912019I), most of the public sector employees agreed to go on unpaid leave, and to postpone protest actions for January.

Commentary

Despite the strong trade union opposition to the potentially massive layoffs and wage cuts in the public sector, the unions had to postpone their protests until 2010 – due to the focus on the country’s election campaign and an interim government.

From the perspective of the labour market and industrial relations, the structures closely related therewith will be directly affected by some of the measures to be taken by the government – including mergers and dissolutions of public sector institutions. For example, the country’s Social Inspection (Inspecţia Socială, IS) is to be closed down and its 80 employees dismissed. Its tasks will be transferred to the Labour Inspection Office (Inspecţia Muncii, IM), where, under the same law, 400 positions will be removed. Meanwhile, the National Agency for Social Benefits (Agenţia Naţională pentru Prestaţii Sociale, ANPS) has lost 201 positions in its staff structure, despite an increase in the volume of work owing to transfers from the local labour and social protection departments, where a total of 143 jobs were cut.

In addition, the National Agency for Equal Opportunities (Agenţia Naţională pentru Egalitatea de Şanse, ANES) lost 26 positions, while 21 positions were cut at the National Authority for People with Disabilities (Autoritatea Naţională pentru Persoanele cu Handicap, ANPH).

A total of 40 employees at the Ministry of Education were made redundant, adding to the 239 positions abolished in county school inspectorates. These were accompanied by the removal of 82 positions from the agencies concerned with educational quality, curricula, assessment and research, along with other job cuts. Overall, the regional centres for continuous training and the national centres for vocational training have lost a total of 102 positions.

Luminita Chivu, Institute of National Economy, Romanian Academy