Trade unions criticise national budget for 2007

The new national budget allocates larger amounts to high cost services such as education, healthcare and social security, in addition to wage increases sometimes in excess of 20%. Nevertheless, the minimum wage level underpinning the budget structure for 2007 remains unacceptable to the trade unions.

The national budget forecast for 2007, approved by the Romanian government (Guvernul României) on 13 October 2006 and the parliament on 19 December 2006, was approved by the President of Romania, Traian Basescu, and published in the Official Gazette on 29 December 2006.

Government view

According to the Prime Minister, Calin Popescu-Tariceanu, the budget is ‘designed for Romanian citizens in their new role of citizens of Europe’ and meets both the priorities and obligations entailed by European Union membership following Romania’s accession to the EU on 1 January 2007.

Among the fundamentals of the budget structure are the following elements:

• a 6.4% increase in gross domestic product (GDP);

• budget revenues amounting to 35% of GDP, compared with 30% in 2006;

• an annual average inflation rate of 4.5%;

• an average gross wage increase of 12.4%;

• a 1.8% increase in the number of people employed.

The areas that generated the most discussion and tension in 2006 will be allocated the following funding percentages for 2007:

• education and research – 5.2% of GDP, representing over 32% more than in 2006 and a threefold increase on the proportion allocated in 2004;

• healthcare – 4.12% of GDP, ensuring €198 a year per person for healthcare, which corresponds to an additional €102 compared with 2004;

• pensions and social policies – 8.8% of GDP, or €9.9 billion, ensuring a 15% increase in the average pension, although social security contributions have been reduced by two percentage points.

Views of the trade unions

Throughout 2006, the minimum wage level and wage increases in general, as well as the promotion of a single wage system for public sector employees, constituted the most controversial issues in the dialogue between the government and the trade unions (RO0608039I, RO0610029I).

The first of the five nationally representative trade union confederations to contest the national budget was the National Trade Union Confederation ‘Cartel Alfa’ (Confederatia Nationala Sindicala ‘Cartel Alfa’, Cartel Alfa).

On 25 October 2006, in a press release, Cartel Alfa criticised the level of the national gross minimum weekly wage proposed for 2007, which represents approximately 30% of the average gross wage, at €117 and €380 respectively. The trade unions had demanded a target of 60% of the average wage, as enshrined in the European Social Charter, which has been ratified by Romania.

According to the trade unions, in a cross-country comparison of national minimum wages, Romania ranks 26 among the 27 EU Member States, ‘a fact that generates a workforce crisis, with workers being recklessly forced to migrate’ (RO0611049I).

In relation to pensioners, the trade unions maintain that this category of the population is likely to remain poor, given that the pension level is equal to only 30% of the minimum wage or less than a tenth of the average wage.

Subsequently, on 14 November 2006, Cartel Alfa launched an appeal to employer organisations in Romania ‘to assume, jointly with trade unions, the responsibility of raising the national minimum wage in the single national collective agreement’. In response, the employer organisations accepted a minimum wage of €132 in the new national collective agreement, representing €15 more than the government proposal.

On 10 November 2006, the other four national trade union confederations expressed their disappointment with the government negotiations, which had followed protests and demands in May (RO0606019I). The four organisations involved are the: Confederation of Democratic Trade Unions in Romania (Confederatia Sindicatelor Democratice din România, CSDR); the National Confederation of Free Trade Union Fraternity of Romania (Confederatia Nationala a Sindicatelor Libere din România Fratia, CNSLR Fratia); the National Trade Union Bloc (Blocul National Sindical, BNS); and the National Trade Union Confederation Meridian (Confederatia Sindicala Nationala Meridian, CSN Meridian).

It is clear to the trade union members that Romania will continue to have two national minimum wages, namely one established by the government and the other resulting from collective bargaining. Moreover, the wage policy for the education and the healthcare sectors has been unsuccessful because the government has wilfully failed to honour its commitments regarding the increase in pay levels (RO0610039I).

Call to resume negotiations

‘Considering the total failure of negotiations, the lack of interest of the government in ensuring decent living standards, the lack of respect for social partners, and the contemptuous and antisocial attitude of government representatives as a whole,’ the four trade union confederations demanded that Prime Minister Popescu-Tariceanu should resume negotiations immediately and should take them seriously this time round.

Consequently, a meeting was held on 21 November 2006 between the prime minister and representatives of the trade union confederations, during the course of which the latter groups requested a national minimum weekly wage of €135. Prime Minister Popescu-Tariceanu declared himself open to a level of €125 a week; nevertheless, subsequently, a government decision of 21 December 2006 confirmed the national minimum wage at €117 a week.

The government further committed itself to publish a new law on work conflicts and an additional law on collective agreements.

In its memorandum of 22 December 2006, the government approved the wage increases of public sector employees for 2007. The annual average increase for the entire sector amounts to 7.5%, payable in two stages. However, workers in the education sector receive a 7% pay increase in April and a further 15% in October 2007, while wages are set to increase in healthcare at the same intervals by 7% and 14% respectively.

Commentary

The extremely low minimum wage in Romania has a negative impact on the amounts raised from the collection of contributions towards pension, healthcare and unemployment funds. Furthermore, it also deepens the domestic labour market crisis by encouraging workforce migration.

Constantin Ciutacu, Institute of National Economy