National trade union confederations set up crisis committee

Romania’s five national trade unions have set up a crisis committee following the financial cuts agreed by the Romanian government and the International Monetary Fund. The agreement, taking effect from 1 June 2010, cuts all public sector wages by 25%, and all pensions, unemployment benefits and subsistence allowances by 15%. There will also be mass job losses. The unions planned a general strike for 31 May, a big rally in Bucharest, plus picketing of the presidential quarters and of government buildings.

Risk of social tension

The President of Romania, Traian Băsescu, announced on 6 May, 2010 that, after negotiations with the International Monetary Fund (IMF), public sector wages would be slashed by 25% with effect from 1 June 2010.

Pensions and unemployment benefits will also be cut by 15%, and there will be cuts in child allowances for mothers and in other welfare benefits. More than 140,000 public sector employees will be made redundant by the beginning of next year.

However, the IMF Managing Director, Dominique Strauss-Kahn, later announced that he had opposed the cuts, proposing instead other measures including the increase of value added tax (VAT) and a higher flat rate of income tax.

Trade union reactions

The five national trade union confederations accused the government of ignoring the social dialogue. They set up a crisis committee, requesting that President Băsescu call an urgent meeting with the Prime Minister, Emil Boc, before he signed the IMF agreement. The unions announced they would alert all the European trade union bodies, and the International Labour Organization (ILO), about the way in which the government is trying to shift the burden of the economic crisis on to the shoulders of workers, pensioners and other vulnerable sections of the community.

The unions have also withdrawn their representatives from all tripartite bodies, and have organised the picketing of government buildings.

On 19 May, a mass rally was staged in Bucharest. It was attended by 50,000 people. Similar demonstrations also took place at the same time in other parts of the country, including Petroşani and Braşov in central Romania and Baia Mare in the northwest.

Government and employer response

The government has now asked the Economic and Social Council (CES) for their opinion on proposals for a new agreement with the IMF.

Initially, the employer organisations had told the CES that they agreed with the cuts. However, two of the largest employer organisations, the Employer Confederation of Industry, Agriculture, Construction and Services Employers (CONPIROM) and the General Confederation of the Romanian Industrial Employers 1903 (UGIR 1903), later withdrew their support arguing that lowering individual earnings would only worsen the recession. They have now asked the government to institute measures to create jobs and generate economic growth.

Commentary

On 26 May, the government approved the measures to cut wages by 25% and pensions and other social protection benefits by 15%, as agreed with the IMF. A government spokesperson said the measures are necessary because Romania consumes more than it produces. He added that taxes may have to rise, depending on the impact of the current measures.

Constantin Ciutacu, Institute of National Economy, Romanian Academy

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