Romania To Bolster Public-sector Wages Despite Deficit Risks

BUCHAREST, June 7 (UrduPoint / Pakistan Point News - 07th Jun, 2017 ) : Lawmakers in Romania, one of the EU's poorest members, voted Wednesday to give hefty wages to public-sector employees, in some cases doubling their earnings, despite international creditors warning of a deficit blowout.

The bill, which passed by 188 votes to 28, was a key election promise of the leftwing Social Democrat party (PSD), which was voted back into power in December. Under the new legislation, top-ranking doctors employed by the national health service will next year have their monthly wages increase to 2,700 Euros from 1,000 euros (to $3,000 from $1,100), while nurses would earn 900 euros instead of 530 euros.

Some teachers would benefit from a 100 percent increase, implemented gradually between 2018 and 2022. The changes, which need to be approved by centre-right President Klaus Iohannis, would impact around 1.2 million civil servants and cost close to 10 billion euros over the next five years.

"This law will change Romania's history," PSD leader Liviu Dragnea told lawmakers.

A decade after joining the European Union, the nation of 20 million inhabitants remains the bloc's second-poorest country, after Bulgaria.

The European Commission recently warned against the wage increases, saying they represented "an important downside risk to budget forecasts". And the International Monetary Fund has said that successive tax cuts over the past two years had already considerably lowered public revenue, and urged Bucharest to "carefully assess" its latest measures.

Romania has forecast a budget deficit of 2.96 percent for 2017, but Brussels expects a rate of at least 3.5 percent. The former communist state logged first-quarter economic growth of 5.7 percent, according to data released last month -- the fastest rate in the EU.

The PSD won a resounding election victory last December, barely a year after it was forced from office over its response to a deadly nightclub fire.