State prepares for staff cull

A shaky economy and tough regulations from the IMF are prompting the Government to cut spending on personnel, as Marian Sarbu, Minister of Labour, Family and Social Protection, talks with Ana Maria Nitoi

September 2009 - From the Print Edition

Romanians’ main worry in the financial crisis is the threat of losing their jobs. The private sector laid off a considerable number at the beginning of the year, which it has continued to do over the spring and summer, but at a slower rhythm. In the meantime state employees are in continuous danger of either losing their jobs or risking salary cuts.
Unemployment reached 6.3 per cent, or 548,930 people, at the end of July. This is a large rise from the post-Communist low of 3.4 per cent in June 2008 and part of a steady increase of 0.3 per cent per month, according to the National Office for the Occupation of Work Force (ANOFM). While it is not as severe a figure as countries such as Spain’s 17 per cent, there are still an unaccountable number of Romanians engaged in black work, or intermittent jobs abroad or in Romania, as well as a class of ‘non-actives’ who do not register in this figure.
However the state is now preparing to reduce spending by cutting staff from its institutions and companies. Around one quarter of the full-time active workforce, 1.39 million, were working for the state at the end of July. The most numerous professional category, over 400,000 people, work in education. The worst-off staff are those in administration, while the best-paid continue to be the 7,000 judges and prosecutors and the 2,400 members of the diplomatic staff.
Romania’s Government has revised the 2009 budget a few times already in an attempt to find ways to reduce spending. Last April, each ministry had to draw up a strategy to reduce personnel spending by 20 per cent.
This spring’s 19.95 billion Euro IMF-led bailout plan for Romania included conditions such as the reduction of the GDP share for state wages from eight per cent in 2008 to 6.7 per cent in 2011.
Estimates are that about 200,000 employees working for state institutions and companies will have to be laid off gradually until the end of 2011, but the IMF agreement does not include a fixed number of lay-offs among state employees.
The ministries are cutting staff where there are more workers than necessary or where employees are not fulfilling the tasks of their job. For example, Romanian Labour Minister Marian Sarbu will slash 1,316 jobs and save about seven million Euro per year, the Ministry of Economy will lay off 4,800 people from its state companies, which is an addition to its 4,800 staff cull last January.
The personnel reductions accompany restructuring plans to shrink some government institutions and unite and dismantle others. From the existing 226 state agencies, only 107 will be kept in place by the end of the year. “To reduce personnel expenditure, laying off employees is not the only solution,” Marian Sarbu tells The Diplomat. “The Government also decided to block all hirings this year, reduce bonuses and to establish the right number of people in each institution or department to cover enough workload.”
Although the western media warned at the beginning of the year that strikes would bring Romania to a standstill by summer 2009, this did not happen. Nevertheless the fear of large-scale protests has not vanished and unions continue to threaten the Government as their members face the dole queue. “I like to believe that we will not get to that point where we face significant protests and that the eventual dissatisfactions that may occur in the present economic context have high chances to be solved through dialogue,” says the Minister of Labour. “I am a man of dialogue.”
The increase in the unemployed may lead to an expansion of black market jobs. Sarbu says it is not yet clear whether people are more willing in the current market conditions to face illegal employment. The Ministry, although prosecuting 1,000s of cases of illegal work this year, does not have accurate data revealing the extent of the black labour market in Romania.
Businesses are also facing a tough period. Around 93,542 companies suspended their activity or closed down in the first six months of 2009. This is 2.3 times higher than in the same period last year, according to the National Trade Register Office. There is a concern that some of these companies may continue their activity on the black market without paying their taxes.