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Bureaucrats' salaries distort private economy in Romania – IMF representatives

The bureaucrats' salaries have become almost double compared with the average salary of the country over the last two or three years and are threatening not only the public finances but also the labor market, with the aggressive competition of the state against private companies, the regional representatives of the IMF believe. 

“After having almost doubled in 2004, the salaries of the people in the public administration were approximately double the average salary at the end of 2006. As a comparison, the salaries in Germany in the public sector are close to the average and in the Czech Republic they are 10% below the country's average salary,” write Costas Christou and Juan Fernandez-Ansola, the representatives of the IMF in the region, in an article send to ZF.

The Romanian state has become a market maker on the labor market, as it has spectacularly raised the wages of the bureaucrats and has been one of the biggest employers in the economy over the last few years, the two IMF officials conclude. “The significant increase in the public sector wages has put pressure on the salaries in the private sector, and statistical analysis shows that the salary raises in the public sector have affected the private sector in the last five or six years. Moreover, if we look at the workforce employment, we can see that the number of employees has increased in the public sector to the detriment of the private sector,” the two officials say.

The salary policy in the public sector is the cause for some anomalies in the salary structure, the Fund representatives note. The increase in the public servant salaries is even more unjustified, the two believe, as it is “hard to say that the efficiency of the public sector in Romania has significantly improved over the last few years.” The average salary in the public administration came close to €500 in the first five months of this year, an increase of 20% on last year's average. The average bureaucrat salary had already doubled in 2006 compared with the 2004 level, exceeding €400.
Compared with the net average wage in the economy, the average income in the administration is almost 70% higher at the moment. Ten years ago, that is in 1997, the average wage in the economy was visibly higher than the salary in the administration, the IMF officials note. “The Government has to be careful with raising the wages in accordance with the law but not in accordance with the productivity increase, so as not to kill the goose that lays the golden eggs. The only result of such a step is a loss of competitiveness and a slowdown of the economic growth,” the two conclude.

A survey conducted by the National Statistics Institute last year reveals that the state is the most generous employer in the economy, paying the highest official salaries to the people in its employ (either in administration or public companies). The employees in the state-run companies made 45% more last year than those in the privately run companies. (