What the newspapers say: October 6, 2009

State employees’ salaries are to drop 30% by the end of the year. Elsewhere in the news, Romania risks getting tied in a loan vicious circle in its effort to pay loan interests. Last but not least, hundreds of Romanians queue daily for the legally unemployed status.

The salaries for state employees will drop 30% by the end of the year, Evenimentul Zilei reads. The Romanian Constitutional Court (CCR) authorised the law addressing the restructure and reduction of public spending. The measure will only be enforced in November and December. The Government wants this measure to be translated into days of unpaid holiday.

The union leaders were surprised by the decision and doubt that it can be applied this month. The Court’s decision from last night was previously scheduled for December 9. „The government cannot take, on its own, the decision to send state employees in an unpaid holiday without their approval or the union’s consent. This is a serious breech of the Work Code and can expect thousands of trials to be won in court by state employees”, the leader of the Cartel Alfa union Bogdan Hossu declared.

In departments such as Education or Health, a holiday is out of the question and alternatives should be also given. No matter the findings, state employees earning 600 lei per month, the minimum income, will see their salaries reduced by 200 lei. A holiday in the health system would put a lot of pressure on big emergency hospitals, who are overwhelmed anyway. In the education department, schools threaten to fill the vacant day with academic activity and say they will take the matter in the court. One proposal was to extend the budget cuts for the first two months of the following year as well.

Romania is getting a loan to pay the interests for the already existent credits, Gandul informs. The country might create the Debt Ministry, the publication goes on ironically. In 2010, Romania could pay interests worth of 1.6% of the GDP, meaning more than the Transport Ministry’s budget in 2009 (1.4%). Practically the state will pay two billion euros worth of debt next year, the equivalent of a brand new motorway stretching across several hundred kilometres.

Should the country not reduce the budget deficit, it might be caught into a lending vicious circle. „The debt that has to be paid is too big for a country that collects only 31% of its GDP”, Raiffeisen Bank chief economist Ionut Dumitru told Gandul. Meanwhile, the state paid over one billion euros in interests back to the creditors, that is 14% of the public debt. In 2009, the Romanian state borrowed none times more money from banks in comparison with 2008, that is 54 billion lei to pay its debts.

According to the publication, the state is at the bankers’ mercy, after the European Commission decided to postpone the one billion euros instalment due for December until next year because of the economic crisis. After signing the IMF treaty, the interests dropped constantly from over 14% to around 10%. On Thursday, the Government announced its intention of borrowing 220,000 euros more and refused the bankers’ first offer.

Romanians queue for the legally unemployed status, Adevarul reads. Hundreds of people form long rows in front of the work force recruitment agencies to submit their unemployed dossiers. In the crisis’ mid-season aftermath, Romania counted over 600,000 unemployed this summer; that is double the figure against 2007. The European Commission estimates a figure around 850,000 by the end of the year.

In Constanta (South-East), the number of people queuing for a job is so big, that the row goes around the building. People often arrive to stand in line one hour and a half earlier than the official working schedule (8:30am). In Cluj (Central-West), a man arrived at 5 am. Many seem desperate and do not know how they will make it until finding a new job. Some say they will have to emigrate to earn a living. The crowd storms inside when the doors open, worried of what tomorrow may bring.

In Cluj, around 70 to 80 unemployed are registered daily. In Dolj (South), over 31,000 unemployed were recorded in September with the work force recruitment agency. Some of the Romanian unemployed have two BA degrees. Other people say they have been sacked after more than two decades of employment or that they are supported by their children.

The crisis made companies reduce their staff spending and leave people without a job. The middle-level jobs have been cut to a large extent and the future does not look promising. Plus, the entry-level incomes have dropped significantly, from around 400 euros to 200-250 euros.