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PM Bolojan: The discussion at Cotroceni was about cutting the number of local administration employees by 10pct
Prime Minister Ilie Bolojan stated on Monday in respect to the local public administration reform that, from his point of view, the discussion at the Cotroceni with President Nicusor Dan and the coalition party leaders was about cutting the number of employees by 10 percent.
"In the governing programme there is a clear provision which stipulates a cut of the public administration personnel, I believe it is 20 percent. People are not numbers, but there are some assessments based on some realities. If we have a county council which has 90 employees, such as the Bihor County Council, it means that other county councils can have perhaps 120 employees, 150 employees, but not 200 or 250, because, if a county is working well with a small number of employees, it means that other counties can operate with fewer employees than they have today, so that we do not waste the money we collect with difficulty from the citizens and which everyone rightly protests against when a new tax, an extra excise or an added health contribution appears," Bolojan stated at TVR info, when asked whether the agreement at Cotroceni was a 10 percent cut in personnel spending, as the Social Democratic Party (PSD) argues or a 10 percent cut in the number of employees in local administration.
From his point of view, structural measures must be taken and personnel expenses are part of the reform measures because a reform means a more efficient administration and there is no way "to escape" personnel cuts.
"I believe that following the discussion I had both in the coalition and at the meeting with Mr President, those who were present understood what were the conclusions. From my point of view, the others should also be asked, because if several people understand the same thing, that becomes the general understanding, the discussion was as clear as it could be, we need to reduce personnel expenses, and that can only be done either by cutting salaries or bonuses, or by reducing the number of employees. And in the discussion we had, it was about cutting the number of employees by 10 percent," Bolojan added.
În his opinion, that retirement age must go up for all categories, so that the population aged 50 to 65 engaged in the real economy be in greater numbers than it is today.
Asked if the third reform package would also include the measures on the other professional categories receiving special pensions, besides magistrates, Bolojan told TVR Info national television show that more people are needed on the labour market. "To this end, like it or not, we must increase retirement age so that in the 50-65 years of age interval, the population engaged in the real economy be in a greater share than it is today, as there is no one to replace it."
He explained that if retirement age didn't go up, in general, for all categories, including in the special pension area, there would be reached "a situation where the pension system becomes unsustainable" in five or ten years.
Asked if the third reform package would also include economic relaunch measures announced by the Social Democratic Party (PSD), Bolojan pointed out that any good proposal is welcome no matter who thought of it, adding that what mattered the most was being responsible and serious while implementing the envisaged measures. For instance, he said, if the government announces personnel cuts, it means that is exactly what needs to be done, not cut vacant positions, as there would not result in any real effects.
According to the prime minister, this type of relaunch measures must also be prepared.
"During those two months that this Government has been in Romania's service we had some very big fires, so that we had to work on extinguishing the financial fires, reset the market confidence in what we do in Romania, correct the trajectories that were leading to a taxation dead end, this is the truth, and indeed, in the next step we must think and have prepared this type of relaunch measures," he added.
According to Bolojan, economic slowdown in Romania is a reality at least until the summer of 2026:\. "We cannot go below such a figure [8% deficit] because it is not sustainable. This government is in its second semester in office, and the measures that have been passed have an impact on the last four months and it is impossible to come up with measures that correct accumulations of 12 months in four months," Bolojan told TVR Info public broadcaster when asked if Romania has overcome the danger of inability to pay or recession.
He said that the economic downturn is a reality and this is the consequence of the external and internal context.
"On the one hand, we have a European context that is not likely to sustain us, we have a slowdown in the European economy, we have a resettlement of global supply chains, we have these disputes related to tariffs, trade barriers, which are likely to slow down the European economy. We have an economy that is linked, through our economic structures, to what is happening in Europe. If Europe does very well, it has a ripple effect on us. If the European economy slows down, it inevitably acts as a ballast for us as well. So, this context does not help us. Then there is the domestic context. When, in one form or another, you increase the Value Added Tax by one percent, by two percent, inevitably some prices will probably increase. Or, if they don't increase, those additional costs are internalised by companies. When you cap salaries, cut bonuses, again, in one form or another, you put less money into the market, you decrease the purchasing power globally and that has some economic slowdown effects," Bolojan said.
He added that, "at least until the summer of next year,"Romania will be "in a situation of slowing economic growth."
Bolojan also said that, after this period of corrections, there will be a period of economic growth.
"After passing through this period of corrections, we will be in a period of economic growth again. Inflation, indeed, has increased, but I don't think it will reach double digits (...), and all the estimates, both of the National Bank of Romania and of specialists, indicate a decrease in the second half of next year greater than the one estimated before these measures."
The PM added that it is necessary to maintain a rhythm of controlling expenses, staggering investments and collecting revenues.
"As far as the inability to pay is concerned, we are in the situation where we have passed several stages of evaluations, we have to maintain a rhythm in which to control our expenses, to stagger our investments and to collect the revenues that have been established. That means responsibility in governance, it means following a path, and political stability and solidarity among partners give a perspective that, in the medium term, one year, two, three years, things in Romania are going in a good direction."
He also said that "when factors of political instability appear or things happen that no longer give the guarantee of a predictable behaviour in the governmental action, then obviously the perspective of confidence is low."
"A prospect of default, if we comply with these rules, from my point of view, is excluded. But if we only increase certain taxes without reducing expenses, if we are not more efficient in general, if we do not perform in the act of administration, whether it is the administration of state institutions, whether it is the administration of state companies, it is only a matter of time before these revenues that we collect additionally will be eaten by inefficiency, structural expenditures that are not modified and that is why we have to go down this path," Bolojan said.
On September 2, President Nicusor Dan met at the Cotroceni Palace with leaders of the governing coalition to discuss the reform of local public administration.
Social-democrat (PSD - partner in coalition) leader Sorin Grindeanu said after the meeting that Social Democrats are in favor of a "real" reform in the local public administration, not layoffs, emphasizing that his party's proposal is a 25 percent reduction in filled positions, but phased in with assessments every six months.
"We believe (...) that the local administration reform must be done smartly, not with an axe. The PSD fully supports the commitment to a real reform of local public administration, but reform, not layoffs. These are two completely different things," Grindeanu said. He acknowledged that reform may also include layoffs, but underscored that the reform cannot be reduced to layoffs alone.