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Iohannis: the salary situation is constantly changing, far from satisfying the principles and criteria of stability

President Klaus Iohannis met on Tuesday with Prime Minister Viorica Dancila and Labor Minister Lia Olguta Vasilescu, a context in which he warned the Executive that the effects of the public-sector pay legislation are in contradiction with the principles of equality and predictability and required prudence in addressing economic policies, so as to ensure the sustainability of citizens' living standards.

"The President of Romania warned the Government that, after the first three months of application, the effects of the new legislation on the remuneration of the staff paid from public funds are in contradiction with the principles of equality and predictability from which it has emanated, given that there were exceptions for different categories of staff, which cancels also the unitary character of the legislative intention," according to a release from the Presidential Administration.

According to the cited source, Prime Minister Viorica Dancila presented to the head of state the salary situation, giving stability assurances regarding the financial resources necessary for the application of the Law on salaries and the salary increases assumed to date. In her turn, the Labour minister detailed the principles underpinning the current salary framework, referring to the salary scale that will fully produce its effects in 2022. At the same time, the Government's position on the wage framework established by Law 153 / 2017 was voiced.

The head of state has shown that the overlapping of Law 153/2017 on the remuneration of the staff paid from public funds with the amendment of the Fiscal Code through OUG 79/2017 has led to wage cuts for some categories of staff at both central and local level, negative consequences that the Government did not foresee.

"Although 25% wage increases were promised as of January 1, 2018, these increases have in fact been canceled by moving of the social contributions to the employees," the communiqué said.

The Presidential Administration mentions that the remedy of these deficiencies required the adoption by the Government of ordinances that brought amendments to Law 153, such as OUG 62/2017 and OUG 91/2017. By exceptions from the phased-out application, contrary to the principle of sustainability laid down in Law 153, the current salary framework moves away from the requirements of the remuneration of the work performed and reaches the point of capitalizing rather on staff's membership to an institution or another.

In this regard, President Iohannis pointed out that the salary situation is constantly changing, far from satisfying the principles and criteria of stability initially assumed, as well as the electoral promises of the PSD-ALDE coalition.

"President Klaus Iohannis pointed out that this carousel of salary changes and unpredictability must be avoided, otherwise Law 153 will soon become another form without substance, given its continuous amendment through ordinances that not only solve but also create new problems," the statement said.

President Klaus Iohannis has shown that there is no predictability in the wage setting mechanism as long as various new amendments are introduced for different categories of staff, introducing wage discrimination and encouraging similar requests from other categories of staff, at the cost of some risks related to the budgetary targets assumed by the Government.

In connection with the much-anticipated increases in the wages of physicians and staff in education, measures that solve only partial problems in these areas, the head of state mentioned that such salary increases should be accompanied by guarantees for the future so that these salary policy priorities meet their performance targets.

Also, President Klaus Iohannis stressed that, on the back of imprudent and uncoordinated fiscal and budgetary policies with overall economic dynamics, there is a risk that the Romanians' purchasing power will continue to fall.

"The transfer of social contributions to the tax burden of the employee and the reduction of the tax on wages from 16% to 10% has so far led to a modest increase in net salaries of about 5% on average in the budget system. And this slight increase in net wages is canceled by the rise in inflation, which reached 4.7% in February 2018," the press release said.

In this respect, President Klaus Iohannis has demanded from the Government prudence in addressing economic policies so as to ensure the sustainability of citizens' living standards.

After the meeting, Prime minister Viorica Dancila says she amazed at the communique released by the Presidential Administration about the meeting she had with President Klaus Iohannis, adding that the transcript of the meeting would be better to be made public.

Quizzed at the Parliament on the conclusions of the meeting with Iohannis, Dancila said: "Truly, I'm a bit amazed. I saw Mr. President's communique. I'm amazed at that communique, but I won't be the one not to believe what Mr. President has written in the communique or what I'm saying. I think the best would be that Mr. President show the meeting's transcript and then we'll all be enlightened."

Asked if from the Cotroceni Palace lies went out about the meeting, she specified: "I cannot say about someone that they are lying, but things didn't stay the way they are released in the communique."

The meeting took place at the request of President Iohannis to discuss, at the end of the first quarter, the effects of applying the legislation on wages in the public sector in light of the principles and commitments in the field of wage policy assumed last year by the PSD-ALDE coalition.



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