Cuts plan rejected by court in Romania

Romania’s constitutional court has ruled that the government’s plan to cut pensions by 15% as part of its package of austerity measures is unconstitutional. However, cuts of 25% in the pay of public sector employees went ahead and came into effect on 1 July.

The Romanian government initially agreed to cut public spending in April 2009 in return for a loan from the International Monetary Fund, and at first the impact was relatively modest. However, earlier this year much deeper cuts were proposed. After some delay (as a result of public protest) these were agreed by the parliament in June.

They included a 25% cut in public sector pay, a 15% cut in social security payments and a 15% cut in pensions together with tax increases. The lower public sector wages are being combined with reductions in public sector employment where around 55,000 to 60,000 jobs will go.

Following the decision that the cut in pensions was unconstitutional the government announced an increase in VAT from 19% to 25% on 1 July.

Bogdan Hossu, president of Cartel Alfa, one of Romania’s five main union confederations, estimated the overall impact of the 25% cut and the VAT increase would cut the real income of Romania’s state employees by 32%. And Hancescu Simon of the teaching union FSLI said, “the situation is desperate and students will suffer”.