The gap between the higher wages in the public sector and those in the private sector has narrowed from 50% to 40%, but the public payroll is still burdensome and ought to be diminished to make possible the fiscal consolidation, vice-president of the CFA Romania Society Adrian Codirlasu stated.

He argued that this deficit ( 6.7% of GDP last year) must be reduced at all costs because it is one of the largest in the European Union, violating EU rules that provide a maximum gap of 3% of GDP for the Member States' budget deficits.

"Consideration should be given to reducing spending or at least keeping it under control. For example, on the public administration expenses in the last two years, the Government has somehow kept under control, the salaries have not increased so much and the differential compared to the salaries in the private sector has narrowed," Codirlașu stated, according to Wall-street.ro.

Indeed, the budget execution data revealed by the Government recently showed that the public payroll-to-GDP ratio dropped by 1pp to 9.4% in 2021.

The CFA vice-president stated that before the pandemic, public sector wages, especially those of the administration, were over 50% higher than those in the private sector.

"Previously, salaries in the public sector were over 50% higher than in the private sector. The public sector wages are still substantially higher, by around 40%, [but] this reduction in the gap has kept budget spending under control," Codirlașu said.

He didn't rule out the option of supplementary taxes as a way of narrowing the budget deficit. 

andrei@romania-insider.com

(Photo source: Ironjohn/Dreamstime.com)