The new salary reform, in its proposed form, significantly limits the ability of public authorities to adapt salary levels to the real needs of certain strategic areas, according to IMM Romania, a representative confederation at the national level.
”There are sectors essential for the socio-economic development of the state where public institutions need well-trained specialists, professionals with experience and skills comparable to those in the private sector. In the absence of salary flexibility, public administration will continue to face difficulties in attracting and retaining high-performing human resources, which directly affects the quality of public services and the state's institutional capacity,” officials from the organization claim.
Also, the reform does not resolve the issue of the imbalance between public and private sector salaries. The new law stipulates that the Ministry of Labor, together with the Ministry of Finance, will establish the reference value based on budgetary constraints, deficit levels, and economic forecasts. Such an approach keeps public sector salaries dependent almost exclusively on executive decisions, without adequately reflecting labor market realities, the necessary competitiveness levels, or economic and social developments.
In Romania's SME opinion, the reference value should be determined through a predictable, transparent, and objective mechanism, based on relevant statistical and economic indicators.
”At the same time, we consider it necessary for the reference value to be established following a real consultation process with social partners, similar to the mechanism used in setting the minimum wage. In this way, wage policy in the public sector would gain more predictability, credibility, and balance, avoiding the transformation of budget salaries into an instrument solely at the Government's discretion.
From the perspective of reducing budget expenditures, the new public sector salary law does not radically change the situation we are in today, as according to public information related to the political agreement on the principles of the new law, no salary in the public sector will be reduced, therefore there can be no question of an impact on revenues,” add IMM Romania officials.
Under these conditions, the average salary in the public sector will continue to be higher than the average salary in the private sector, by approximately 2,000 lei net.
Officials also say that although the new reference coefficients proposed are from 1 to 8, compared to the current 1-12, we must take into account that the reference value to which they will be linked will likely be the gross minimum wage in the economy, of 4,325 lei from July 1, 2026, or a range around this value, compared to the current value of 2,500 lei.
However, the private sector, facing declining revenues amid the current economic crisis, the onset of a technical recession, an inflation rate of 10%, and increased taxes and fees, does not currently have the capacity to support wage increases.
”From the SME Romania perspective, the public wage reform is expected to be coupled with administrative reform. Entrepreneurs cannot bear the budget deficit alone, while public administration remains stuck in the same organizational model. Thus, as we have shown before, there are, on average, 32 decentralized public services of ministries and central public institutions organized at the county level, with the note that in Bucharest some ministries have decentralized institutions in each sector, and some central institutions have regional structures.
”Many of these institutions can be organized at the regional level, with county offices that do not have legal personality, for better utilization of budgetary funds and reduction of administrative costs.
IMM Romania considers it necessary, in the process of drafting and adopting the new public salary law, to provide for mandatory consultations with representative employer organizations, given the need to avoid significant negative effects on the labor market in the private sector and to prevent the transfer of costs generated by salary increases to the business environment through new tax and contribution increases,” conclude IMM Romania officials.