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Romania - Other, Economy & Statistics

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Romania's huge public sector weighs heavily ahead of election

Luiza Ilie and Marius Zaharia - 20.11.2009

Romania's presidential election on Nov.22 is expected to lead to a government that could axe up to 150,000 state jobs next year, but few believe the sector can quickly solve a raft of problems that have plagued the country since before the fall of communism.

Romanians hope the ballot will end a standoff between President Traian Basescu and his opposition rivals. The impasse following the collapse of the country's coalition government last month has halted reforms and threatened the EU member's 20-billion-euro bailout package with the International Monetary Fund.

The victor, to be decided in a Dec.6 runoff, will have the power to name a new prime minister, who must then meet the IMF demands, including the job cuts and a state-wage freeze.

Romania's 1.3 million public workers make up about one-third of total employees, more than in any country in the OECD.

"We have communities of 6,000 people whose town halls employ the same number of people as communities of 200,000," said Dumitru Costin, head of Romanian trade union Blocul National Sindical.

"They could be relatives, boyfriends, lovers who do nothing and get paid for it."

Triple-digit pay hikes for top officials have created resentment, while public sector salaries overall grew by an average 79% in 2005-08, bonuses by 136%.

But job cuts and wage freezes cannot fix everything.

"Cutting jobs will not necessarily solve the efficiency problem of the public sector," said ING Bank chief economist in Bucharest, Nicolaie Alexandru-Chidesciuc. "It is not, in general, a competitive environment."

Romanians complain of hour-long queues to buy train tickets or send packages at the post office, and of clerks who take endless coffee breaks and personal phone calls, while ignoring customers.

Private firms are forced to pay hundreds of small central and municipal fees every year in offices packed full of haughty clerks, while entities meant to fuel progress remain understaffed.

Many experts doubt the presidential vote will lead to reforms.

Politicians often add jobs to reward supporters and earn kickbacks after elections, and some team up with cronies to siphon off funds from state-owned companies and investment projects, despite rebukes from the EU, diplomats say.

"It transcends parties. Once they get into power, they just try to get as much money into their pockets as possible," said Alina Inayeh, head of the Black Sea Trust for Regional Cooperation. "Even the very serious signals sent by the European Commission have not worried anyone too much."

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