Romania agrees to minimum-wage hike

BUCHAREST (Reuters) – Romania’s government and trade unions yesterday agreed to a 28 percent rise in the minimum monthly wage to 500 lei ($212) after prolonged negotiations, Finance and Economy Minister Varujan Vosganian said. Romania has seen double-digit wage rises in the last two years, as the European Union newcomer struggles to catch up with the wealthy bloc’s living standards, now at a third of EU’s average in terms of gross domestic product per capita. «It is a 28 percent rise, which trade unions accepted under the condition to negotiate another hike after the first half of next year, depending on economic growth, inflation, budget revenues and productivity rises,» Vosganian told reporters. The central bank has recently urged the centrist government to plan for fiscal prudence in the longer term, warning that double-digit wage growth was undermining economic growth and competitiveness. Last week, ratings agency Standard & Poor’s revised its outlook on Romania to negative from stable, saying the country’s fiscal and income policies were expansionary, while upcoming elections were likely to stimulate further increases in current expenditures and intensify inflationary pressures. But Vosganian said the rise in the minimum wage, due to be approved at the government meeting next week and take effect from the start of 2008, does not add overheating pressure to the economy. «We made an evaluation, the impact is quite low and affordable by the (state) budget,» he said. Net average wages in Romania rose to 1,040 lei in September, up 20.9 percent from a year earlier, official figures showed last week. Annual inflation rose to 6.8 percent in October from September’s 6 percent.