Impact of teacher wage hike on the private sector

The draft legislation was passed by Parliament, subsequently appealed through the Constitutional Court by the government, which argued there was no indication where funds would come from for the wage hike. The court ruled that the draft is constitutional, and President Traian Basescu signed the legislation on Friday.

Following this decision, trade unions representing civil servants in other fields, such as health and justice, asked for similar salary hikes.

A poll carried out among business people, analysts and representatives of the Finance Ministry by Business Standard shows that there is concern about the impact of the legislation on the private sector, especially since other civil servants are also demanding a similar increase in wages. “There will be pressures and the private sector will be forced to raise salaries in 2009, but will be obliged to reduce investments costs,” according to the President of the Association of Romanian Business people (AOAR), Florin Pogonaru. However, due to the global financial crisis, companies are likely to “lay off staff and will not be able to afford to consider salary hikes.”

A representative of the health services industry, MedLife President Mihail Marcu, said “the 50 percent increase in the wages of teachers will be disastrous. Investors started walking out, not because of the crisis, but when they heard about this measure. They were terrified and walked out,” Marcu added.