Romania plans to impose rewards limit for roles with harmful work environments
In a bid to tackle Romania's notably high budget deficit, which stood at 9.3% of GDP in 2024, the highest in the EU, the Romanian Government has approved a draft emergency ordinance aimed at cutting and capping bonuses related to harmful working conditions in the public sector. This measure also includes a reduction in the number of additional vacation days granted for such conditions.
The initiative forms part of a broader austerity plan, which also includes reducing civil service jobs by 20%, increasing Value Added Tax (VAT), and imposing new taxes, such as on gambling. These measures are designed to slash the deficit and avoid a sovereign rating downgrade.
The draft ordinance is expected to affect approximately 600,000 public sector employees, who currently receive these occupational hazard bonuses. The aim is to contain public spending growth, especially considering that wages and pensions have recently surged by over 20% and 30%, respectively. In response, the government has proposed temporary caps on these as well.
While exact figures for the savings from cutting or capping the bonuses for harmful conditions have not been explicitly detailed, the measure is clearly part of a comprehensive strategy targeting significant fiscal consolidation. Given its scale—affecting hundreds of thousands of employees—the expected savings are likely substantial and critical to the government's efforts to reduce the deficit and maintain eligibility for EU funds.
Public protests have erupted over these austerity measures, indicating widespread dissatisfaction among public sector employees. The Government is planning to present a package of measures by July 8 ECOFIN to avoid EU sanctions.
If endorsed, the bill could be enforced from July. Under the same bill, the duration of additional leave for harmful or dangerous work conditions will be reduced from 3-10 days per year to 1-3 days. The bonuses for harmful working conditions in public administration will decrease from 15% of gross wage (max RON 1,500/EUR 300 per month) to RON 300/EUR 60 per month.
The Government aims to achieve a budgetary impact of RON 35 billion (EUR 7 billion) by the end of the year. The estimated budgetary impact for the six months of the year, due to the reduction of bonuses for harmful working conditions, is RON 1.34 billion (EUR 265 million). The annualized budgetary impact, based on the six-month estimate, would be RON 2.7 billion (EUR 530 million).
The social dialogue committee was convened for consultations on June 27 at 9:00 AM. The committee's opinion in the consultation is not binding. The remaining RON 4.56 billion were categorized as "other bonuses." In 2020, a total of RON 12.4 billion (EUR 2.5 billion or 0.66% of GDP) in bonuses were granted, according to the Ministry of Finance.
The Government meeting where the bill could be endorsed is scheduled to take place after the social dialogue committee consultation.
The government's austerity plan, involving a draft emergency ordinance, includes cuts and caps on bonuses related to harmful working conditions in the public sector as part of a broader strategy to tackle Romania's high budget deficit. This move is expected to affect around 600,000 public sector employees and is designed to contain public spending growth, especially in light of recent wage and pension surges. The measure is anticipated to save a substantial amount, critical to the government's objective of reducing the deficit and preserving eligibility for EU funds. However, public protests have arisen in response to these austerity measures.
