Uniform pay law needed to stabilize chaotic payroll system

The uniform pay law for the public sector is necessary to stabilize the currently chaotic payroll system, the more so as one can never know what effects a court ruling could produce, which renders the budget's staff expense part unmanageable, Minister of Public Finance Viorel Stefan said recently. 

He explained that this is the reason why the Uniform Pay Bill should be implemented in H2 2017 and that the budget resources are enough to afford the impact of this measure at this stage. "I have a set of reference indicators related to the implementation of the [uniform pay] law. The first (...) is that this law is necessary to stabilize the payroll system and prevent leaks that may still occur if this law isn't enforced beginning July 1, 2017. The system is chaotic, one doesn't know what effects a court ruling or an interpretation thereof can produce from one day to another, which renders the budget's staff expenses difficult to manage. It actually makes this budget section unmanageable. From this point of view, the law must be implemented in the second half of this year. The effect of the law's implementation in H2 2017 will not be spectacular, it is bearable, the budget has enough resources to cope with the implementation impact over the second half of 2017," Viorel Stefan said. 

 According to the FinMin, public sector staff expenses represent 7.8 pct of GDP, less than 25 pct of collected revenues and the authorities seek to keep them at this level. "A gu id ing c rite r ion for me is the follow in g : a c c ording to our c a lc u la t ions , the implementation of the law will result in the increase of the wage envelope by 32 billion lei. According to budget projections, the current wage envelope is 63.5 billion lei. An increase of 32 billion lei in the next four years means that we must create the necessary fiscal space to absorb the impact without altering budget balances, meaning this: budget sector staff expenses account for 7.8 pct of GDP and that's where we want them to stay. 7.8 pct of GDP means slightly more than 25 pct of the collected budget revenues," Stefan explained In this context, the Finance senior official assured that he will staunchly see that these indicators are observed.

"I will staunchly see that these indicators are observed. I am optimistic, because the revenue collection rate is very small today, even less than in the past years. So, as we increase the collection rate and the revenues' GDP share increases, the fiscal space will be crated to allow us to absorb these 32 billion lei at a yearly pace that could be of 8 or maybe 10 billion lei, depending on economic growth and the advance of the revenues' GDP share," the FinMin said.