Social policies in the spotlight

Pensions and child allowances are the subject of heated debates between the government and the opposition.

Ştefan Stoica, 21.01.2020, 14:00

If the economy only grows by 4%, we
can’t have something grow by 40%, the governor of the National Bank of Romania
Mugur Isarescu was saying recently, referring to the planned increase in
pensions as of September 1st. He is not the first to warn that
Romania risks entering an area of turbulence if the budget deficit, which has
already exceeded the 3% accepted by the European Union, deepens as a result of
populist measures.

The increase in pensions has been
laid down in law by the former Social Democratic government without being
justified economically, the current Liberal government says. The latter has in
fact postponed until next summer the doubling of child allowances, another
populist measure taken by the Social Democratic Party, and which was not based
on a calculation of available resources and had not even been budgeted.
However, the Liberal government reiterated that this year’s budget has
allocated funds for the increase in pensions and child allowances, but
emphasised that the decision to increase them will be taken in 6 months’ time,
after an economic assessment. Ludovic Orban:

Our goal is crystal clear, namely
to increase the incomes of all Romanians, including private sector salaries,
pensions and allowances, but underlying this increase must clearly be stable
economic growth, not increases on paper that lead to growing inflation and that
cannot be supported in the long run.

The Social Democrats say that in
less than three months, Orban’s government has cancelled the economic progress
made earlier, and this can be seen by looking at the numbers. The former Social
Democratic minister for labour Lia Olguta Vasilescu:

From a deficit of 2.9% we now have
a deficit of 4%. From a public debt level of 35% we now expect a public debt
level of 39%. From a 3.4% inflation rate in November we now have a 4.2% inflation
rate, while the leu-euro exchange rate has reached an unprecedented level.

A clash between the National Liberal Party and the
Social Democratic Party is expected in Parliament, where the Orban cabinet will
assume collective responsibility for the bill on the return to the two-round system
for the election of mayors. Amendments to the bill may be submitted by the 27th
of January, and the bill itself will be debated in Parliament on the 29th.

So far, the Social Democratic Party
has reacted only with words to the previous cases in which the government has assumed
collective responsibility, including in the case of the budget bill, but it
cannot allow a bill that could damage it significantly in this summer’s local
elections go unchallenged. As a result, the Social Democrats have decided to
initiate a motion of no-confidence and expand it from the issue of the
two-round system for the election of mayors to the overall performance of the
Orban cabinet. Supported by the Democratic Union of Ethnic Hungarians in
Romania, a party that also stands to lose from a possible change of the
election law, the Social Democrats believe in the success of their motion.