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Romania to cut wages despite strike threat

May 26, 2010

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BUCHAREST, Romania—Romania will go ahead with sweeping wage, pension and benefits cuts despite unions' threats to stage a general strike, Prime Minister Emil Boc said Wednesday.

The announcement came as the government prepares to adopt measures promised to the International Monetary Fund to reduce the budget deficit to some 6.8 percent of gross domestic product.

Boc said that people who earn the minimum wage of 600 lei (euro144) or the minimum pension of 350 lei (euro84) will not be affected. All other wages in the public sector will be slashed by one-fourth and pensions will decrease by 15 percent.

Education and public administration unions said they will stage a strike on May 31 to protest the measures.

Romania's economy shrank by 7.1 percent in 2009 as the global financial crisis forced it to negotiate a euro20 billion rescue loan led by the IMF.

Jeffrey Franks, the IMF mission chief to Romania said the government, not the fund, had decided to make the wage cuts. The IMF had suggested raising income tax and sales tax, as well as other smaller public sector wage cuts, he said.

Boc says the government will send the measures to Parliament, through a procedure that will either lead to a speedy approval or to a no-confidence vote.

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