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Stagnation, resignation reign ahead of Romanian parliamentary vote
December 9, 2016 / 12:42 PM / a year ago

Stagnation, resignation reign ahead of Romanian parliamentary vote

(Refiles to add missing word “to” in paragraph 11)

* Leftists likely to regain power in ex-communist state

* Focus on wage hikes over investment needs, graft woes

* Health, education, transport in urgent need of funding

* European Commission sees budget deficits rising

By Luiza Ilie

BUCHAREST, Dec 9 (Reuters) - When Romania’s leftist government collapsed a year ago amid outrage over a deadly nightclub fire, many people spied an opportunity for sweeping change in a country plagued by corruption and inept public services.

But after the upswelling of public anger over the deaths of 64 people in the Club Colectiv, which lacked emergency exits and fire safety permits, the clamour for reform to make Romania a safer, more secure and prosperous country has dimmed.

Instead, the campaign for Sunday’s parliamentary election has been dominated by a sense of exhausted resignation about chronic poverty and politicians’ unfulfilled promises of reform and investment in a now derelict infrastructure.

Polls forecast the leftist Social Democrats (PSD), who advocate both higher wages and pensions and lower taxes, will regain power, despite shadows of corruption around them, with their party chief convicted of vote rigging.

“People are tired of promises, they want something they can see, like wages. And it’s about time these rise, they’re very low,” said Grigore Constantin, a Bucharest taxi driver.

Romania’s average monthly wage is 2,094 lei ($493), the second lowest in the European Union, with average pensions less than half that. Germany’s minimum wage is 1,440 euros ($1,528.56), illustrating the enduring chasm between the western EU and the emerging economies in its ex-communist east.

Economists warn that pension and public sector wage rises pledged by the PSD and also rival parties will come at a cost - potential tax increases and a drain on resources urgently needed to build modern hospitals, highways and more schools with heating and plumbing - that are likely to disappoint voters.

Increasingly bloated state budgets - which had been slashed in the wake of the 2008 global financial crisis - may rile the European Union executive, which has pushed Bucharest to create leaner, modern public services and stamp out graft.

Leftists in power from 2012-2015 reversed much of the belt-tightening by cutting taxes and raising the minimum wage and public-sector pay.

The European Commission now expects Romania’s deficit to quadruple from 0.8 percent in 2015 to 3.2 percent in 2017 under European accounting terms. It would be the second largest deficit in the EU after Spain.

INFRASTRUCTURE NEEDS

The current technocratic government of Prime Minister Dacian Ciolos, a former European commissioner who took over for one year after Victor Ponta quit in November 2015, has sought to make public administration more transparent.

It has also adjusted wage imbalances in health care and launched a four-year plan to lift hundreds of thousands of people out of poverty - with benefits ranging from solar panels on roofs of 100,000 homes that lack electricity to cash incentives to help reduce school drop-out rates.

“The government does not challenge the need for higher wages in certain sectors, like health care and education,” Ciolos said. “But even doctors are complaining about infrastructure and teachers and parents are complaining about school conditions.”

But swathes of Romania, a European Union member since 2007, remain starved of investment, driving many to emigrate, despite fast overall economic growth.

Forty percent of Romania’s roads are made of dirt or gravel. A third of hospitals could collapse in any earthquake, says the health ministry. New hospitals have not been built in decades.

“During every election I can remember, every party has promised to build roads, bridges, schools,” said Constantin.

Pre-election polls show the PSD with 40 percent of the vote, trailed by the centre-right National Liberal Party at 18-27 percent and the newcomer Union Save Romania on 8-19 percent.

Most public support for the PSD comes from the rural, poorer part of the electorate that traditionally backs welfare-driven economic programmes. Years of unpopular post-2008 austerity smoothed the left’s return to power in 2012.

“The PSD is an experienced party,” said political analyst Cristian Patrasconiu. “They are also good at selling certain themes and posing as the good hero. They are selling themselves as those who brought prosperity.”

But the Coalition for Romania’s Development, which groups domestic and foreign investors, warned against more of the political “short-termism” that has prolonged backwardness.

“The need to shift Romania’s economic growth onto consumers is a reality, but measures that satisfy short-term interests ... must be avoided at all cost,” it said in a statement.

“The business community we represent repeatedly underlines the acute need for investment in infrastructure, of raising spending for education and health care and of reforms. It’s these strategic investments...that are at risk, which will delay Romania’s catching-up with the EU.” ($1 = 0.9421 euros)

Editing by Justyna Pawlak and Mark Heinrich

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