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BNR governor expects wage rises next year, but inflation to partially offset their effects

Wages in the public sector will indeed inch up next year, but inflation will partially offset the effects of this rise, governor of the National Bank of Romania (BNR) Mugur Isarescu declared on Sunday on a private television channel.

'Although wages in the public sector will go up, inflation will annul this effect, at least partially. The rise in the purchasing power will be much smaller. It is not under our control and it does not fall under BNR's responsibility. (...) Next year too, wages need to stay trimmed to a certain extent, regardless of inflation rates. With reference to 2009 or early 2010, the [wage] reduction next year will be far less than that applied beginning with July 1, 2010,' said Isarescu.

He stressed that the wage cut was operated with delay because payroll adjustment measures take their toll on the votes of the electorate, they have a cost that consists in denting the population's confidence, and are not welcome anywhere in the world, although they are sometimes unavoidable.

The BNR governor said that talks related to the increase of public sector wages next year can be carried out in real or nominal terms, and that many hope inflation will adjust things.

'We can discuss in nominal or real terms. The public discussion is in nominal terms. Many hope that inflation will do the adjustment. BNR has a different opinion, because we are the guardian of the stability of prices, and consider it would be unfair and more painful, although it seems to be administered with some kind of drug, a sort of anesthetic, and that it creates distortions. But it moves decision from the front-line where political factors and the population interact, into a more diffuse field and generates the feeling of a compromise,' said Mugur Isarescu.

Sursa: http://www.agerpres.ro

Tags: inflation partially governor bnr

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