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Trade-Unions Press For Salary Hikes

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31 Mar 2008 - 00:00

The strike at Dacia car-maker will inevitably end with salaries' hike, even if not at levels trade-unions want to. Though this may be regarded by investors as an unwelcome precedent, they may still consider Romania as an investment opportunity, given that salaries here are second lowest in the European Union.

The strike at Dacia car-maker will inevitably end with salaries' hike, even if not at levels trade-unions want to. Though this may be regarded by investors as an unwelcome precedent, they may still consider Romania as an investment opportunity, given that salaries here are second lowest in the European Union.

 

Dacia trade-unionists started their general strike on Monday, March 24. They ask for a 550 RON hike of their monthly salaries, in 2008.

National Trade-Unions Block leader Dumitru Costin said the strike of 9,000-strong work-force generates ten million euros losses per day, which would put Dacia's total loss so far at 50 million Euro, for one week of striking.

Dacia officials, however, say they cannot provide a 64.2% hike – which is the quota of the 550 RON trade-unions asked for – but only a 12% hike. This will add 144 RON to the monthly salaries, plus a one-time bonus of 1,020 RON, before taxation.

Dacia trade-unionists also want to be made part of the company profit, asking for a 5% to 10% quota of the net earnings, hikes in Christmas, Easter and vacation bonuses, as well as 15% off for the Renault-made cars or car-parts they buy.

Trade-unionists all over the country seem to stay focused on the strike at Dacia, just as the railway workers got a 13% hike of their income after they threatened to go on general strike.

The workers with Bergenbier Blaj got a 15% hike of their salaries after going for one week into a general strike, and the workers at Mittal-Sidex Galati are collecting the signatures needed for the approval of a general strike at the end of which they hope to get a 25% increase of their salaries, and a doubling of their bonuses and pay of over-time hours.

All these strikes or attempted strikes have only one foreseeable outcome: the companies will give in to trade-unions' demands, as the workers have now the option to just leave for the better pay in other European nations, analysts say.

“It's a fact that Romania will no longer stay as an investor's heaven, but the workforce is not willing to accept the level of salaries it got so far,” analyst Ilie Serbanescu said.

“Even if salaries will double in size, they will still stay under those in Poland. Romanians are second from last in terms of salaries paid in European Union, while their income dropped even more as a result of their taking on bank credits,” said Liviu Voinea, director with the Group for Applied Economics.

Voinea says a 28% hike should be granted to salaries, given that the purchasing power dropped as much over the past six months, with 20% lost to the drop in exchange rate to the Euro, and with 8% lost to the annual inflation.

Serbanescu said the Dacia workers will have their claims met by the company, or else Dacia works will run the risk of loosing some 20% of its workforce to the Craiova car-maker, recently bought by Ford, which is a short distance away.

Voinea also said that Romania may not stay a heaven of low salaries for investors in the European Union. On the other hand, it is not lost on them the secure environment Romania provides, as an EU member state, where law cannot be infringed upon without retribution at the level of the EU law enforcing bodies, Voinea added.

The salaries' hike will result in even more pressure on the inflation and current account deficit to grow, but these two are issues to be dealt with by fiscal policy makers, not investors, Voinea said. The latter will be forced to meet the demands for higher salaries, or else risk loosing their workforce, he concluded.

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