BCR: 150,000 employees could be laid of next year

Around 150,000 employees will be laid off next year, and most of them will be in the public sector, the analysts of the Commercial Bank, BNR, write in a report on the evolution of the Romanian economy, taken over by Business Standard.

According to an understanding with the International Monetary Fund, IMF, in 2010, the Government should have cut the budget revenues, by 0.66 percent of GDP, which is the equivalent of 3.5 billion Lei (Romanian currency).

And in order to make this reduction, the Government has committed itself to approve the legislation necessary until the end of the current year.

Following these layoffs, the unemployment rate will increase in 2010, to 0 percent, from 7.4 percent at the end of this year. In July, the unemployment had reached a rate of 6.3 percent, according to the National Agency for Employment, ANOFM. In figures, the unemployment this July, totalled 572,462 people.

And an increase of 7.4 percent, as BNR estimates the unemployment rate to reach at the end of this year, means an additional number of 100, 000 unemployed until the end of 2009.

This is some 670,000 people without a job at the end of the year. If we add the 150,000 unemployed of next year, when the unemployment rate is expected to stand at 9 percent, the number of unemployed is expected to be, in 2010, at 820 people.

Nevertheless, Lucian Anghel, the chief economist of the Romanian Commercial Bank, BCR, is of the opinion that the fall in the expenses for the salaries in the public sector, from layoffs mainly, would put „very much pressure” on the economy.

The pressure will affect the domestic demand, as well as the trust of foreign investors.
„The fall of the expenses in the public sector could be achieved by a mixed set of measures, by a fall in salaries and by restructuring.

If the expenses are not restructured, the shrinkage of the budget deficit will be very difficult, but this fall in the expenses in the public sector has to be made efficiently, otherwise the private sector would be exposed to much greater correction efforts,” said Anghel.

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