BNR Governor warns wages should fit the “economy’s shell”, says Parliament should decide if he is fit at 70 for a further term

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In a message on Wednesday, National Bank Governor, Mugur Isarescu, said the wages have grown, but calls for prudence so that they fit the “economy’s shell.”

“The wages, including the minimum wage, have grown on the market, regardless of the fact that the Government has increased the minimum wage or not, the state employees’ wages have grown. The Government position is justified: how can we stop the doctors leave the country if not by wage increases? How should we cut down corruption in hospitals if not by higher wages? There is no dispute on this issue from BNR. We say: caution, caution, caution, prudence so that we find out how to manage them, in order to fit them into the ‘economy’s shell’, into the macro-economic shell,” Isarescu said.

The BNR Governor argues the labour market is still under stress and the unitary labour cost is on the rise, adding that he believes no one can stop wages from growing in Romania, but the important issue is to moderate them, not to block them.

Isarescu mentioned the 50% increase in labour costs and that they would be reflected in prices. “It’s hard to find something to balance this, such as productivity increase or technologic upgrading,” he said.

The BNR report on inflation reads that the current dynamics of the unitary costs with labour, on the economy, increased in Q4 2017 (12.5%) against the previous quarter (8.5%), mainly due to higher employees’ earnings, whereas the productivity dynamics, although slowed, continued to have the high pace of the past two years.

My term ends in 2018. It’s up to Parliament to decide if at 70 I will have another term

Mugur Isarescu said his term in office ends in 2019, when he turns 70, so, similarly to the professors, he should retire, but the Parliament should decide.

Asked if he would retire as Governor, Isarescu said this issue is not topical, but he added he would turn 70. “At 70 a university professor cannot practice anymore,” Isarescu added.

“Anyway, my term ends next autumn; I will turn 70 and it’s like a professor’s job, after 70 one cannot practice anymore. The Parliament, with its wisdom, will decide,” the Governor said.

Mugur Isarescu was born on August 1, 1949 in Dragasani (Valcea County) and is one of the most long-lived central bank governors in the world. Isarescu is at the BNR helm since 1990.

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