Romania reworks public wage bill as European Commission seeks fiscal limits for €770M fund

European Commission review of wage reform draft

The European Commission issued formal observations on Romania's draft public sector unitary wage law, prompting revisions by the Ministry of Finance and the Ministry of Labor. Romanian interim Prime Minister Ilie Bolojan stated on 19 August that European officials did not outright reject the draft, but requested clarifications regarding fiscal sustainability. The draft had been submitted to Brussels to verify compliance with commitments under the National Recovery and Resilience Plan. Romania risks losing 770 million euros in European recovery funding if the law is not passed by parliament before 31 August 2026. Bolojan confirmed that government experts spent Wednesday adjusting the text based on the feedback from Brussels.

They did not reject the proposal, they made certain observations and asked common-sense questions and clarifications.

Budget envelope scenarios and fiscal pressures

The primary dispute involves the overall size of the public sector payroll increase projected for 2027 compared to 2026. The initial draft estimated an expansion of approximately 8 billion lei, but discussions with trade unions in healthcare and education increased that figure to over 12 billion lei. Interim Labor Minister Dragoș Pîslaru also evaluated a scenario involving an increase of 16 billion lei. The European Commission stated that any increase beyond 8 billion lei requires concrete compensatory measures, such as permanent spending reductions in other areas. European officials also opposed phasing in the salary increases over several years, noting that multi-year rollouts create compounding spending liabilities.

It is an issue related to the fact that, if you increase the envelope beyond a certain level, you have to find the difference in money that you need to reduce from somewhere else. So, the issue is that in the end, pluses and minuses, you fit into what the Romanian economy can sustain.

Cross-party negotiations at Cotroceni Palace

Following the technical exchange with European officials, Romanian political leaders scheduled talks at Cotroceni Palace. President Nicușor Dan convened the heads of parliamentary parties for a decisive meeting on 20 August at 14:00. Attendees include interim Prime Minister Ilie Bolojan of the National Liberal Party, Sorin Grindeanu of the Social Democratic Party, Dominic Fritz of the Save Romania Union, and Kelemen Hunor of the Democratic Alliance of Hungarians in Romania. Technical teams met at the presidential palace on Wednesday evening to analyze the Commission's feedback ahead of the political session. Bolojan stated that the coalition partners must choose between reaching an agreement on the revised draft or forfeiting the associated European funds.

Procedural obstacles and deadline stakes

The legislative process follows earlier legal and administrative complications since the draft was first published. The Ministry of Labor released the draft for public consultation on 17 July 2026, drawing objections from healthcare and education personnel over potential pay disparities. On 21 July 2026, the Bucharest Court of Appeal suspended the public consultation procedure, a decision that remains subject to appeal. Bolojan explained that public sector salaries would remain frozen at current levels until annual reference values catch up, rather than facing direct cuts. Romanian lawmakers have until 31 August 2026 to adopt the final legislation in parliament to fulfill the recovery milestone.