Romania’s wage bill risks €770 million

€770 million in European recovery money now depends on a single Romanian law that unions have rejected, a court has partially blocked, and the country's largest party refuses to back.

Interim Prime Minister Ilie Bolojan said on 23 July that five of six bills needed to unlock remaining EU grants could reach parliament this week. The public-sector salary law, the one carrying the €770 million, would not be among them (Adevărul, Romania Insider).

Romania risks losing roughly €4.5 billion in remaining grants from the Recovery and Resilience Facility (the EU's post-pandemic fund, which pays governments only after they deliver promised reforms) unless parliament passes six laws before a hard 31 August deadline (Brussels Times). As To Brief reported ten days ago, the crisis was about all six bills. What shifted this week is that five may move. The salary reform, valued at more than €770 million on its own (Stirile ProTV, Europa FM), is now the exposed bill.

Three blockers in ten days

The wage bill ran into three walls. On 14 July, PSD leader Sorin Grindeanu said his party would not support the draft. PSD dominates Romania's parliament; without it, no majority exists to pass the law. On 21 July, the Bucharest Court of Appeal suspended the public consultation procedure after a challenge from the Sanitas health-workers' union (Romania Insider). On 23 July, all five major union federations asked parliament to drop the current text, arguing that €770 million did not justify forcing through a flawed reform (Adevărul).

Bolojan's weakness is structural. As interim prime minister, he governs after elections but before a permanent coalition forms. He lacks the political mandate to impose an unpopular restructuring, and PSD can refuse to vote while leaving him to face the deadline alone.

The fight is over who absorbs a payroll cap. Bolojan's draft limits public-sector wages to 8.1% of GDP, a ceiling negotiated with the European Commission, according to Mediafax. Bonuses would be capped at 20% of base salary, protecting headline wages but cutting the allowances many public employees actually depend on. Unions say the draft is defective. PSD says an interim government has no right to impose it.

Brussels can check, not command

The court ruling does not freeze EU funds directly. It raises a harder problem: whether Romania can produce a reform that survives legal challenge before the Commission has to judge it. The Commission pays only after Romania proves the reform is done. If the proof fails, Brussels can hold back or cut the money (EUR-Lex, European Court of Auditors).

Partial validation is how this system works in practice. According to Primigea, when Spain submitted its sixth payment request, the Commission approved most milestones but left some pending and released retained funds only after Madrid supplied additional evidence. Romania could follow a similar path: passing five of six bills may protect those milestones and their money. But the salary law's €770 million does not transfer to another line item.

Romania's next payment request, expected in early August and worth roughly €2 billion (Radio Romania International), will arrive at the Commission with a gap where the wage reform should be. Bulgaria faces the same 31 August deadline, with roughly €400 million tied to unfinished energy and anti-corruption reforms (Mediapool).

The Commission can attach money to reform promises and verify delivery. It cannot make a national parliament vote, override a court, or compel unions to accept a consultation they consider a sham. The RRF is working exactly as designed: converting the cost of political delay into a precise, non-negotiable figure. In Romania's case, that figure is €770 million, and the deadline is 31 August.