Romania’s Pay Cap Puts €770 Million at Risk

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

Interim Prime Minister Ilie Bolojan said on 23 July that five of the six bills needed to unlock the 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 that pays governments only after agreed reforms are delivered, unless parliament passes six laws before the hard 31 August deadline (Brussels Times). As To Brief reported ten days ago, the stand-off was then about all six bills. This week, the picture narrowed. Five may move. The salary reform, worth more than €770 million on its own (Stirile ProTV, Europa FM), is now the exposed bill.

Three blockers in ten days

The wage bill hit three walls. On 14 July, PSD leader Sorin Grindeanu said his party would not support the draft. PSD dominates Romania's parliament; without it, there is no majority to pass the law. On 21 July, the Bucharest Court of Appeal suspended the public consultation procedure after a challenge by 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 defective reform (Adevărul).

Bolojan's weakness is built into the moment. He is governing after elections but before a permanent coalition has taken shape. That leaves him without the mandate to impose an unpopular restructuring, while PSD can refuse to vote and let him carry the EU deadline alone.

The fight is over who pays for 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 the headline wage but cutting the allowances on which many public employees actually rely. Unions say the draft is flawed. PSD says an interim government has no right to impose it.

Brussels can check, not command

The court ruling does not freeze EU funds by itself. It creates a sharper problem: whether Romania can produce a reform that survives legal challenge before the Commission has to judge it. The Commission pays only once Romania proves that the reform has been delivered. If the proof fails, Brussels can hold back or cut the money (EUR-Lex, European Court of Auditors).

This kind of partial validation is how the system works in practice. According to Primigea, when Spain submitted its sixth payment request, the Commission approved most milestones but left some pending, releasing retained funds only after Madrid supplied more evidence. Romania could end up on a similar track: passing five of the six bills may protect those milestones and the money attached to them. But the salary law's €770 million cannot simply be moved to another line item.

Romania's next payment request, expected in early August and worth roughly €2 billion (Radio Romania International), will reach 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 check delivery. It cannot make a national parliament vote, override a court, or force unions to accept a consultation they consider a sham. The RRF is doing what it was designed to do: turning political delay into a precise, non-negotiable cost. In Romania's case, that cost is €770 million, and the date is 31 August.