Romania’s Pay Bill Holds Up €770 Million

€770 million in European recovery money is now resting on a Romanian wage law that unions have rejected, a court has partly stalled, and the country’s largest party will not support.

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

Romania risks losing about €4.5 billion in remaining grants from the Recovery and Resilience Facility, the EU’s post-pandemic fund that pays governments only after they deliver agreed reforms, unless parliament passes six laws before a hard 31 August deadline (Brussels Times). As To Brief reported ten days ago, the problem then was the full package. The change this week is that five bills may now move. The salary reform, worth more than €770 million on its own (Stirile ProTV, Europa FM), has been left exposed.

Three blockers in ten days

The wage bill has hit three obstacles in less than a fortnight. On 14 July, PSD leader Sorin Grindeanu said his party would not back the draft. PSD dominates Romania’s parliament; without it, there is no majority for the law. On 21 July, the Bucharest Court of Appeal suspended the public consultation process after a challenge from Sanitas, the health-workers’ union (Romania Insider). On 23 July, all five major union federations asked parliament to abandon the current text, arguing that €770 million was not enough reason to push 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 force through an unpopular restructuring, while PSD can refuse to vote and let him carry the deadline.

The dispute is about who takes the hit from a payroll cap. Bolojan’s draft would limit 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. That protects headline pay, but cuts into the allowances many public employees actually rely on. Unions say the draft is flawed. PSD says an interim government has no authority to impose it.

Brussels can check, not command

The court ruling does not itself freeze EU money. It creates the harder problem of whether Romania can produce a reform that survives legal challenge before the Commission has to judge it. Under the RRF, the Commission pays only when a government proves that a promised reform has been completed. If the proof does not stand up, Brussels can withhold or cut the money (EUR-Lex, European Court of Auditors).

That 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 others 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 be moved to another heading.

Romania’s next payment request, expected in early August and worth about €2 billion (Radio Romania International), will reach the Commission with a gap where the wage reform should be. Bulgaria is facing the same 31 August deadline, with about €400 million linked 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, overrule a court, or compel unions to accept a consultation process they regard as hollow. The RRF is doing what it was built to do: turning the cost of political delay into a precise figure. For Romania, that figure is €770 million. The date is 31 August.