BNR governor Isarescu: Wage rise should be market-driven, not result of political play

Wages should grow in step with productivity, and a dramatic twist is for pay rises to be the effect of political play, not of market forces, governor of the National Bank of Romania (BNR) Mugur Isarescu told a specialist conference on Thursday. 

"In Romania, we are faced with a series of challenges which are for certain not limited here, but impact the entire EU. One of the dramatic consequences would be for wages to be raised by politicians and not under the drive of the market. We are also faced with the issue of migration. More than 3 million Romanians, that's a significant percentage of the total working-age population, have left the country to settle in other member states. In a natural order, wages should increase with productivity and we should thus become competitive. Talking about infrastructure, I want to mention that this is essential to connecting various regions Romania is a part of. In order to have a solid economy it is important to maintain a perspective where we implement consistent political reforms. Romania needs stable economic convergence. It's the only way we can reach our destination," Isarescu said. 

In the opinion of the country's top banker, Romania should monitor the implementation of structural reforms, which is key to achieving convergence and sustained economic growth. 

For enhanced effectiveness, macroeconomic policies should go along with structural reforms aimed at ensuring a more flexible economic environment, that is we need to monitor the cyclical policies included in structural reforms. Structural reforms are essential to achieving convergence by ensuring sustainable economic growth and a more flexible economy capable of dealing with asymmetric shocks and of drawing benefits from the country's joining the eurozone, Isarescu said. 

The National Bank of Romania organised on Thursday in cooperation with the European League for Economic Cooperation - Romania the conference 'The Danube Triangle' on 'Convergence towards euro enlargement'.