Romania does not have a functional market economy, but it has experienced 30 years of "socialism with a human face," prime minister Florin Citu said at a conference, quoted by Profit.ro.

The term, coined by the Czech reformists in 1968, was later attributed to the first Romanian president after the fall of communism, Ion Iliescu, who developed as a political leader during the Prague Spring period - when Ceausescu backed the mild democratization and political liberalization envisaged by Alexander Dubček and his colleagues in Czechoslovakia. After 1990, Iliescu used his power to prevent the "shock therapy" pursued by other former communist countries (such as Poland) and promoted a more gradual approach that preserved the state's dominant role in the economy for over a decade.

Romania still has 700 state-owned companies that are insolvent in various degrees, and the Government must have the guts to decide which of them can survive and which ones must be taken out of the economy, said PM Citu, during the Confidex debate organized by Impetum Group.

The wages in state-owned companies, more precisely the total payroll, will not increase this year, PM Citu added, citing the discrepancies between the incomes in the public and private sectors.

PM Citu froze the wages in the budgetary sector this year - prompting protests from trade unions backed by the Social Democrats - and he implied the wages might remain at the same level next year as well.

"Today, the state, as it is, drags us down when we talk about economic dynamics. It is a brake on the economic development, with all the [budget] arrears, with all the problems it has," the prime minister said.

He pointed out that the true "champions" in the business environment must be chosen by the free market, and this must also be true for state-owned companies.

Regarding the evolution of salaries in the budget sector, Florin Cîţu specified that the salary envelope remains at the level of last year, it increases very little, Economica.net reported.

In his opinion, unfair competition in the state environment takes place not only in terms of incomes but also in how state-owned companies work.

(Photo: Octav Ganea/ Inquam Photos)

iulian@romania-insider.com