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Romanians Warned on Pay Issue as Productivity Falls

From Reuters

Prime Minister Petre Roman named a new government Thursday and warned that Romania’s fragile economy could collapse if firm measures are not taken to clamp down on excessive wage demands and falling productivity.

Roman told Parliament that the drop in productivity in several industrial sectors is unjustified and intolerable and that pay increases granted despite falling output could “lead to an uncontrollable explosion of the economic mechanism.”

“In such a situation everything we have achieved can be destroyed completely,” he told both chambers of the newly elected Parliament.

Romania is moving toward introducing a market economy after more than 40 years of Stalinist central planning ended in December with the overthrow of dictator Nicolae Ceausescu.

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Parliament on Thursday approved the establishment of a new ministry to take control of the moves toward a market economy, in what Roman called an historic transition of unprecedented scope.

Since the overthrow of Ceausescu, Romania has has set its sights on a stock exchange, joint ventures with foreign investors and large-scale privatization.

The government’s program also calls for a six-month moratorium on trade union demands for better pay and conditions in return for state compensation where reforms result in lower living standards.

Roman’s pay warning coincided with a demonstration organized by an independent trade union in the central city of Brasov.

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In the biggest independent protest since political violence in Bucharest June 13-15, up to 2,000 people packed a square in the traditionally radical city to demand faster economic reform.

The Brasov Convention, an umbrella grouping of 21 independent trade unions claiming 100,000 members, also called for regular consultations with the government, a law on press freedom and more information about the scale of deaths in their city during the December uprising.

The 23-man Cabinet named by Roman included only five ministers from the provisional government that ruled until after May elections won resoundingly by the National Salvation Front.

Those remaining in their posts included the defense minister, Gen. Victor Stanculescu, 62. Thirty votes were cast against his nomination in the Senate, more than against any other minister.

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The army and police have come under fierce criticism by President Ion Iliescu for failing to deal with rioters who attacked state property in Bucharest after a seven-week anti-government protest was broken up June 13.

Miners loyal to the front were brought in to deal with the protesters, and they attacked them with clubs, killing six.

The then interior minister, Mihai Chitac, who is responsible for the police, was fired immediately after the disturbances and his successor Doro Ursu, 37, was confirmed in his post Thursday.

The new foreign minister is front spokesman Adrian Nastase, 40, who replaces Sergiu Celac. Theodor Stolojan, 47, a former Finance Ministry official, became finance minister. He will replace Ion Patan in the post.

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