Romania risks losing €770 million in EU funds after public-sector pay reform deadline missed

Romania is set to lose at least €770 million in European Union funding after the country’s main political parties failed to reach an agreement on a public-sector salary reform required under its post-pandemic recovery plan.

The parties missed the August 31 deadline for adopting a new public-sector salary law, a key reform included in Romania’s National Recovery and Resilience Plan (NRRP).

According to EU sources, around €770 million could be deducted from the €8.44 billion still due to Romania under the €21.41 billion recovery programme. The exact amount will be determined by the European Commission when it assesses Romania’s final payment request, which must be submitted by the end of September.

Romanian President Nicu?or Dan said last week that the legislation was technically close to completion and could still be adopted by the end of the year. He described the reform as a “complicated topic with major social and economic implications” that had been negotiated under considerable time pressure.

The public-sector salary reform is reportedly the principal reason behind the potential loss of EU funds, although several smaller targets, including measures related to decarbonisation, have also not been completed.

The proposed legislation has faced strong opposition from Romanian trade unions, which argue that it could reduce the salaries of some categories of public employees and that planned inflation-linked adjustments would not adequately compensate workers.

The dispute has already prompted street protests. Several trade union federations demonstrated outside the Labour Ministry on August 25, calling for higher minimum wages and the restoration of collective bargaining.

The missed deadline has also triggered a political blame game among the pro-European parties that formed Romania’s previous governing coalition under centre-right Prime Minister Ilie Bolojan.

The dispute comes as Bucharest faces increasing pressure to complete the remaining NRRP reforms before the EU funding window closes, with the country having already received only part of the substantial financing allocated under the post-pandemic recovery programme.