Austerity and Structural Reforms in Romania: Severe Measures, Questionable Economic Results and Negative Social Consequences

The response of the Romanian government to the economic crisis came late, but the austerity measures were among the most severe in Europe.

The crisis response policy, consisting of austerity measures and structural reforms, stemmed from a combination of international pressure (from the IMF), the doctrine of the centre-right governing coalition and lobbying by some major social and economic stakeholders (for example, business associations).

The austerity measures focused mainly on public employees and social welfare beneficiaries, while the structural ‘reforms’ encompassed a broad range of areas, from the labour market to social welfare and health care, as well as the privatization of several Romanian companies.

Many sectors of Romanian society and the economy were plagued by deficiencies and low performance and needed to be reformed, but there is no evidence that the implemented structural reforms have resulted in any improvement in the quality or performance of the targeted services.

The impact of the crisis response measures is hard to measure at this point, but there is evidence suggesting that most of the stated objectives of the structural reforms were not achieved, except for the budgetary adjustments and fiscal consolidation.

The austerity measures had negative social consequences, including persistently high unemployment, a low employment rate and a low sense of well-being among the population.