Shock after the first year of reform: payroll significantly higher than forecast

A shock has emerged one year after the implementation of a major reform aimed at restructuring public sector salaries. The government’s new pay scale, introduced earlier this year, was designed to increase wages for public employees while expanding their numbers. However, recent analyses have revealed a significant discrepancy between initial projections and actual figures. According to reports, the total salary cost for public workers rose far beyond expectations, with an increase of over 12 percent in just one year. The Ministry of Internal Affairs and Public Administration, which oversees these changes, initially estimated that wage increases would amount to 374 million euros last year. A more recent review conducted by the merged ministry has uncovered a surprising gap between these forecasts and reality. The reform, which raised the value of salary brackets and led to higher wages, was intended to be phased over six years, with annual costs increasing gradually, starting at 374 million euros in the first year, rising to 376 million euros in the second, and ultimately reaching approximately 1.3 billion euros by 2028. The latest data shows that the actual salary expenditure surged dramatically. In 2025, compared to 2024, the total increased by 713.5 million euros, or 12.1 percent, reaching a total of 6.6 billion euros. This figure does not include additional expenses such as summer vacation reimbursements, food allowances, transportation costs, jubilee bonuses, and solidarity grants. These exclusions suggest that the true financial impact could be even greater than currently recorded. Several factors contributed to this sharp rise. The transition to the new pay scale, which features higher valuations for salary brackets, played a key role. Additionally, the increase in the minimum wage and the structure of supplements, which are calculated based on base salary, meant that as wages climbed, so too did the associated benefits. This dynamic caused the overall cost to grow faster than anticipated, with a 14.1 percent increase in the same period. The reform also allowed for the inclusion of up to ten salary brackets above the basic level, depending on the employer's assessment of an employee’s specialized knowledge. This change potentially accelerated career progression, enabling some workers to move up two levels instead of just one. New supplementary payments were also introduced, including those for work involving foreigners or individuals with dementia. In the public sector, average gross wages reached 2,871 euros in 2025, representing a 10 percent increase from the previous year. The highest average gross salary was observed among officials working in the office of the president of the republic, the National Assembly, the Council of Ministers, and other high-level institutions, where the average reached 3,744 euros. The expansion of the public sector workforce was particularly notable in education, healthcare, and social welfare. As of 2025, there were 196,123 employees in the public sector, an increase of 2,391 people, or 1.2 percent, compared to the previous year. September will mark the first time this term that government representatives and union leaders will meet to discuss wage negotiations. Minister Franci Matoz has previously indicated plans to develop separate pay systems for specific sectors such as police, military, health, social care, culture, and education, based on the coalition agreement.