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.

Citu was nominated by his party, the National Liberal Party (PNL), but he complained about the lack of “political will” for pursuing deeper reforms such as in the public sector where the incomes have increased well above sustainable levels. 

Later this year, the PNL will hold a congress where incumbent leader Ludovic Orban — who lost the PM seat after the disappointing results in the general elections — hopes to restore his power with an eye to a presidential candidacy in 2024.

The "socialism with a human face" term, coined by 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 Nicolae Ceausescu, who led the country from 1965 to 1989, backed the mild democratisation and political liberalisation envisaged by Alexander Dubcek 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.

Citu attributed the still incomplete reforms in the country to Iliescu and the Social Democrats (the main opposition force at this moment). 

Romania still has 700 state-owned companies that are insolvent to 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 Citu during the Confidex debate organised by Impetum Group.

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

Citu froze the wages in the public sector this year — prompting protests from trade unions backed by the Social Democrats — and he implied 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. 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.