Romania will lose €770 million in EU Recovery and Resilience Facility funding after political parties failed to agree on a public-sector wage reform by the required deadline.

Romania is set to lose €770 million in funding from the European Union’s Recovery and Resilience Facility due to a failure by governing parties to reach a consensus on public-sector wage reform. The deadline for the reform passed at the end of August without the necessary legislation being enacted. The dispute involved disagreements over the cost of the new pay system and how to distribute salary increases among more than one million public-sector employees.

Political deadlock and government collapse

Negotiations were complicated by the collapse of the government led by Ilie Bolojan, which fell following a vote of no confidence on May 5, 2026. The motion was supported by the Social Democrats (PSD) and the far-right AUR. Following the government's fall, Romania was led by a caretaker administration with limited powers, which political scientist Cristian Pîrvulescu noted lacked the authority to implement a major overhaul of public-sector pay under the constitution.

Disagreements over reform costs

The core of the political conflict centered on the financial scope of the reform. Caretaker labour minister Dragoș Pîslaru stated that trade-union demands reached over €5 billion, while the government’s proposal was capped at approximately €2 billion. The Liberals advocated for a fiscally restrained approach, while the Social Democrats pushed for larger increases for teachers, healthcare workers, and civil servants. Parties also failed to agree on a proposal to cap bonuses at 20 percent of basic pay.