FES BRIEFING ROMANIA Trade Union Monitor May 2022 POLITICAL, ECONOMIC AND SOCIAL FRAMEWORK POLITICAL CONTEXT 2021 was marked by considerable political instability and polit­ical tensions, which overshadowed other controversies. The tensions inside the governing coalition formed by the National Liberal Party(Partidul Na ț ional Liberal, PNL), the Union to Save Romania(Uniunea Salva ț i România, USR-PLUS) and the Demo­cratic Union of Hungarians in Romania(Uniunea Democrat ă Maghiar ă din România, UDMR) were a constant during the en­tire year, but escalated in the second half of 2021. In Septem­ber 2021, all ministers from the USR-PLUS party submitted their resignations from the Romanian coalition government led by prime minister Florin Cî ț u. USR-PLUS was the second larg­est member of the coalition in power since December 2020. The resignation of the USR-PLUS ministers took place follow­ing repeated tensions between the partners of the alliance, which came to a head when the PNL Prime Minister Florin Cî ț u sacked USR Justice Minister Stelian Ion. The withdrawal of the USR ministers left a PNL-UDMR minority government in place, ushering in a political crisis amid the intensification of COV­ID-19 infections and deaths and diminishing the government’s capacity to produce an adequate response. The political crisis escalated further when in October the PNL-UDMR minority government lost a vote of no-confi­dence, initiated by the opposition centre-left Social Demo­cratic Party(Partidul Social Democrat, PSD) and supported by the right-wing populist Alliance for the Unity of Romanians (Alian ț a pentru Unirea Românilor, AUR) and ex-coalition part­ner USR-PLUS. The negotiations to form a new government dragged on al­most two months, amidst a public health-care crisis as Roma­nia reached a historic high in COVID-19 deaths accompanied by rising energy prices. The new government, led by the PNL-politician Nicolae Ciuc ă , was appointed on 25 November 2021. PNL and UDMR were joined by PSD, until then PNL’s ri­val and bitterly opposed by President Klaus Iohannis. The main political debates revolved around a few issues, such as the National Recovery and Resilience Plan(PNRR), rising in­flation and rising energy prices. Following several rounds of negotiations, in September 2021 the European Commission issued a positive assessment of Romania’s recovery and resil­ience plan. The PNRR provides for substantial investments in green transition, digital transformation as well as an extensive set of reforms and investments addressing the economic and social challenges faced by Romanian society. To confront the crisis surrounding energy prices, in September 2021 the Romanian Parliament adopted a law providing for measures to protect socially vulnerable energy consumers. An estimated number of 500,000 households are to receive up to RON 500(EUR 100) per month to pay bills during the cold sea­son. One month later, in October the Parliament passed a law (Law no. 259/2021) establishing a compensation scheme for electricity and natural gas consumption for the 2021–2022 winter season. The law capped electricity and gas prices and imposed a windfall tax on producers. Under the law, prices billed to end consumers are to be capped and the difference between the average and maximum price will be compensat­ed from the budget of the Ministry of Energy. The law also provided compensation for small and medium-sized compa­nies, professions such as individual physicians’ surgeries, hos­pitals, schools, kindergartens, etc. ECONOMIC AND SOCIAL SITUATION After contracting 3.9 per cent in 2020, one of the mildest eco­nomic slumps in the EU, Romania’s economy recovered strongly, with GDP surging 7.4 per cent on an annual basis in the third quarter of 2021. Economic growth was fuelled main­ly by private consumption and investment. Private consump­tion, which contracted in 2020, rose in 2021, encouraged by a weakening of COVID-19 restrictions and wage increases. To support economic activity and to mitigate the impact of the COVID-19 pandemic, the government continued with the implementation of several measures initiated in 2020, 1