PROPOSAL FOR SOLVING THE ISSUE OF TEACHERS" SALARIES Government bonds instead of increased wages

• Teachers could become investors on the stock market

Teachers" salaries were supposed to be increased this year, following the passing of the law 221/2008 and the electoral promises made during the November 2008 campaign. However, numbers for the wage increase don"t add up, - so to speak -, from the new Government"s point of view, as it is lacking funds and it fears opening "Pandora"s box" when it comes to wage demands, by other sectors of the economy.

A solution for the problem of teachers" wages comes from the group of advisors to the Vice-president of the Senate, Mr. Alexandru Pereş. They suggest that teachers receive government bonds, together with their current salaries, instead of cash, as an equivalent of the 33% wage increase. The maturity of the bonds would be greater than one year, which would allow them to be considered securities.

One of the vice-president"s advisors, Mr. Constantin Năforniţă, considers that this technical solution would help develop the domestic capital market and would create the necessary groundwork for the development of a true market on which the Ministry of Finance could trade government bonds, apart from the interbank market. "This competition could lead to lower interest rates for its bonds", claims the adviser we quoted.

Mr. Năforniţă said by issuing bonds on the Stock Exchange would increase the liquidity of state bonds, and would increase the number of investors on the stock market.

Teachers could experience first hand the capital market, as they would receive every month, a fixed number of government bonds which they could then sell on the secondary tier of the Bucharest Stock Exchange, or keep it until maturity.

The advisor to the vice-president of the Senate was kind enough to expand on the ideas of his colleagues on paying part of teachers" salaries in government bonds.

Mr. Năforniţă feels that the only solutions for increasing teachers" wages are bank loans, or the capital market. The latter being the best option, in his opinion, as issuing government bonds, will help the development of the domestic capital market.

He explained that the increase of teachers" wages can be done by issuing Government bonds, with a 1- or 2-year maturity, guaranteed by the State. In other words, the state is making a promise to the teachers that they will receive their salary, at a certain time.

Thus, in case this solution gets approved, upon receiving their salary, each month, teachers will also receive a certificate mentioning the number of government bonds afferent to their salary increase. They can then either wait until the bonds reach maturity to sell them and earn the interest, or trade them at any time on the secondary tier of the Bucharest Stock Exchange.