Radiography of the Romanian state: inefficient institutions, loss-making state-owned companies and a blocked system

The public system in our country has reached a critical point where the size of the state apparatus, operating costs, territorial discrepancies and the systemic inability to correlate data can no longer be ignored, according to an analysis published on Friday on the Government website.

According to the cited source, we have a public apparatus made up of over 13,900 institutions and 1,421 active state-owned companies, supported by an administrative mechanism that consumes huge amounts of money annually and which, in many areas, operates without a clear picture of its own human resources, real efficiency and even the exact number of employees.

From that analysis, we note that the Romanian state does not have a single and integrated base that can accurately tell how many people work in the public sector. The Ministry of Finance, the Ministry of Labor, ANFP, REVISAL and the other administrative structures operate with different methodologies, different databases and different definitions. In a modern system, this situation would be considered a major anomaly. In Romania, it has become institutional normality.

According to data centralized by the Ministry of Finance, there are 1,511,900 approved positions in public institutions, of which 1,287,381 are occupied. However, the number of paid positions is 1,255,381, which shows important differences between organizational charts, occupied positions and effectively paid personnel. In parallel, the Ministry of Finance reported 1,182,190 contractual relationships in public institutions and 1,102,010 unique employees, after eliminating duplicates.

• 200,000 state employees have two or more employment contracts in the public system

The reality becomes even more complicated when the REVISAL data is analyzed. The Labor Inspectorate identified 1,182,670 individual labor contracts in public institutions and only 948,848 employees with individual labor contracts. The difference is explained by the existence of a huge number of people with multiple contracts. Almost 200,000 people in the public system have two or more labor contracts, and over 38,000 of them have at least two full-time contracts.

This reality raises huge questions about how work is organized in the public sector, about the overlapping of duties, about efficiency and about the state's ability to control how public money is spent.

Moreover, the Romanian public system operates through four major categories of contractual relationships that are not integrated into a single record: individual labor contracts, civil servants, special officials and mandate contracts. In the case of mandate contracts, the authorities admit that there is no clear centralized record, according to the cited analysis.

In parallel with this lack of administrative control, Romania spends huge amounts on the functioning of the public apparatus. In 2024, personnel expenses reached 164.6 billion lei, representing 9.3% of GDP, in a context in which the budget deficit rose to 8.65% of GDP. Basically, our country has reached the EU average level regarding personnel expenses reported to GDP, standing at 10.1%, above states such as Germany or Switzerland, shows the cited source, which specifies that the fundamental difference is that we have an incomparably lower level of economic development and quality of public services.

Therefore, the Government notes that the Romanian state spends a lot, but the results are deeply unequal, and this contradiction is best seen in the territory, where public administration operates in a dramatic demographic context: accelerated depopulation, aging, migration and local economic collapse. The consequences are huge, claim the authors of the government analysis, which shows that there are localities that receive money for people who no longer live there and localities that support infrastructure and services for residents who are not officially listed.

The cited document claims that the phenomenon is especially visible around Bucharest and the big cities. Thousands of people have effectively moved to Ilfov or peri-urban areas, but have kept their residence in the capital. Thus, the pressure on local infrastructure is increasing without proportional funding.

At the same time, almost all counties in Romania are recording negative natural growth. Exceptions are rare and limited to areas such as Ilfov or Suceava. In many regions, the population is aging rapidly, and rural localities are entering a slow process of economic and social disappearance. This reality is doubled by a deeply unequal distribution of economic development. The areas in the west of the country, Transylvania and Bucharest-Ilfov concentrate income, investments and administrative capacity. In contrast, large parts of Moldova, Oltenia and southern Wallachia remain dependent on subsidies and transfers from the state budget.

• 80% of the operating budgets of most communes depend on the state budget

The analysis carried out by the Government mentions that there are communes in Romania that collect over 5,000 lei per inhabitant from property taxes and other communes that barely reach 70 lei per inhabitant. The city of Cernavodă exceeds 6,400 lei per capita from property taxes, while localities such as Bărbuleşti or Slobozia Bradului remain at symbolic levels. This difference is not only related to the wealth of the community, but also to the administrative capacity, the way in which tax databases are updated, the level of collection and the local political will.

The level of collection of local taxes represents one of the clearest radiographs of the efficiency of local administration. Some communes reach collection rates of almost 100%, while others fall below 10%. For example, the Grajduri commune in Iaşi has a collection rate of only 2%, and Slobozia Bradului, 4%.

Therefore, in many areas of the country, local administrations practically operate in a survival logic, dependent on budget balancing and transfers from the center. This dependence is also visible in the structure of local revenues. In many communes, over 80% of operating budgets come from broken down amounts, subsidies and transfers from the state. Locally generated revenues are minimal.

In contrast, cities such as Cluj-Napoca, Oradea or Alba Iulia generate most of their revenues from their own sources, which gives them autonomy, predictability and investment capacity. We are basically dealing with two Romanias: one metropolitan and competitive, economically integrated in Europe, and one structurally dependent on the redistribution of resources from the center.

This fracture is also visible in the basic infrastructure, claim the authors of the government analysis. In 2025, there were many localities without sewage, running water or real selective waste collection.

Moldova, southern Muntenia and Oltenia concentrate the most ATUs with a low degree of connection to the sewage system. In many cases, these localities have neither the administrative capacity nor the necessary resources to support large infrastructure projects.

In parallel, large urban centers and peri-urban areas attract the majority of European investments and projects. European funds and national investment programs have sometimes accentuated regional polarization instead of reducing it. Counties such as Tulcea, Bistriţa-Năsăud, Bihor or Sălaj have attracted and implemented massive European and government funds, while other counties have consistently lagged behind.

The cited source states that in many cases the problem is not the lack of money, but administrative incapacity. There are localities that have not contracted any European project in the current financial year and localities that have not issued any building permits in an entire year. These areas enter a vicious circle: without investment there is no development, without development there is no income, without income there is no administrative capacity.

• 43 loss-making state-owned companies have total personnel expenses of 5.4 billion lei

In this context, state-owned companies represent another major core of structural vulnerabilities. Romania has 1,421 active state-owned companies, but only 1,107 have reported complete financial data for 2024, according to the cited source. The rest operate in an administrative gray area, some with no income, no clear activity or even without updated financial reporting.

Of the 1,107 companies analyzed, 904 are self-financing and 203 are subsidized. The major problem is that subsidized companies concentrate almost half of the total personnel expenses.

43 subsidized and loss-making companies alone consume 5.4 billion lei on personnel expenses. These represent 17% of the total salary expenses of the entire sector of state-owned companies. Among the biggest losers are CFR, CFR Marfă, Metrorex, Electrocentrale Craiova or Termoenergetica Bucureşti.

In the mirror, there are also performing state-owned companies, which generate billions of lei without subsidies. Hidroelectrica, Romgaz, Transgaz, Transelectrica or Aeroporturi Bucureşti demonstrate that the state can profitably manage certain strategic sectors. The problem is that these examples coexist with a multitude of underperforming companies, artificially maintained by constant injections of public money.

Worse, the official analysis identifies companies that have expenses, but do not report income or subsidies. This raises direct questions about the real activity of these entities, about financial control and about their economic usefulness.

In parallel, the local administrative apparatus often operates below the maximum limit provided for by law. Romania has approximately 182,000 maximum positions provided for in local administration, but only approximately 129,000 are effectively occupied. This means that almost 53,000 positions are either not created or vacant.

The official conclusion is brutal: any staff reduction below 30% would have marginal effects, because it would mainly eliminate vacant or unfilled positions. Behind this reality, however, there is a deeper problem. Romania has very small localities, with small populations and fragile economic bases, which still have to support complete administrative structures. They are common with a few hundred inhabitants that operate with their own administrative apparatuses, with town halls, local councils and minimal public services, while the active population disappears. This administrative model is becoming increasingly difficult to financially support.

The radiography of the Romanian administration thus shows a state that operates simultaneously at two speeds and in two different eras. There are high-performing, digitalized, economically integrated areas and capable of attracting major investments. There are local administrations that efficiently collect taxes, implement European projects and generate development. But there are also entire areas that survive almost exclusively through budgetary redistribution, with poor infrastructure, dependence on social assistance, understaffed administrations and reduced development capacity.

At the heart of all these problems lies the same fundamental vulnerability: the lack of real administrative reform.