State-owned companies that are not strategic should be privatised or restructured, as the current model based on political appointments and high staffing costs is no longer sustainable, said Cristina Chiriac, president of the National Confederation for Female Entrepreneurship, on Friday.

'In 2016, I published what I consider the only reference work in Romania, titled 'The Great Privatisation', in which I highlighted extremely sensitive issues, namely that the restructuring of state-owned companies has not been completed - it is far from it - and that we have a single solution: privatisation or the sale of the state's shareholdings in non-strategic companies through a transparent vehicle. I gave the example of the Bucharest Stock Exchange, precisely because we say that trading volumes on the capital market are low. Selling these stakes could not only increase activity on the capital market, but also improve the efficiency of these state-owned companies, which we know are politically captured,' Cristina Chiriac said at a labour market debate organised by the Coalition for Trade and Communication Freedom.

According to her, in many state-owned companies, including in transport and the rail sector, board members are appointed on a temporary basis with renewable mandates in order to bypass corporate governance rules and professional management.

'Although there is a body that should oversee the appointment of board members - for example, the Ministry of Transport - you will see that in almost all companies managed by the state through this ministry, allowing for a margin of 2-5%, the vast majority of board members are appointed for fixed terms with renewable mandates, precisely to avoid going through corporate governance procedures. This is evident, for instance, in railway companies, which are indeed strategic, but where professional management should be paramount. Therefore, the discussions we have seen recently are not new; they are cyclical and have been recurring for some time,' Chiriac added.

In her view, the real issue is not whether state-owned companies should be restructured, but whether the political class has the courage to implement layoffs and reforms, given that more than half of their costs are related to personnel.

'The real question is not whether we restructure, optimise, lay off staff or introduce proper management, but whether the political class - and I repeat, the political class, not just the governing coalition - has the courage to clean up these companies. And 'clean up' means this: over 50% of the costs these companies incur are labour costs. They have very large workforces. When you talk about optimisation, the first measure you must consider is staff restructuring. That means layoffs. It means shifting pressure from one place to another - from a ministry or a company to unemployment. And that also means many people, with various political connections, will start knocking on the doors of those who placed them there,' the CONAF president added.

She argued that state-owned companies should be divided into two main categories: strategic companies to remain under state control, and heavily indebted companies that should be restructured or privatised.

'Companies should be split into two broad categories: those that are strategic, which should remain under state administration - there is already a legal framework for this, including the appointment of a special administrator under Government Ordinance 64, where optimisation is discussed - and the rest, which have massive debts and where restructuring must take place, including the appointment of a judicial administrator to manage and streamline the company. In my view, if the transfer of ownership from state to private hands had been carried out much faster - as in Poland or Germany - Romania would be far more advanced economically today,' Chiriac said.

She added that the privatisation process should be completed, with the state withdrawing from companies used as sources of political appointments and enforcing greater accountability for administrators.

'Through the privatisation process - which has effectively stalled, as since 2007-2009 we have not had any major privatisations - Romania has lost two million jobs in these companies. If we were able to carry out such reforms in the past, we should complete the process now, so that the state can focus on good governance and withdraw from companies that serve as platforms - I repeat, platforms - for political appointments to boards. These are not individuals held accountable under commercial or criminal law. If you look at what commercial law stipulates - that administrators are directly liable when companies accumulate large arrears - I would like to see how many administrators the state has actually held accountable in such cases. And if you find the answer, please let me know, because as far as I know, only liquidators and judicial administrators do this, while the Romanian state has taken almost no action since 2007 to prevent these situations from recurring indefinitely,' Chiriac added. AGERPRES (RO - writing by: Nicoleta Banciulea; EN - writing by: Simona Iacob)