The Romanian labour market needs a well-thought approach
Bucharest, 16th of November, 2018
The Foreign Investors Council (FIC) has signaled in the past 2-3 years that its members are anticipating increasing strains on the Romanian labour market because starting with 2015-2016 our members have reported increasing problems in finding adequate workforce. Recent data comes to confirm what our associations was saying back then and FIC welcomes the increased awareness of the public and policy makers and the Government’s and Parliament’s intentions to find solutions.
Now, however, we note with concern that the solutions do not seem to emerge in a coordinated way, and the legislative or public policy interventions on the labour market seem to be the result of partial conclusions drawn by several stakeholders who do not interact with each other. Such an approach, in a labor market that is already tense due to the increasing deficit, may have effects that are contrary to what is expected.
In this respect, we note that there are three directions of action for public policies whose separate but also cumulative effects must be weighed carefully:
- Several initiatives to modify the legislative framework on the relationship between trade unions and employers
- Measures to increase individual incomes - increases of the minimum wage and the entire dynamics of wages in the private and public sector, and also the increase of pensions
- Short-term and medium-term measures designed to alleviate the shortages in the labor market
Bills in the Parliament of Romania amending the Law on Social Dialogue are the result of dissatisfaction expressed by trade unions and their aim is a turning back in time of the relations between unions and employers. In the meantime, Romania's economy has been integrated into the European and global market, becoming more sophisticated, working conditions have improved and wages have risen consistently and steadily. FIC considers that no law with an economic impact should be adopted without consulting the main trade unions and employers, but also the active population, so that social dialogue to become a real tool adapted to present and future needs.
The level of well-being of a country is reflected by the standard of living of the population and it is legitimate for this objective to be the priority of any executive, always having the ambition to reduce the gaps with more developed countries in the EU. In this regard, the FIC has developed a series of suggestions on how Romania can recover these gaps (www.vaurma.ro).
The opinion of FIC members is that the minimum wage level should not be decided administratively but be the result of negotiations between trade unions and employers on the basis of objective criteria agreed in advance and with a foreseeable timetable. Policy makers must be aware that the minimum wage has as a secondary effect the gradual increase of all wages in an economy and this dynamic must be carefully monitored so that it will not only end in inflation. To contribute to this debate, we analyzed the Government’s arguments and sketched together with CPAG (a think-tank focused on economic policy) some consideration which we believe need to be considered. The analysis can be downloaded at the following link.
Finally, both the Government and the Parliament have justifiably taken a series of measures aimed at improving, in the short-term, the deficit on the Romanian labour market. These measures are aimed either at activating certain categories of persons in Romania, at facilitating the access of workers from outside the European Union or attracting part of the diaspora back to the country.
FIC members believe it is very important that all labor market policies are addressed in a unitary system as part of a long-term strategy, not be adopted with unwarranted speed and without serious consultation with all relevant actors.
FIC member companies employing about 200,000 people and having a cumulative turnover of RON 200 billion express their full readiness to engage in a dialogue regarding the future of the Romania labour market.