BR Analysis. Romania’s hidden workforce is large and unemployed, but nobody wants to hire it

Romania still have a large unemployed workforce, hidden in the official statistics under the expression “self-employed in agriculture”, despite claims of a workforce crisis. However, governments have never imagined effective policies to make these people interested in taking real jobs.

The latest National Institute of Statistics (INS) data, consulted by Business Review, show that Romania has 1.6 million working-age adults – or 19 percent of total employed population – considered as “self-employed in agriculture”.

For most of them, this label is just another word for “jobless”, as they usually live in poor rural areas, with very few job options, and have small plots of arable land usually used just to cultivate their own food.

These individuals are part of a large Romanian population disconnected from economic growth, according to experts.

“Romania’s prosperity is not equally shared, as the bottom 40 is largely disconnected from the drivers of growth. Close to half of the people at the bottom 40 percent of the income distribution do not work, and another 28 percent remain engaged in subsistence agriculture,” World Bank experts said in a recent report called “From Uneven Growth to Inclusive Development: Romania’s Path to Shared Prosperity”.

Unemployment in Romania is highly concentrated in poor rural areas – mainly in Moldova and southern Wallachia -, where the labor force is highly unskilled and where there are few opportunities.

But this lack of opportunities is not compensated by labor force mobility.

“Low internal mobility further reinforces Romania’s dual development challenge – less than 2 percent of the population reports having moved in the past five years, implying that structural constraints inhibit internal mobility toward economic opportunities,” World Bank experts point out.

However, a traveler to these poor rural areas in Romania would be surprised to discover that few people are interested in taking jobs, as the few existing opportunities mean 8-hour-per-day jobs paid with minimum national wage (RON 1,160 net or around EUR 250).

In fact, many “self-employed in agriculture” Romanians live in households where there are mixed income sources: pensions, social assistance, black market / day laborer salaries, and benefits in kind.

The total real income sometimes is close to or even higher than the minimum wage – and this means low incentive in taking full-time jobs.

Some “self-employed in agriculture” Romanians are also temporary working abroad, where they earn enough to live a few months in their home country without working or to make some investment in their own households.

With around 3.5 million Romanians working abroad, many persons in poor rural areas are regularly receiving money from their relatives working in rich Western countries, and this translates into lower interest in taking jobs.

Foreign workers welcomed

Despite this large domestic workforce source, employers and government are looking abroad to find workers.

Recently, seaside business owners in Romania said that they are having an increasingly harder time finding seasonal workers to provide the essential services of the tourism industry.

They urged the government to make it easier for them to hire people from other countries.

At their request, Romania’s government has increased in July quotas for non-EU foreign workers in 2018 by 5,200 work permits, on high demand from local companies claiming they are affected by workforce crisis.

The government has decided the supplementation by 5,200 of the contingent by types of newly admitted workers on the Romanian labor market in 2018 for the two major categories of employment, up to 8,000 permanent workers and 2.400 posted workers.

But few foreign workers are currently working in Romania, official data show. During the first seven months of this year, Romania issued work permits for 4,395 non-EU foreign employees who came mainly from Vietnam, Turkey, Nepal, Serbia and Sri Lanka, according to Labor Ministry data sent to Business Review.

Official data show the total number of non-EU foreign employees in Romania was 17,089 in July 2018, an all-time high, but a negligible figure compared with the numbers seen in western European countries.

Turkey and China are by far the two leading countries of origin of migrant workers in Romania, with 3,627 and 2,120 employees, respectively, followed by Moldova (1.787), and Vietnam (1,554).

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