Romanian BNS trade union plans labor code change

The National Trade Union Block (BNS) launched in October a campaign to modify the labor code in a move to offer more protection for Romanian employees, but business associations warn this could hamper foreign investments.

BNS wants to hike the gross minimum wage to RON 1000 (EUR 220) and to lower the social contributions paid by employers by 4 percent. In the same time, the trade union wants to extend the period of determined contracts form 3 to 5 years and to overhaul the performance assessment of employees. These are some of the measures included in the bill that will be sent to the Parliament. The union started a signature gathering campaign and plans to get 100,000 signatures by April of next year.

The business advocacy groups FIC (Foreign Investors Council) and AmCham are growing concerned with the intentions to amend the labor legislation, which was enforced in April 2011.

“If you don’t know that you can fire easily a person that is not performing, you won’t start to invest somewhere because it means you have all the chances to become bankrupt. Due to the absence, or limited level of foreign investments in Romania, a lot of people are leaving to work abroad, in areas where no legislation protects them, because they work illegally. Wouldn’t it be better if we set up legislation in line with the European one because our interest is to attract investors? We compete with other markets. We can’t compete solely through wages,” said Mihai Bogza, FIC board member, quoted by the public radio RRA.

Daniel Cirstea, partner, head of the employment practice at law firm Dragne & Asociatii, said the labor legislation was changed to create a more flexible relationship between employers and employees, to the benefit of both categories.

“The result of the legislative changes undertaken in 2011 is difficult to evaluate, as the labor market is affected by many factors, but, what can be said in all certainty is that too many changes in a short period of time cannot produce positive effects,” said Cirstea.

He added that BNS wants to see the Labor Code reverted to its pre-2011 form, which is more rigid and offers fewer levers for the employers.

Cirstea said the fiscal and legislative instability is one of the main hindrances that companies face when doing business in Romania.

Labor market needs more flexibility

AmCham notes in a recently published report called Priorities for Romania that it welcomes further clarifications brought to the current labor legislation and further flexibility of works relations. Reverting to former provisions would affect Romania’s competitiveness, it added.

“Stability and predictability would be shaken, fueling investors’ prudence with regards to investing in Romania,” said AmCham.
The business advocacy group has laid out a series of measures that would further increase the competitiveness of the local labor markets. Decreasing the level of bureaucracy and the simplification on the management of employment contracts is one of the propositions.

Another issue is the requirement to conclude addendums to the employment contracts in all cases when the work relations are modified, even by effect of a collective bargaining agreement.

AmCham suggested the level of work on the grey/black market could be lowered by imposing more severe sanctions and by creating a clearer legal frame. Setting the maximum duration of successive employment contracts for a maximum duration of 60 months could make the labor market more flexible.

Clearer and more attractive incentives for hiring certain graduates or unemployed would also contribute to reducing the shady labor market.

Romania should maintain the current provisions on Trade Unions, Collective Labor Agreements and Employer’s Associations, according to the AmCham report.

The unemployment rate in Romania was 7.4 percent in April 2011, when the new labor legislation was enforced. It fell to 7.1 percent one year later, according to Eurostat. Around 699,000 people were unemployed in September, according to the National Statistics Institute (INS).

People can find out more about the BNS initiative at www.sustinecodulmuncii.ro

Ovidiu Posirca

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