BR Analysis. Romania’s extremes: 1.7 mln people work in agriculture to produce 4.4 pct of GDP while the 200,000 employed in IT&C add over 5 pct to national income

Sorin Melenciuc 08/10/2018 | 11:39

Romania’s workforce is severely unbalanced as more than 1.7 million people work in agriculture with very low productivity, while other 200,000 contribute more to the gross domestic product (GDP) by working in high value-added IT&C sector.

According to an official report released by the National Institute of Statistics, 1.74 million people, representing 20.8 percent of Romania’s total workforce (8.37 million), worked in agriculture at January 1, 2018.

At the opposite end of the scale, 205,900 Romanians work in information technology and communications (IT&C), a high value-added sector.

The 1.7 million people working in agriculture have produced 4.4 percent of Romania’s GDP last year, while the 205,900 people working in IT&C have contributed to the country’s GDP with 5.1 percent, according to Business Review calculations based on official data.

Hidden workforce

A recent BR Analysis show that 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.

For most of people working in agriculture, 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.

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