Jobless figures look bleak in Romania, but even worse abroad

Newsroom 27/07/2009 | 17:26

Axing jobs may not be the ideal way for a company to maintain its profit level or at least avoid posting a loss, but more and more firms facing financial trouble have started to shed staff in the last couple of months. Although the biggest culls in Romania were not, at least openly, attributed to the financial crisis, all the movements in the economy have been mirrored on the human resources market, fuelling a steep increase in the jobless total.
Out of Romania's 22 million inhabitants and from around 9 million workers, 550,000 were out of work at the end of June, according to data from the Labor Ministry. This makes an unemployment rate of 6 percent, up 2.3 percentage points on the same month of last year. It is not the worst unemployment rate in the last decade, but it came fast after a record low of 3.6 percent mid last year.
Banks active in Romania laid off 1,000 employees between the end of last year and March this year, according to data from the Romanian Central Bank (BNR), although representatives say the figure was more due to workers retiring than to the financial crisis. TCE Logistics also fired 400 people between December last year and May this year. And package producer MJ Mailis has said it will stop production in Romania and let half of its 130 employees go. In the first five months of the year, around 30,000 people were dismissed every month, according to the National Workforce Agency (ANOFM).

Steep decrease after unemployment fluctuations and steady recovery
Over the last eight years, unemployment has been a particular problem in Romania, although things did improve in the last three. The highest unemployment rate recorded during this period was 13.4 percent in February 2002. Back then, month-on-month increases were even exceeding 3 percentage points, in some cases. The unemployment rate began to fall steadily from 2004, when it also stabilized and month-on-month fluctuations started to reduce.
Labor Ministry representatives say the recent steep hike in the jobless total is mainly due to more people – who were either axed in the preceding months or who have extended their unemployment payment period – registering as unemployed. “The unfavorable economic context has led to an increase in the unemployment rate in a month when normally the rate would stay constant or even drop. Unemployment in June hasn't seen an increase on May since 1997,” said Labor Ministry representatives in their monthly report. Furthermore, the ministry's expectations point to a maximum 7 percent unemployment rate at the end of the year.
If the figure reaches 10 percent it would be a worrying sign for the Romanian economy. President Traian Basescu recently specified the number as a maximum threshold. Annual jobless totals above 10 percent were posted in 1994, 1995, 1999, 2000 and 2002, when more than one million Romanians were left out of work.

Romania posts lowest unemployment rate in CEE
As bad as it may look for Romania, it is not the only country in the region in this predicament. In fact, the jobless figures in Romania are among the lowest in Europe. “Central and Eastern European industry has been affected by a drastic reduction in orders following the global financial crisis, eliminating the success of several years of sustained economic growth and leading to a steep increase in unemployment,” said Reuters in a recent report on the region.
After several months during which companies like Dacia and Arcelor Mittal temporarily reduced production, economic confidence has increased in Romania since the country signed a EUR 20 billion agreement with the IMF and EU.
In Bulgaria, the unemployment rate is now 7 percent, and economists expect it to hit two digits by year-end. The Czech Republic's current figure of 8 percent is tipped to reach 9.9 percent next year. Meanwhile, in Hungary, the jobless total was 9.8 percent between March and May and the country's Central Bank predicts 11 percent for next year, according to Reuters.
In Poland, the rate was 10.8 percent in May this year, but in December it could reach 13.5 percent. The picture is even worse in Slovakia, where the jobless total was 11.3 percent in May, while in Slovenia the figure was 8.9 percent.
Across the entire European Union, the unemployment rose to 8.9 percent in May this year, the highest rate since June 2005, according to Eurostat. By comparison, in the US, the figure was 9.4 percent in May this year, and 5.2 percent in Japan.

Most of Bucharest still going to work
The situation in Bucharest makes happier reading, with the lowest levels of unemployment, a mere 1.8 percent, or some 20,000 registered jobless in a city of around 1 million workers, according to 2006 statistics. The place with the highest proportion of people out of work in June was Vaslui county, in north-east Romania, at 12.1 percent, followed by Mehedinti, in the south-west, with 10.6 percent, and Alba county, in western Romania, with 9.9 percent.

By Corina Saceanu
corina.saceanu@business-review.ro

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