Romanian labor market improves, but pressure mounts on public sector

Official data released by the Ministry of Employment, Family and Social Protection last week reveal that over 735,000 new work contracts have been signed and almost 130,000 lapsed between May 1 and July 28. During this period, the new Labor Code came into force, aiming to cut bureaucracy between employer and employee and introduce better evaluation criteria. Furthermore, the new employment legislation makes it easier for companies to hire new workers on a temporary contract, which can later be extended. Labor unions have voiced concerns about the new Labor Code, denouncing it as the “road to slavery”.

Romania’s current unemployment rate stands at 4.8 percent (436,000 people of working age), while the EU-27 average is 9.3 percent. Sebastian Lazaroiu, minister for employment, said in a press conference in Alba Iulia two weeks ago that Romania’s ten-year objective was to increase the level of economic activity among the working-age population from 63 to 70 percent. He also pronounced the unemployment level reasonable. On the bright side, European structural funds for improving human resources (POSDRU) reached a 19 percent absorption rate, against an average absorption of structural and cohesion funds of a mere 12 percent.

Meanwhile, Spain, whose jobless total is running at 21 percent, has recently imposed restrictions on new migrant workers from Romania in an effort to secure employment for Spanish citizens. This protectionist measure will not affect the 850,000 Romanian migrants who are already established in the peninsula, only new job-seekers. The European Commission will decide whether the temporary restriction is permissible.
Lazaroiu, who has described the measure as unprecedented, will meet with his Spanish counterpart Valeriano Gomez this week to discuss the restrictions adopted by the Spanish government.

Back home, the Romanian government is trying to combat inefficiency in the public sector and has decided to lay off 1,300 employees in three state-owned energy companies as part of the restructuring process agreed with the IMF. The energy firms will have private managers from 2012 and an international search will get under way this fall. Further cuts are expected in the Ministry of Administration and Interior, where approximately 10,000 employees are likely to lose their jobs.

Ovidiu Posirca