The quality of Romania’s labour force
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20 Septembrie 2011 |
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CATALINA MOLNAR - Senior Economist
RBS BANK (ROMANIA) S.A. |
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Bulevardul Barbu Vacarescu, Nr. 301-311
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020276 Bucureşti, Sector 2
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+40-21-319.11.69
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www.rbs.ro
With a population of around twenty million, Romania is the seventh largest country in the EU in population terms and the second largest after Poland of the 12 countries that joined the EU after 2004. Therefore it could be perceived as an important market for consumption and labour force. The population structure on the other hand has to be known to assess this potential and moreover to evaluate the strengths and weaknesses of this labour intensive economy.
Being no significant changes in statistics from one year to another, we will make a snapshot analysis for 2010 of Romania’s labour force (plus a time series analysis whenever necessary). The main data source was the National Institute of Statistics’ publication of “Labour Force in Romania – Employment and Unemployment in 2010” – based on a survey of around 30,000 homes/quarter with all the households (one household implying one or more persons) that were included in the respective home. In addition we used also the Eurostat database, the Ministry of Labour statistics and other data from NIS.
The population data for each year after 2002 has been obtained (by NIS) using the data from 2002 Population and Housing Census, adjusted with the natural life increase and balance of international migration determined by permanent residence changes for population at a national level. But this migration is only the one that can be justified through official papers. For 2010 the official statistics are saying that Romania had a population of 21.4 million. The labour force survey is using also the 2002 Census to extrapolate the survey results at the national level. Between 2002 and 2010 an important migration phenomenon has occurred, but it was not captured by the official statistics, because mostly people were leaving Romania unofficially. Until new census detailed data becomes available (after October 2011 when the census takes place; most probably at the beginning of 2012 the preliminary data would be available) all the data about Romania’s population and labour force should be interpreted with some reserves. While some unofficial estimates talk of between 2.8 and 3 million people that have left Romania to work/live in other countries (especially in EU), the official statistics are significantly lower. Romanians that remain outside the country for more than one year should not be included in total population. An exercise census that was made in May 2011 (by NIS) showed that total population in Romania was in fact 20.1 million people.
Although Romania has a large population, it has one of the highest inactivity to total population ratios in the EU (8th place) and implicitly one of the lowest activity ratios. Total active population in Romania was about 10 million people including 92.7% employed persons and 7.3% unemployed persons (International Labour Office - ILO methodology). One third of unemployed people never had a job before (most of them are recent graduates and are looking for a job). Those who had a job before mostly had the status of employees (87%), the rest being self-employed, contributing family workers or had other status. Moreover, given the previous work place, the unemployed could be structured by economic sectors as follows: 8% from agriculture, 18% from construction, 36% from industry and 38% from services (almost half from commercial trade and auto repair services). The long-term unemployment in Romania is around 35% of total unemployment (according to EU statistics which defines this indicator as unemployment lasting for longer than one year). The importance of this indicator derives from the fact that as long as a person stays unemployed, skills’ losses might occur and he will become harder to (re)integrate. Nevertheless, Romania’s position looks better, the long-term unemployment in EU being 40% in 2010 (and even higher in euro area, 43%). In fact Romania is one of the countries with the lowest unemployment rate in the EU (seventh place, equal with other two countries), with the EU average at 9.7%. One explanation of such low unemployment could be a structural one, with the agricultural sector seen as a buffer against unemployment and poverty. Thirty per cent of workers are active in agriculture (with 97% most in rural areas). On the other hand it could be seen as a significant drawback because many people are engaged in a sector that produces low value-added goods. Moreover it looks inefficient – highly segmented, poorly equipped and characterised by low productivity. In Romania there are around 3.9 million agricultural holdings (99% individual holdings and only 1% legal entities – according to the Agricultural Survey for 2009-2010). In fact 99% of total holdings in Romania are subsistence and semi-subsistence farms – active for self-consumption and possible with a low degree of market participation; Eurostat classifies farms smaller than 1ESU (Economic Size Units=1200 euro) as subsistence and those of less than 8ESU as semi-subsistence. In comparison, the EU average total number of workers active in the agricultural sector is around 5%, while in France – the EU’s largest agricultural producer – only 3% of workers are active in this sector while subsistence and semi-subsistence farms amount to no more than 30% of total holdings.
