The labour market in 2024, between the three main actors – companies, employees and state institutions

What challenges do companies face on the labour market?

Companies are facing the same difficulties this year. First among them is the labour shortage. For manufacturing companies in particular, the need for skilled staff is high, especially in large, industrial cities where cost pressures are high. They manage to meet this need partly by hiring locally, by extending the area up to 100 km around their location, depending on the infrastructure (providing transport service), but also by hiring foreign workers, especially from Asian countries (in 2023, we had a quota of 100,000 foreign workers).

Another scenario, applied since 3-4 years ago, is the opening of “production satellites” in the area of smaller cities, where labour force availability is higher.

If we proceed in the direction of graduate jobs, there are processes that we can manage in big cities, especially in university towns, the trend of migration from small towns to big cities continues.  Implicitly, we see the shift towards the ‘knowledge society’ as R. Inglehart calls it, “characterised by the predominance of jobs in the information and communication technology sector”, jobs that require higher education. In these companies, we have another challenge – the lack of skills in the market at the desired level. But it’s not just a desire, it has become a need. We are in a global service market, competition can come from Poland, Germany, India, and so on and when arguing the price of the service, the quality of the service is an important component. And quality is strongly influenced by people’s skills.

In fact, we should be able to talk not only about the pay packages on the market, but also about productivity, work ethic, the quality of the service/product offered.

Do employees see these issues?

These terms must be something every employee, every employer, is comfortable with. This way, we use terms that are understood by both sides, and manage to define everyone’s expectations. We need a common language in business, managers who understand their teams, employees who understand that we are in a global competition, and their distinguishing element – their skills and the result they deliver with a certain work ethic.

But let’s not forget, there are employees in state institutions, too, those providing services to citizens. And the direction is to move towards digital services – see the implementation of e-invoicing – in the relation with companies and individuals. In addition to the technological infrastructure needed to provide digital services, there are two other important aspects:

1. the degree of acceptance/use of these services by the public, which also depends on people’s digital skills.
2. take-up and continuous improvement of these services by employees of these institutions. They are the ones who can facilitate or hinder this process. That is why their training is important. But not on paper. Real training, in which they acquire the necessary skills, plus the implementation of indicators to show their progress.

The quality of services and products offered is no longer just a matter for companies in their dealings with their customers. Employees, through their work, are an important part of this equation. And employees in state institutions can see themselves as providers of digital services to the public, looking with pride at their work when they see indicators such as usage increasing. I say ‘with pride’ because this is lacking in many public institutions – what we have instead is demotivation, toxic relationships, lack of meritocracy, and so on.

The biggest impediment to all of us getting involved? The way we see ourselves in the mirror, the active role we do or don’t take in society, the desire to grow, the wisdom to have a purpose and a mission in life, no matter how old we are.

How can state institutions influence the labour market?   

First of all, let’s not forget that the need to increase skills is a national one. In a market on the move, with a shift towards digitalisation and automation, we need to see all employees in this picture, regardless of who their employer is.

Romania has currently an adult participation rate in lifelong learning of 5.9 % and aims to reach 12 % by 2027, “by increasing and improving the provision of formal, non-formal and informal learning opportunities”, according to the Romanian Government.

In its adult learning strategy, the Romanian Government points out that “the low level of participation in adult learning has led to persistent gaps in skills, hindering economic growth and making it difficult for Romania to adapt to a rapidly changing labour market in the digital age”. The same source specifies: “the low number of low-skill jobs available in the country is a cause for concern for the career prospects of those already in the labour market or wishing to enter it, further underlining the need for upgrading the working population”. In addition, difficulties encountered in the labour market are “mainly caused by the falling birth rate, the ageing population, labour migration, negative rate of natural increase”.

In other words, what we have is a picture of reality, as assumed by the Romanian Government, and 440 million euros have been allocated for this purpose through the Education and Training Programme, as described by Edupedu.ro  

According to data reported by the National Institute of Statistics, insse.ro,  Romania has:

1. an employment rate of 63 % in 2023, of which 54 % are women, 71.5 % are men. (at EU level the employment rate is 70 %, with 65 % women, 75 % men)
2. an employed population of 7.8 million people, of which 5 million are full-time, 300 000 part-time.
3. 4 million retired people and beneficiaries of social assistance
4. 3 million pupils and students over 15 years old
5. 4 million housewives. Please note: 1.4 million housewives!
6. almost 500 000 unemployed and 160 000 unpaid family workers.

What conclusions can we draw from all this?

1. We need to make working relationships more flexible in order to be able to integrate women or mothers who can allocate 4-6 hours to working part-time. Their work continues through caring for their children or parents, but also through household activities. In this way we would also be able to influence the need for a higher birth rate, so that women do not have the impression that as a mother they have to give up their profession or career.

In the segment of housewives, some of them need retraining to enter the labour market, especially if we are looking at rural areas, where these women are engaged in subsistence farming. We also need employment opportunities in their vicinity, so that demand meets supply, as I mentioned earlier – namely manufacturing satellites or establishments with economic activities specific to the area.

2. Another important point: we should give people the opportunity to work when they want to. We know the need of those who retire, as required by law, but who need to feel active and useful afterwards, and find it difficult to manage the status of retiree, even if it was initially presented as desirable. They will work fewer hours, do different work but which gives them dignity and extra income above the amount of their pension or welfare benefit.
3. There is a great need for qualification and retraining so that the unemployed or unpaid population as shown in these figures can be inserted into the labour market.

According to data requested by Economedia from the National Trade Registry Office (O.N.R.C.), we have the following figures:

1. In small and medium-sized enterprises, there are 3.1 million employees, while in large companies there are around 1 million employees. That is to say, 75 % of all employees are in small and medium-sized companies, many of them entrepreneurial.
2. There are 211 small and medium-sized enterprises and 1,112 large companies. Of the total number of companies, 710,558 have a turnover of less than €1 million, which represents 82 %.
3. There are about 3 million employees in public institutions and local administrations (source: The Romanian Government, Nov 2023)

Once again, I would like to draw some conclusions:

1. Small and medium-sized, entrepreneurial enterprises need support in training and upskilling their employees. Lack of financial resources, lack of long-term vision in the context of short-term performance pressures, high staff turnover in some industries lead many employers to delay engaging employees in upskilling programmes. It is imperative to define national programmes dedicated to this important segment of employees and employers.
2. There is a need for national programmes to be implemented, with a well-defined budget, with intermediate and final indicators, so that we do not end up simply ticking off hours or activities, but can measure the impact of these programmes, with the ultimate goal being the impact on “economic growth and Romania’s adaptation to a rapidly changing labour market in the digital age”, as the Romanian Government itself stated.
3. There is a need to make employees in state institutions and local administrations more dynamic. We need confident people who, when their dignity is trampled on by a politician, can be sure that their skills will allow them to keep or change jobs. The compromise some have made – keeping their heads down, keeping their mouths shut and following orders, keeps them trapped in a toxic environment, with no way out except retirement. And some still have 15-20 years to go. It would help every civil servant, every employee of a state institution to be able to see their own development, to define first of all in their minds how they want to develop their skills, what their unique contribution is. In difficult times, it’s your own skills that are the allies that won’t let you down. And these people know exactly how programmes can be defined so that the outcome is real, not just on paper, the indicator being – the money allocated has been spent, but showing the effectiveness and impact of the programme. But it takes courage and planning, as they are among the direct beneficiaries.

We have a lot of work to do! In a year packed with elections, with a stream of promises and emotion-laden statements – the classic recipe for bringing people to the polls – practical issues like the above will not be addressed. Although they are the ones that have a powerful impact on our lives. On the whole of our lives, not just on the next election cycle.

To sum up: 1. We have a labour force available in the country, but we need to capitalise on it. Attract these people into the labour market, through a more flexible approach to employment relationships, through the necessary training or retraining. 2. We need to upskill all people, whether employed by the state or in the private sector, national or multinational, entrepreneurs, pensioners, housewives, the unemployed, students or schoolchildren, etc. Together we are that unitary element that contributes to the economic growth of the country and therefore of each of us, being competitive in an increasingly competitive world.

Our chance, everyone’s chance, is to know what we want, to put things on the table realistically and to define the necessary measures. We need to know what to ask for, to be clear in describing it and firm in stating it in order to develop solutions. Solutions that we apply for a regionally and globally competitive Romania. In this way, let us greet every politician, when they ask for our vote, no matter which party they belong to, with specific questions about the long-term measures they want to take.

You can find the article published in Economedia here.