Romania’s labour market further tightens as unemployment drops

Romania’s labour market further tightens as unemployment drops
By bne IntelliNews April 17, 2018

Romania’s registered unemployment rate decreased by 0.77pp to a post-crisis low of 3.94% in February, the labour bureau reported on April 16. Unemployment dropped by 17% y/y to 344,400 out of which only 72,090 people were recipients of unemployment benefits.

Unemployment in Romania (both the rate and the absolute figure) thus fell in December-February to the lowest post-crisis levels, while employment already exceeded the pre-crisis peak (amid, however, very low activity rate levels of around 60%). As of January (the latest data available data), economy-wide employment was 2.2% up y/y to 4.89mn compared to 4.84mn in September 2008 before the 2008-2009 recession. Employment thus recovered robustly from 4.1mn at the end of 2010. The very low activity rate reflects the population working abroad, in the grey economy or in households. 

The tighter labour market has put pressure on wages in the areas with low unemployment, while the government raising the minimum statutory wages sustained the wage rise in high-unemployment areas as well. 

Real average pay in Romania has been growing at double-digit rates for two years but the growth rate eased in early 2018 to 3.5% y/y in January and 6.2% y/y in February. Further rises are not possible at such high rates unless significant investments push up labour productivity as well — or else the macroeconomic balances (the exchange rate primarily) will be subject to rising pressures. The local currency is already undergoing a slow correction process toward weaker levels, and is likely to act as an automatic Balance of Payments (BoP) stabiliser.

By residence, most of the unemployment is in rural areas: 245,918 versus 98,491 in urban areas. The large urban agglomerations particularly in the western parts of Romania are the least exposed to unemployment, which is as low as 1.52% in Bucharest, 1.40% in Arad county, 1.96% in Cluj county and 1.02% in Timis county. The highest registered unemployment is found in the eastern parts of the country (9.4% in Vaslui) but also in the southern counties such as Teleorman (9.7%). 

Unemployment in Galati county, where the ArcelorMittal steel plant due to be sold as part of a regional deal is located, is rather high at 7.6%. The steel mill also creates jobs in related industries and its uncertain future has raised concerns among employees and generally among the country's population.

By age, most of the unemployed population is aged between 40 and 49 years (103,433) followed by the 30-39 age range (68,113). Only 4.64% of the registered unemployed people have higher education.

Data

Dismiss