3. Improving labour market conditions for stronger and inclusive growth

Caroline Klein

OECD

Pierre Lesuisse

OECD

Abstract

A large share of Romania’s population is detached from the formal labour market and does not have the skills needed to adapt to the fast changing environment. This results in large income and regional inequalities, with some groups – low educated, women, youth, and Roma – remaining at risk of poverty and social exclusion, especially in rural areas. The COVID-19 crisis has aggravated barriers to the labour market integration of vulnerable individuals. At the same time, skill mismatch on the labour market undermines Romania’s capacity to grow and to adapt to technological progress. Improving matching to support the recovery and making it more inclusive requires a vast range of measures. First, barriers to participation should be addressed, especially for disadvantaged groups, through more effective active labour market policies. Second, youth unemployment should be tackled by addressing the high level of early school leaving and strengthening employers’ involvement in training. Finally, offering reskilling options to Romanian workers is urgently needed and requires developing adult education. Doing so will involve increasing financial incentives for workers to train and improving guidance services, especially for the low skilled and in small firms.

After being hit hard by the global financial crisis, Romania’s convergence process has resumed, with above OECD average economic performance. The COVID-19 crisis put a halt to this impressive performance. The recovery from the initial shock has been rapid, but crucially hinges on the containment of the pandemic (Chapter 1). Labour market conditions have been resilient so far, sustaining living standards. After increasing by 7 percentage points between 2009 and 2019, the employment rate stabilised close to the OECD average in 2020 (Figure 3.1, Panel A), meeting the 70% national target for the 20-64 age cohort. Unemployment reached a record low level in 2019 and increased only moderately during the pandemic. The convergence of wages accelerated, with average net earnings rising five times faster than in the EU over the past 5 years, partly reflecting a higher qualification level of workers and a higher sophistication of jobs. One fifth of jobs remains in the agriculture sector, where subsistence farming still prevails, but the share keeps declining at a fast pace.

Figure 3.1. Labour market performance is uneven

However, human capital challenges are holding back Romania’s convergence process. Before the pandemic, labour shortages have intensified on the back of high emigration. Tensions on the labour market will likely return as the recovery gains speed, especially in strategic sectors, such as ICT or construction, where investment needs are large. At the same time, a large share of the Romanian population, especially among youth and women, occupies low-productivity jobs or is not working. High inactivity rates, informality and in-work poverty generate substantial income and well-being inequalities. The COVID-19 pandemic has exacerbated barriers for individuals with low employability to integrate into the labour market. Regional disparities and the rural/urban gap are large and have increased over the past few years (Figure 3.1, Panel B). In addition, like for OECD countries, Romania’s capacity to adjust to global megatrends, especially to harness the potential of digital transformation and to address demographic challenges will depend on its capacity to mobilise its labour resources and to endow Romanian workers with appropriate skills to adapt to a fast changing environment. In response to these challenges, the government recently issued the new national Employment Strategy for 2021-2027 that includes four main objectives: (i) sustainable integration in the labour market of the labour force; (ii) increasing the economic potential of young people: (iii) modernising and strengthening labour market institutions and (iv) strengthening the adults vocational training system.

Against this background, this chapter discusses potential structural policies to improve labour market conditions in Romania for stronger and more inclusive growth. It first presents current and future challenges of the Romanian labour market. It then discusses policies to stimulate participation in the formal labour market and to tackle high youth unemployment. Finally, it investigates avenues to improve the adaptive capacity of the Romanian population to technological change.

Mismatch in the labour market undermines inclusive growth

The labour force has declined due to emigration and ageing

Romania is ageing and depopulating at a much faster pace than many OECD Central Eastern European (CEE) countries. Reaching 19.4 million in 2019, its population has been persistently decreasing since 1991, losing 3.8 million people, and is projected to decline further to around 15 million by 2070 (Figure 3.2, Panel A). While being amongst the highest in Eastern Europe, the fertility rate, at 1.8 children per women in 2018, remains below the replacement level. Around half of the Romanian population is in working age, above the OECD average, but the old-age dependency ratio – measured as the ratio of dependents above age 64 to the working age population – is projected to increase fast and to exceed 53% in 2050.

Figure 3.2. The working age population has declined on the back of high emigration

Emigration played an important role in past population loses and, despite robust economic performance, has intensified before the pandemic. The Romanian diaspora is the fifth largest group of emigrants living in OECD countries. Around 3.5 million Romanians went abroad between 2007 and 2015 and 17% of people born in Romania were living in the OECD in 2015 (OECD, 2019a). While emigration has decelerated significantly in 2019, 1.05 % of the population left the country, around twice as much as in OECD CEE countries. Emigrants are relatively young and skilled, one fourth of them having a tertiary education level (against 15% for the resident population).

The main reasons for leaving Romania are the better job prospects and higher remuneration in the destination countries (OECD, 2019a). Other pull factors include better working conditions, public services and quality of public governance (European Commission, 2019). In 2020, a large number of Romanians living abroad returned due to the restrictions imposed in their host countries. Future migration flows remain uncertain and will hinge on the relative economic prospects in Romania compared to destination countries. Romania has a unique opportunity to retain former emigrants and reintegrate them in the labour force. Policy measures that contribute to improving job quality, rule of law, and effectiveness of public services, especially education and health, could help (Chapter 1).

Immigration had increased fast prior to the pandemic, but without compensating the acceleration of emigration (Figure 3.2, Panel B). Between 2013 and 2019, foreign-born population increased from around 183 000 to 612 000 people, but it still accounts for only 3.7% of the total population, below the OECD average (13%). Immigration flows reached 1% of the population in 2019, higher than the CEE OECD average. Labour immigration from non-EU countries has accelerated. Work permits accounted for more than 50% of long-term residence permits delivered to third country nationals in 2019 (around 14 000 permits, from 4700 in 2018, OECD, 2020a).

A large share of the population is detached from the formal labour market

Participation in the labour market is low

A large share of the working age population is inactive or engages in low productivity jobs, especially in rural areas, where formal job opportunities are scarce. Despite having increased, including in 2020, the labour market participation rate remains relatively low by OECD standards, especially for women, young, old age and Roma people (Figure 3.3). More than half of the inactive population in working age is above 50 or low educated. The gender participation gap is among the highest compared with OECD countries: only 59% of women work or look for a job, 19 percentage points less than men. It is particularly pronounced in the Roma population, as the women participation rate is 3.5 times weaker than for men. Labour market participation of Roma in Romania is below levels seen in other CEE countries (FRA, 2016). The gender participation gap is also significant for older people. While the participation rate of older men is close to the national average (62%), it reached only 37% for women aged between 55 and 64 in 2019.

Informal employment remains widespread

Informal employment is widespread, estimated at between 14.5% and 30% of total employment depending on the methodology used (ILO, 2018a; Williams et al., 2017). The share of undeclared work is much higher than for the average OECD country or most of the OECD CEE countries. Two main groups can be identified among those in informal employment: those for whom informal employment constitutes a survival strategy (e.g. subsistence farming and family workers), and those who evade taxes and social security contributions (i.e. non-registered firms, employees without labour contracts or receiving envelope payments) (Parlevliet and Xenogiani, 2008). In Romania, like for inactivity, informality is prevalent in rural areas, with around 70% of the estimated informal employment in the agriculture sector (ILO, 2018a). Undeclared work is also prevalent in home services (housekeeping, child or elderly care) and in the construction sector. However, the increasing number of registered employees in the construction sector suggests the informality rate in this sector has entered a downward path since 2019.

Informality is often associated with low paid jobs, the absence of training and career perspectives. It contributes to poor health outcomes and old-age poverty, as informal workers do not have access to social security insurance and to the pension system. Informal workers are also likely to be more affected by the COVID-19 pandemic, as they were not covered by support measures directed to workers.

Figure 3.3. Labour market participation is low

Informal jobs in the agriculture sector still account for a large share of employment

A large proportion of workers in the agriculture sector, that accounts for 20% of total employment in 2018, almost three times more than in OECD CEE countries, own a small farm and live from subsistence farming. The average farm size in Romania is more than ten times smaller than in peer countries, undermining economies of scale and investment in productivity-enhancing technologies. For instance, in 2013, more than 95% of utilised agricultural area did not have access to irrigation and was fully dependent on rain-fed production (World Bank, 2018a). Employment in the agriculture sector, especially subsistence farming, is decreasing relatively fast and will continue to do so in the coming years. Poor working conditions and high level of in-work poverty have entailed emigration from rural to urban areas, but internal labour mobility remains among the lowest in the European Union. Addressing barriers for rural population to access better jobs, including by facilitating access to training, would reduce poverty significantly (Chapter 1) and free up labour resources in more productive sectors.

Youth integration in the labour market is difficult

Despite being on a declining trend since 2015, the share of youth (aged from 15 to 24 years) neither in employment nor in education and training (NEET) stands at around 15% since 2019, well above the average rate in the OECD CEE countries (9%). Women and Roma are over-represented among NEETs: around 18% of young women and 63% of young Roma are detached from the labour market and the education system (FRA - European Union Agency for Fundamental Rights, 2016). Besides, the youth unemployment rate has declined relatively slowly since the global financial crisis, reaching 17% in 2019, four times higher than the national average. Furthermore, a third of young jobseekers are looking for a job for more than one year, a much larger share than in OECD and OECD CEE countries (15% and 21% respectively). Contrasting with many OECD countries, youth unemployment has increased less than total unemployment during the pandemic. The youth unemployment rate increased by 0.5 percentage point to 17.3% between 2019 and 2020. At the same time, while labour market participation increased in Romania over that period, it has remained relatively stable for young people.

The lack of qualification is an important barrier to youth employment. A large number of students leave the education system without attaining upper secondary education, which is recognised as the minimum level of attainment needed in a knowledge economy (Kitchen et al., 2017). Early school leaving rate has declined over the past decade, but remains the fifth highest in the OECD (Figure 3.4). Pupils from families with low socio-economic status, living in rural areas, and/or Roma are more exposed to the risk of leaving school without qualification. In particular, less than one third of Roma pupils attained upper secondary education in 2016. The pandemic had a limited impact on the share of early school leavers in 2020. Nevertheless, by accentuating poverty issues in disadvantaged households and disrupting learning, especially during school closures, the COVID-19 crisis risks aggravating school dropouts in the medium run (OECD, 2020b).

Figure 3.4. A large number of youth leave the education system without a qualification

Skills shortages pose risks to the recovery

Before the COVID-19 crisis, despite the relatively high level of untapped resources, labour shortages intensified, hampering business growth and investment (Figure 3.5). Shortages were particularly large in labour intensive sectors, including construction, health, education, and Information and Communication Technology (ICT) (World Bank, 2020, CDR, 2019). The pandemic temporarily eased tensions on the labour market with the decline of activity. In some sectors, labour demand has remained strong though (e.g. construction, IT), reflecting the asymmetric impact of the pandemic across the economy. Overall the COVID-19 crisis induced a moderate decline in employment, partly explained by job retention measures (see Chapter 1), the increase in public investment, and the relatively low share of jobs at risk from containment measures (e.g. accommodation and food services, and wholesale and retail trade, (OECD, 2020c).

The impact of the COVID-19 crisis on the composition of the labour market remains uncertain, but some pre-existing trends will likely persist. Recruitment of ICT specialists is projected to intensify as the recovery gains momentum, the vibrant ICT sector continues to develop and digitalisation of the economy progresses. Business representatives estimate total shortages could reach 1.1 million workers by 2021 in a no policy change scenario (CDR, 2018).

Labour shortages in the construction sector have undermined highly needed infrastructure and residential investments over the past five years. They are expected to increase in the coming years, as EU-funded infrastructure projects will require additional recruitments (European Commission, 2018a). Rehabilitation and expansion of transport, health and education infrastructure as well as public utility networks are of paramount importance for Romania’s economic development and will be stimulated by the implementation of the Recovery and Resilience Plan (see Chapter 1 and 2). Fiscal facilities and a specific minimum wage have been introduced in January 2019 to address shortages by improving the attractiveness of the construction sector for workers. Formal employment and remunerations have increased since then in the sector, but a thorough evaluation of the measures would be needed to assess their impact and their cost-effectiveness.

Figure 3.5. Labour shortages have undermined business growth

The labour shortages have multiple causes, including high emigration of skilled workers. Mismatch between the labour market needs and available skills plays an important role. While the share of over- or underqualified workers is relatively low by international standards, skills acquired at school do not fit labour market needs (ARACIS, 2016; World Bank, 2017). A relatively high proportion of workers do not work in the field they studied and do not have the right skills to fit the current needs of businesses (Figure 3.6). Around 40% of employers identify an inadequately educated workforce as a major constraint for doing business (World Bank, 2020a). Employers point to the low employability of students and to the lack of key socioemotional skills, including motivation, problem solving, teamwork, and communication (World Bank, 2018a). In tertiary education, according to the Eurostudent survey, only 37% of students assess that the study programme prepares them well for employment, while half do so in OECD CEE countries (DZHW, 2018).

Figure 3.6. Some indicators point to a high level of skills mismatch

Digitalisation can exacerbate labour market tensions

The skills needed to adapt to a digital world are missing

The COVID-19 crisis has accelerated the digitalisation of the economy and accentuated the need for workers to adapt to a fast changing environment. The ability of countries to provide workers with competences to use new technologies will determine to what extent they can reap the benefits of the digital transformation. Furthermore, upgrading skills - especially technical and managerial skills - supports the diffusion of digital technologies and their positive impact on productivity (Sorbe et al., 2019). Digital skills will be increasingly important, but generic and cognitive skills are also key, as working in a digitalised environment requires cognitive, interpersonal, managerial and organisational skills (OECD, 2019c; OECD, 2016a; Grundke et al., 2018).

A relatively large share of the Romanian population lacks basic skills. Romania’s scores in the PISA survey have stagnated and remain below the OECD average (Figure 3.7, Panel A). The share of low performers in reading, mathematics, and science is quite high (OECD, 2019d). In 2018, more than 40% of the students did not achieve baseline proficiency in reading, almost twice the OECD average (Figure 3.7, Panel B). The “Educated Romania” project, which sets the objectives of reforms in the education system, aims at reducing the share of low performers to 20%, below the OECD average.

Figure 3.7. Educational outcomes remain below OECD standards

While the IT infrastructure is of good quality on average (see Chapter 2), Romania lags behind its OECD peers in terms of exposure to digital technologies. High-tech hubs (Bucharest, Cluj-Napoca, and Timisoara) coexist with areas with low IT penetration. A large number of Romanians do not have basic digital skills nor use digital tools (Figure 3.8), in particular in rural areas and among the old age and the poorest people. Access to ICT training is limited. For instance, in 2019, only 6% of firms provided training to their personnel to develop or upgrade their ICT skills (vs. 23% in the EU and 19% in OECD CEE countries according to Eurostat data). This share did not increase in 2020, despite the development of teleworking and the increasing demand for online services due to the physical distancing measures.

Regional inequality in skills provision is large and some regions are stuck in a low skills trap. Both the supply of and demand for skills is relatively low in some regions, which can create a vicious cycle or low investments in skills and poor quality jobs (OECD, 2018b). Workers will have low incentives to upgrade their skills, knowing they will not be able to find jobs in the local economy that use them, and employers may be reluctant to move to more skill-intensive production and services, knowing that they are unlikely to find the workers with the skills needed to fill these positions. This calls for adapting policy actions to the local context and take into account regional specificities.

Digitalisation will affect a large number of jobs

While it can help to tackle shortages in labour intensive industries and create quality and productive jobs, digitalisation might exacerbate already high inequalities in the labour market (OECD, 2019e). Technologies can replace workers for routine tasks, mostly performed by low and medium-skilled workers who are already more exposed to unemployment risks. Nedelkoska and Quintini (2018) estimate that 14% of jobs in OECD countries are highly automatable, and that another 32% may undergo significant changes due to automation. Overall, the risk of automation declines with the level of skills and education, except for some low-skilled professions (e.g. for personal care). Digitalisation can also exacerbate regional inequalities as some regions concentrate high-tech firms, high paid jobs and high-skilled population.

Figure 3.8. A large share of the population lacks digital skills

The share of jobs at risk of automation is higher in OECD Eastern European countries than in the OECD on average (Nedelkoska and Quintini, 2018). Romania has a relative high share of routine jobs in the manufacturing, ICT and agriculture sectors (World Bank, 2020b). According to McKinsey (2018), 54% of workplace activities could be automated by 2030 in Romania. PwC (2019) estimates that around 600 000 jobs will be affected by the digital transformation, with 325 000 jobs creations and 275 000 workers needing reskilling.

Fostering participation in the formal labour market

Raising participation in the formal labour market is key to increase living standards together with reducing gender and ethnic inequalities. Employment is the main route out of poverty and mobilising untapped labour resources can raise Romania’s growth potential. According to recent OECD estimates, increasing the average participation rate to the OECD average and closing half of the gender gap would boost GDP per capita respectively by around 8% and 6% after 10 years. Doing so requires tackling multiple barriers to participation, while increasing the employability of inactive people. Improving active labour market policies can help, since too few inactive people are within the reach of public employment services (PES). Specific barriers to female and Roma employment needs to be addressed. Finally, more needs to be done to improve working conditions and eliminate undeclared work.

Improving the effectiveness of active labour market policies

Active labour market policies are key to mobilise the workforce detached from the labour market and to address the multiple barriers jobless people face to (re-)enter employment. They can also play a central role in the relocation of displaced workers from sectors affected by the pandemic to those with better prospects. However, business representatives in Romania consider labour market policies could do better to help jobseekers reskill or find a new job (WEF, 2019). Before the pandemic, spending on active labour market policies (ALMPs) has been very low and a large share of jobseekers was not participating in activation measures (Figure 3.9 and Figure 3.10). In 2018, only one in eight long-term unemployed was registered with PES (European Commission, 2019). In 2020, spending on active labour market policies increased by 11%, less than the total number of registered unemployed.

Figure 3.9. Spending on active labour market policies has been low

Figure 3.10. Participation in active labour market policies needs strengthening

The understanding of job opportunities and ALMPs is limited among jobless people (CDR, 2018), contributing to low participation in activation programmes. This calls for developing reach-out mechanisms to engage with those detached from the labour market in job search or training. This requires increasing financial and technical resources allocated to PES from very low level (Figure 3.11), while reducing bureaucracy that has been identified as another important barrier to participation (CDR, 2018). The workload of PES staff has increased with a growing number of jobseekers and of vacant positions in the National Agency for Employment (ANOFM) due to recruitment difficulties. The number of employees in ANOFM has declined by 8% since 2016, while it was already low by international standards (European Commission, 2018b) and is unequally distributed across countries (Figure 3.11).

Measures to develop profiling tools and target PES support on the more vulnerable jobseekers that would generate large efficiency gains have been delayed. Profiling tools are in place, but PES do not provide personalised services based on the specific profile of job seekers nor on labour market analyses. Developing IT tools to support the establishment of a client-oriented PES and reduce red tape is thus priority, as it can free up resources and thus support caseworkers in coping with increasing number of clients (OECD, 2020d). An integrated information and management system to improve the links between job training, job placement and labour market information and online local jobs portals are considered as good practices and should be developed. Automation of procedures, such as registering jobseekers and processing unemployment insurance benefits, via exchange of data across administrations, like in Estonia, could contribute to saving scarce staff resources.

Strengthening cooperation between public administrations could help enhance the reach of ALMPs. Programmes to integrate employment services with social, education, and health services, in 139 marginalised communities, have started in 2019 (POCU project) and should serve as pilots for an implementation at the national level. Expanding the coverage of social assistance benefits from current low level can also increase participation in ALMPs, as the allocation of benefits is conditioned to registering with PES. Implementing the Social Inclusion Income (VMI) reform, voted in 2016, that aims at streamlining the social assistance system and increasing its coverage and adequacy, is thus priority (see Chapter 1).

Figure 3.11. Public employment services have been underfunded

The efficiency of active labour market policies could improve as well. Employment incentives accounted for 85% of spending on ALMPs before the pandemic, by far exceeding levels seen in CEE OECD countries (32%). While international studies find them to be among the most effective tools to improve the employability of jobseekers, they also suffer from a high deadweight cost, i.e. many employers receive subsidies to recruit someone they would have hired anyway and can have substitution and displacement effects (Cahuc, Carcillo and Zylberberg, 2014). The risk of large deadweight losses is high in Romania since subsidies are poorly targeted and cover a large number of jobseekers, including graduates of educational institutions and unemployed over the age of 45. In addition, they are relatively generous, reaching RON 2250 per month (close to the minimum wage of RON 2300) during 12 months. To improve cost efficiency of the measure and reduce the deadweight loss, employment subsidies should target jobseekers with the lowest employability, especially low-productivity workers and long-term unemployed.

Up-skilling and re-skilling measures can improve jobseekers’ employability, but little emphasis has been put on training, information and guidance services in Romania (Vasilescu, 2018). Only 14% of spending on ALMPs measures was dedicated to training before the pandemic, well below the EU average. Consideration should be given to develop courses turned toward strong practical component. In addition, more should be done to analyse the effectiveness of vocational training measures directed to jobseekers. An evaluation framework for labour market programmes is still missing. Government plans to improve data collection through a centralised IT system should be accelerated and systematic impact assessments should be carried out to focus funding on those interventions that are cost-efficient and limit deadweight. The planned implementation of the “ReCONECT" programme that aims at establishing an integrated mechanism for anticipating labour market needs, as well as monitoring and evaluating public policies, including activation measures and professional training, is a step in the right direction.

Providing specific support to the Roma population

Specific policies should be dedicated to the disadvantaged Roma communities, which face multiple barriers to employment (Toderita et al., 2018). Labour market participation of Roma is much weaker than in other OECD CEE countries, especially for women, pointing to the need to strengthen targeted measures. Fostering participation in the labour market would be the best remedies against poverty and social exclusion in these communities. Improving the employability of the Roma population, which is much younger than the non-Roma one, would also contribute to rejuvenating the work-age population, tackling labour shortages, and enlarging the tax base.

Outreach, including hiring of mentors for Roma jobseekers or mediators, should be reinforced as Roma tend to be less well informed about employment opportunities and their rights to benefits (FRA, 2016). In this respect, the above-mentioned project of establishing integrated community services is a step in the right direction. Living in marginalised conditions and poverty affects Roma’s employment opportunities in multiple ways, including educational outcomes and the process of school-to-work transition (FRA, 2018). Therefore, addressing poverty as a multidimensional phenomenon is priority and requires combining active labour market policies with social policy instruments, as well as combating stereotypes (see Chapter 1). Authorities should collaborate more with non-governmental associations with a good track record of effective support for Roma and can also outsource some of the services to non-state providers to target the hard-to-place job-seekers from disadvantaged groups (Tergeist and Grubb, 2006; Bednarik et al., 2019).

Supporting social economy enterprises is another avenue to improve the integration of Roma in the labour market (European Commission, 2014a; OECD, 2021a). Those enterprises can be an alternative to public works schemes that do not provide relevant skills and can even lower the probability of finding employment after the programmes have ended (Card et al., 2015). Lock-in effects that prevent enrolees from job search or training activities can lead to a long-term exclusion from the primary labour market. However, in Romania, public policies targeting social enterprises are limited in scope and do not effectively support their development (European Commission, 2019b; OECD/European Union, 2018). Support measures, including free legal or management counselling, reserved contracts in public procurement, are poorly implemented not least due to weak administrative capacity. Other barriers include highly bureaucratic certification procedures and limited access to finance. To address these issues, some inspiration could be taken from experiences in OECD countries (Box 3.1). For instance, in Hungary, resources centres support Roma people in setting up cooperatives with training and consultation sessions. In any case, systematic performance monitoring and impact evaluation should be implemented to determine if these programmes are as efficient and effective as intended. The inclusion of measures to support social enterprises in the national Recovery and Resilience Plan is welcome, but their effective implementation will require a careful monitoring.

Box 3.1. Promoting social enterprises

Policy makers have a crucial role to play to support the development of social enterprises. Creating and managing a social enterprise can prove difficult not least due to the specific skills it requires and greater difficulties to access funding. A compendium of good practices (OECD/EYU, 2017) for policy makers to draw inspiration from the design and implementation of different policy initiatives in the EU identified key avenues for reform:

Build appropriate legal framework to clearly define the nature, mission and activities of social enterprises and promote it.
Create support structures to raise visibility, especially among investors, and to play an intermediary role among all relevant stakeholders.
Engage and consult with the relevant stakeholders for instance by establishing strategic partnerships to facilitate participation in value chains and access to skills and networks.
Facilitate access to business development services and specialised support structures (hubs, accelerators, incubators) to build social entrepreneurial skills (e.g. training on how to navigate public procurement procedures, developing business plans, accessing financing sources).
Support risk-sharing mechanisms for finance providers (e.g. guarantee schemes).
Foster social entrepreneurship skills in the education system, with specific educational programmes and partnerships with research institutions.
Ensure continuity of support in time and across different government levels (central and local).

Source: OECD/EU (2017), OECD/EU (2013) Policy Brief on Social Entrepreneurship – Entrepreneurial Activities in Europe.

Removing barriers to participation of women

Raising the participation of women in the formal labour market could significantly increase Romania’s labour supply. Halving the gender gap in participation would increase the labour force by around 6.5%. The labour market participation of women was 19 percentage points lower than for men before the pandemic, one of the largest gap when compared with OECD countries (see Figure 3.3). The gap had increased over the last decade and continued doing so in 2020, possibly because women disproportionally bore childcare responsibilities during school closures and are overrepresented in the sectors most affected by the COVID-19 crisis. Differences in participation are much more pronounced in rural areas, where participation of women reached only 67%, reflecting the relative high share of women working in the informal economy. It is also large in Roma communities, where 13% of Roma women are employed, a third less than Roma men (FRA, 2016).

Financial gains of taking up a job for single parents and second earners are relatively low when compared to the OECD average (Figure 3.12). The effective tax rate on entering employment has increased over the past two years. The withdrawal of benefits for households with children is particularly costly when non-working partners move into work (Kalyva et al., 2018). A labour market insertion incentive given to parental leave recipients, to help them re-enter the labour force, has increased in 2021, but its impact needs to be carefully assessed.

Figure 3.12. The effective tax rate on entering employment is high for lone parents and second earners

Care responsibilities can negatively affect participation in the labour market (OECD, 2017a). In Romania, women are disproportionately the principal caregivers for children, elderly or disabled relatives, with women spending twice as much of their time on unpaid care work than men, a level close to the average of high-income countries (ILO, 2018b). Around 34% of women declare caring responsibilities, while only 2% men do so. While the impact of motherhood on the employment gender gap is relatively low compared with CEE peers, it is much more pronounced for low-educated women. Women also bore most of the epidemic-related childcare burden triggered by school closures (UN, 2020). The paid leave for parents introduced in 2020 to mitigate the impact of the COVID-19 crisis on families with children has likely helped to maintain female employment during the lockdown though.

Expanding childcare and early childhood education facilities is important to improving the labour market participation of young mothers. Participation in early childhood education is much lower in Romania than on average in the OECD (Figure 3.13). At the same time, early education is considered as an increasingly important part of the education system, as it has positive effects on future learning outcomes, especially for children with a disadvantaged background. The “Educated Romania” project includes notably objectives of increasing participation in preschool education of children up to 3 years old to 30% and the establishment of national curriculum at all levels of early education. Incentives for enrolling children aged between 3 and 5 in early education have been reinforced. Since 2020, low-income families can receive RON 100 per month (around EUR 20) for each child enrolled at the kindergarten.

However, more needs to be done to support participation of children below 3. Shortages of childcare facilities, especially in rural areas, still need to be addressed. More than 90% of the nursery places are located in urban areas (OECD, 2020f). In Bucharest, there were only around 4000 places in crèches for a population of 50 000 children aged below 3 in 2018 (World Bank, 2019). Informal employment in the childcare sector is widespread, but is mainly used by high-income families (Polese & al., 2018). The national Recovery and Resilience Plans foresees the establishment of 110 new nurseries and 412 of complementary services, servicing up to 4 500 children from 0 to 6 years-old and 20 000 children from disadvantaged backgrounds respectively, as well as the creation of a framework programme for the continuous training of professionals in early childhood education (European Commission, 2021).

Developing healthcare for elderly people, rehabilitation, palliative or home-care services would also help labour market participation of women. While Romania is ageing fast and demand for long-term care is increasing, the coverage of long-term care provision remains low, reaching less than 1% of the old-age population. Despite a strong increase in the number of public homes for the elderly since the early 2000s, less than 0.5% of people over 65 lived in a residential care in 2016 (Vladescu et al., 2016). In 2017, there were 11 beds in residential long-term care facilities per 1000 population aged 65 years old and over, four times less than in the average OECD country. The financial decentralisation of social services led to uneven development, a lack of transparency and unpredictable financing (Spasova et al., 2018, WHO, 2020).

Figure 3.13. Early childhood education enrolment remains low

Non-residential services are also underdeveloped and there is an insufficient number of workers in the field (OECD, 2020e). In 2018, the government employed 7000 people, as personal assistants for older people, equivalent to less than 0.2% of the total population older than 65 years (WHO, 2020). A national strategy to support caregivers and develop care services is needed, starting by establishing stable financing mechanisms. The national Recovery and Resilience Plan includes the provision of vouchers that should contribute to the formalisation of 60 000 workers in the home care sector. While this is a step in the right direction, this measure will mainly benefit wealthy households that can afford hiring domestic workers. Investment in a network of 71 day-service centres and in mobile teams of care providers is planned. Improving access to quality long-term care will require a more ambitious reform of the system, including the development of integrated services and quality monitoring, as well as the provision of stable financing.

The length of paid leave available to mothers exceeds the OECD average (108.7 weeks vs. 53.9 weeks in the OECD). The parental leave can reach 24 months and is paid 85% of the monthly salary with a cap (Popescu, 2021). While high-wage earners tend to return earlier that the maximum period allowed, financial gains to do so are limited for medium or low-wage earners. Financial incentives to return to work before the end of the parental leave have increased though. The insertion incentive is RON 1500 (around EUR 300) if parents return to work before the child is 6 months old and RON 650 (around EUR 130) per month otherwise. It is provided until the child is two years old (or three years in the case of children with a disability). The decline in uptake of this benefit during the crisis suggests the pandemic discouraged the labour market participation of parents on leave (Popescu, 2021). In addition, paid leave reserved to fathers is relatively short (5.3 vs. 8.1 weeks in the OECD). Increasing the “daddy quota” – the minimum share of available parental leave reserved to fathers on a ‘use it or lose it’ basis - to the average OECD level would accelerate the return of mothers to the labour market and have a positive impact on children and parents well-being (OECD, 2017b). In 2022, Romania will implement the EU Directive that extends the minimum period of parental leave that cannot be transferred from one parent to the other and sets the minimum duration of paternity leave to 10 days.

Tackling undeclared work

Designing policies and institutions to address the problem of widespread labour informality is a mandatory condition to improve job quality and free-up resources for productive and formal employment. Undeclared work that materialises through the absence of a work contract, hidden self-employment, and wage envelopes, highjacks resources and is associated with poor working conditions and career prospects as well as the absence of training (OECD, 2018c; Parlevliet and Xenogiani, 2008). Informal workers tend to be more exposed to health risks, as firms in the informal sector invest relatively less in workplace safety and operate outside of the purview of government regulation (Forastieri, 1999). Safety at the workplace needs to improve in Romania. At 5.3 per 1000 employees, the incidence of fatal accidents at the workplace was the second highest in the EU in 2018. The incidence of non-fatal accidents is extremely low in international comparison, suggesting underreporting issues. The COVID-19 pandemic strengthened the need to ensure health and safety at workplace with adequate preventive measures. In the longer term, it will be important to adapt the work environment to an ageing workforce.

The persistence of informal employment in Romania is due to a large number of interlinked factors (Parlevliet and Xenogiani, 2008). First, poverty, which is among the main reasons pushing people into informality, is still high in Romania, especially in rural areas where job opportunities are scarce and subsistence farming remains the only option. Emigration is an additional determinant, as temporary migrants return to Romania for short periods of time and tend to engage in informal work. Bureaucracy increases the cost of formalisation. Finally, a number of societal factors such as the culture of non-compliance and the lack of trust in public institutions, especially in their capacity to manage public resources and deliver quality public services, play an important role. Improving the quality of public services provided, in particular social security, and communicating effectively on the benefits of formal work are necessary actions to tackle voluntary informal work.

Substantial efforts have been made to tackle informality, notably by revising the labour market regulation, reforming the tax system, and carrying out national awareness campaigns. The impact of these measures is unclear as evaluations are missing. Simplified procedures for business and workers’ registration have reduced the cost of formalisation. The decline in the tax wedge over the past decade likely helped to encourage formal employment. At the same time, the relatively high level of labour income taxation can encourage false self-employment.

Efforts to detect and punish undeclared work should continue. Strong labour law enforcement is a necessary condition to eliminate undeclared work. The Romanian Labour Inspectorate is well staffed by OECD norms, which is appropriate given the size of informality. It provides online and onsite advice publishes an information letter, issues verbal warning to promote compliance with the law. This can improve the protection of workers without excessively burdening enterprises. Sanctions imposed by the Labour Inspectorate amount to 20 000 lei, amounting to 30% of the annual average gross wage in 2019. Because it is one of the most important factor determining effective deterrence (Weil, 2008), the level of fines should be set to a level that is proportionate to the seriousness of the violation and effectively discourages law infringement. For instance, it should be higher in case of recidivism, revised on a regular basis, and indexed at least on inflation. To facilitate the formalisation of work, the transition to formality could be encouraged by reducing the fines if the employer employs the worker on a formal contract, the fine being reduced with the length of the contract offered like done for instance in Greece (Williams, 2021).

Joint control action of the labour inspectorate and the fiscal administration are possible under a collaboration protocol. Nevertheless, coordination between law enforcement agencies could be improved. For instance, the labour inspectorate cannot intervene in all suspected cases of false self-employment and has no obligation nor protocol to alert the tax administration (Heyes and Hastings, 2017). A risk assessment system based on more information sharing, including by merging the data on contractual agreements (REVIVAL), company registry and taxes should be developed. Expanding joint actions should also be envisaged. In Lithuania, for instance, after a first screening exercise based on employees tax declarations, interviews or inspections of firms suspected of undeclared work were planned and shared between law enforcement agencies (OECD, 2018d).

Social dialogue should also play a key role in ensuring effective labour law enforcement and a safer work environment (OECD, 2019j). In particular, trade unions can support workers in their complaints against non-compliance and provide information on job hazards. In Romania, the trade union density is relatively large (around 23% in 2019), but on a fast declining trend. Social partners have limited power as they play only a consultative role in forming the economic and social policies and are not involved in most collective negotiations. In 2015, more than 90% of the collective agreements did not involve trade unions (Eurofound, 2019).

Like in many OECD countries, collective bargaining has weakened significantly in Romania over the past decade following a social dialogue reform in 2011 (Chivu et al., 2013). The number of employees covered by collective agreements has declined sharply, from 98% in 2011 to around 45% in 2019. This is partly due to relatively strict representativeness criteria and high fragmentation of employers’ organisations and trade unions. This is worrisome as collective bargaining plays important roles, not least in ensuring improvement of working conditions and access to training (OECD, 2019j, OECD, 2018c, Keogh, 2009;).

A legislative project aiming at strengthening the social dialogue by revising representativeness criteria for trade unions and the role of employees in the collective bargaining process has been debated in Parliament, but no agreement has been found due to strong opposition from the employers’ confederation. It is important to resume the negotiations. Another option to strengthen the social dialogue would be to establish work councils that can initiate a collective labour dispute and have bargaining prerogatives in firms that do not have trade union representatives. The national Recovery and Resilience Plan and the Operational Programme “Education and Employment” 2021-2027 include support interventions directed at social partners to strengthen their capacity to cooperate and engage in social dialogue, but given the diversification of the forms of work and the fragmentation of the labour market restoring social dialogue will be challenging.

Bringing youth in

Labour market outcomes of young people have improved before the pandemic, though not as much as those of the rest of the population. The unemployment rate of those aged 15 to 24 fell from 24% in 2011 to 17% in 2019, above the OECD average of 12% though. The progress before the pandemic clearly reflects the favourable economic conditions and high emigration flows, while the positive impact of labour market policies is less evident. The gap between youth and total unemployment rates has widened dramatically over the past few years, with the youth unemployment rate reaching four times the national average in 2019. The school-to-job transition is difficult for low-skilled youth. A high number of young Romanian leaves the school system without acquiring competencies to adapt the labour market and its fast changing needs. Rapid growth of labour costs disconnected from economic fundamentals before the crisis might also have priced out unexperienced low skilled workers from the labour market.

Youth unemployment has increased moderately since the start of the COVID-19 crisis (from 16.8% in 2019 to 17.3% in 2020). Nevertheless, the pandemic risks leaving long-lasting scars on careers of youth people, not least by complicating access to education and training. Policies can contribute to mitigating these adverse effects, as illustrated by the experience of OECD countries (OECD, 2021c). An ambitious and comprehensive policy package is needed so that no young person is left behind (OECD, 2021d).

Preventing and addressing school dropout

Reducing high dropout rates in upper secondary education and providing a minimum education level to every citizen is a precondition to improve current and future labour market performance. Individuals with low basic skills are more likely to be persistently detached from the labour market and not to have access to training in their adult lives. The National Strategy to Reduce Early School Leaving (2015-2020) aimed at reducing the share of school leavers to 11.3% by 2020 from 19% in 2015. Reaching the target is challenging as early school leavers’ face multiple difficulties, including poverty and social exclusion, which have been aggravated by the COVID-19 crisis. In 2020, 15.6% of young people were early leavers from education. The national Recovery and Resilience Plan rightly identifies the reduction of school dropout as a key priority.

During the pandemic, school closures have disproportionally affected disadvantaged pupils who did not have access to remote learning. The World Bank estimates that illiteracy could increase by 10 percentage points in the aftermath of the crisis (World Bank, 2020b). Policies to provide remote learning and support teachers and pupils included the provision of ICT equipment, guidelines to teachers, TV broadcasts and online learning platforms. To compensate for learning losses due to the disruptions of face-to-face learning, a programme “School after school” was in place for around 6 months in 2021 in primary and secondary schools. The objective is to offer face-to-face remedial courses to 168 000 vulnerable children. Remedial instruction is crucial to help those children who have missed school to get back on track and reduce long-term learning losses. Evaluations to assess the learning gaps on a regular basis, like done in France for instance, would be a first necessary step. Targeted measures to address gaps identified in these evaluations should then be implemented. Programmes should be prolonged according to the needs and coordinate with other on-going initiatives to tackle school dropout.

The government strategy to reduce early school leaving encompasses a large range of measures, such as the development of early warning mechanisms to identify at-risk students, community mediation to reach out to families in risk groups, and remedial school with individualised intervention plans. Envisaged measures also include mentoring of teachers and school principals and the provision of training and learning tools to address educational special needs, both at the national and schools levels. Social programmes currently offer cash and in-kind benefits for disadvantaged students, including means-tested scholarships, hot meals, subsidies to acquire IT equipment and reimbursement of transportation costs. Other projects are targeted at vulnerable groups or disadvantaged schools, such as “the Romanian Upper Secondary Project” to improve passing rates in the baccalaureate of underperforming high schools and “Inclusive schools: Making a difference for Roma children” (INSCHOOL) launched in 2019. The on-going mapping of disadvantaged schools will contribute to improving the allocation of resources in the school network.

However, government initiatives have been limited in scope and scale so far. Second chance programmes have been extended but their distribution is uneven and below demand (OECD, 2020g). To address implementation issues, guidelines were provided to schools, but the impact remains to be seen. Students at-risk of failing are concentrated in disadvantaged schools in rural areas, which have inadequate resources and do not attract experienced teachers (see Chapter 1). The capitation formula that determines around 92% of school funding does not to take into account the socio-economic vulnerabilities of schools (World Bank, 2018b, Chapter 1). Since 2021, the formula allocates more resources to schools located in rural areas. A revision of school funding mechanisms is envisaged under the “Educated Romania” project, aiming at reducing large inequalities.

Romania could also define Priority Educational Intervention Areas as done in Portugal and France and allocate extra human resources or funding on a long-term and predictable basis. Other options include hiring youth coaches that advise and accompany young people at risk of dropping out from school or being marginalised like done in Austria, Norway or Uruguay (OECD, 2018e). Establishing a national network of youth mediators like done in Bulgaria should also be envisaged.

Romania also participates in the Youth Guarantee programme launched in 2013 by the European Commission and reinforced in 2020, a political commitment undertaken by all EU Member States to give all young people under 30 a good quality offer of employment, continued education, an apprenticeship or a traineeship within four months of either leaving formal education or becoming unemployed. This programme had only limited impact, as it reached only 14% of the NEETs and was not adapted to their needs (Toderita et al., 2019). Lack of consultation with main stakeholders and weak coordination at the local level were identified as the main obstacles to effective implementation. Reinforcing the cooperation between various actors involved in youth policies, including public employment services and educational authorities, like done in many OECD countries, including Australia, Latvia, Portugal and Norway, would be welcome (OECD, 2021e, OECD, 2016b). For instance, regional “partnership brokers” in Australia contributed to strengthening local connections between schools, businesses, community groups and families (OECD, 2016c, Box 3.2). In addition, as discussed above, improving the integration of vulnerable groups in the labour market will require improving the capacity of public employment services in reaching those detached from the labour market and targeting spending on active labour market policies to more effective programmes.

Box 3.2. The Australian “Partnership Brokers” programme

Youth policies are often poorly co-ordinated due to the fragmentation of responsibilities across a range of ministries and implementation located at different government levels (local, regional and national). Effective institutional structures can greatly contribute to institutionalising cooperation across the various actors. The School Business Community Partnership Broker (“Partnership Brokers”) programme operated between 2010 and 2014 in 107 Australian regions is an innovative concept for improving the coordination of local policies for at-risk youth. It aimed at facilitating and strengthening local connections between schools, businesses, community groups and families, to promote educational attainment, social participation and successful school-to-work transitions among youth. Main tasks of the partnership brokers were to help disadvantaged young people access and navigate local support systems, to improve the collaboration of various actors involved in delivering youth support services, and to identify and help bridge gaps in service delivery. In practice, they organised locally regular interactions and informal exchanges of information between the various stakeholders. While the cost-effectiveness of the programme is impossible to assess in the absence of a formal evaluation, the initiative is deemed to have made a considerable contribution to linking up the key actors (supporting around 4 000 local partnerships).

Source: OECD (2016b) and OECD (2016c).

Specific measures are needed to address school dropout in the Roma communities. Educational attainment of the Roma population improved drastically: around 60% of the young Roma completed a lower secondary education level, twice as much as the older generation (World Bank, 2018a). However, the large gap with non-Roma persists (Figure 3.14). Roma’s early school leaving rate is five time the national average and has increased with the closure of schools during the pandemic. Training and incentivising teachers to improve the quality of education in schools with a high percentage of Roma pupils and scaling up school mediation can help to reduce school dropout (World Bank, 2014). Engaging and communicating with parents on the benefits of school attendance, in particular for girls, is also crucial and give rather good results (FRA, 2016). Participation in early childhood education should also be fostered, not least because it has a positive impact on education performance over life (OECD, 2012). According to Ministry of Education estimates, less than a third of Roma children between 3 and 5 are enrolled in pre-primary education. Support measures, such as the hiring of school mediators, the establishment of kindergartens in some communities, and EU-funded grants in a few disadvantaged schools, are steps in the right direction, but should gain scope and scale.

Figure 3.14. A large number of Roma children are not engaged in education

Improving the relevance of vocational education and training

One main cause of high dropout rates is the low quality and the low relevance of vocational education and training (VET) (OECD, 2020g). Competences acquired in vocational schools needs to better adapt to fast changing labour market needs. Outdated teaching methods lead to insufficient technical and job-related skills (World Bank, 2018a). Business leaders have a relative negative opinion about the adequacy of the skillset of VET graduates (WEF, 2019) and VET is still seen as a low status type of education by students and the public. At the upper secondary level, students graduating from vocational schools have higher employment rates than those coming from the general education, but the gain is much lower than on average in the EU. Like in OECD countries, VET has been hit hard by the COVID-19 crisis, as distance-learning tools are less suited for practice-oriented courses and the crisis-triggered reductions in work-based learning opportunities for students (OECD, 2021b). Measures have been taken to continue VET remotely, in partnership with companies, including the provision of methodological guides to support remedial activities (European Commission, 2020a).

The integration of key competences in the learning outcomes of VET schools, including digital skills, was finalised in 2016. The VET strategy 2016-20 also included a set of measures to modernise VET under the coordination of the National Centre for Technical and Vocational Education and Training Development, most of which started in 2019. Strengthening digitalisation in the VET system and continuous professional developments of VET teachers are seen as key interventions in the Recovery and Resilience Plan as well as of the EU-funded “Education and Employment” Operational Programme. Investing in teachers training will be key to ensure the curriculum transformation is effective and needs to be reinforced (OECD, 2020h; OECD, 2021f). Teachers’ participation in lifelong learning is among the lowest compared with OECD countries and continuing professional development is not connected to teachers’ needs and evaluation (European Commission, 2018c; Kitchen et al., 2017).

To improve matching between employers’ requirements and the educational offer in VET schools, consultative partnership-based structures have been established at the sector, regional and county levels to regularly identify labour market needs. Employers are involved in the definition of training standards every five years through sectoral committees and sit in VET school administration boards. A part of curricula are defined at the local level to adapt training to local labour market needs, developed by each VET school after consulting economic operators. Involvement of employers in committees has been uneven though and could be rather low in some sectors. The partnership networks were reorganised in 2019 and grouped by VET domains, improving participation.

Interaction with employers has not led to the rationalisation and streamlining of vocational programmes, including the decommissioning of outdated programmes (World Bank, 2019). Ensuring that the school network is responsive to the labour market needs requires improving capacity for school network planning, not least through the collection and the use of high-quality data (OECD, 2018f). It is thus welcome that feedback from VET students on the quality of VET courses has been collected since 2020 and will be used to review VET programmes. In addition, there is large room to improve skill anticipation. An effective assessment of skills needs at the national and sectoral levels is still missing and the forecasting of skills remains unused (European Commission, 2019). A forecasting system analysing changes in skills requirements and labour market developments, like the Estonian OSKA system, can provide relevant inputs for the design of curricula and the financing of educational institutions (OECD, 2019h). The abovementioned “ReCONECT” project is a step in the right direction.

Employers’ involvement in VET provision, through the recruitment of entrepreneurs as teachers and the development of in-job training for both teachers and students can improve labour market relevance of VET programmes (OECD, 2021f). Learning in the workplace allows trainees to develop hard skills on modern equipment and soft skills, including communication, teamwork, and negotiation. It facilitates recruitment for employers by allowing employers testing trainees’ competences. The share of pupils in upper secondary VET who participate in workplace training sessions is relatively low, reaching 35.8% in 2019. Until very recently, the Romanian VET system has been biased towards school based learning, as work-based training was removed from programmes in 2009. Compared to the 2011/2012 school year, the number of students enrolled in professional schools where work-based-learning is part of the VET programme increased seven-fold. Of the 85,000 students pursuing this study field in 2019, 15% were enrolled in dual education. The number of new entrants to dual VET was almost three times higher than in 2017/2018, revealing strong interest among students and companies in this training path (European Commission, 2020a).

Administrative procedures and financial cost related to logistical difficulties undermine the development of in-work training, especially in SMEs (European Commission, 2018c). Small firms may not have the capacity to train all the skills students need to acquire (Kuczera, 2017). Encouraging firms to offer training jointly, as done in many OECD countries including Germany and Austria would facilitate their participation in workplace-based learning. A body that coordinates the placement of students, evaluates the needs and the pedagogical capacity of firms, helps with administrative procedures, planning and implementing training on the job should be established. Inspiration could be taken, for instance, from Koreas’ Human Resources Development Service (HRD Korea) that connects apprenticeship programmes with SMEs seeking skilled workers and offer a wide range of services to firms including long-term low interest loans to establish training facilities or equipment (World Bank, 2018c). A mechanism to coordinate work-based learning in initial VET is envisaged under the “Education and Employment” Operational Programme for the 2021-2027 period, notably to support the placement of students in firms. This institution could operate on the basis of a public-private partnership.

The COVID-19 crisis risks undermining the development of the dual VET system, as employers tend to offer fewer work-based learning opportunities during recessions, mostly due to the need to reduce costs (OECD, 2021b). Options to support the continuity of VET provision in this context include bringing more practical component in the classroom and the use of digital technologies (simulators, augmented or virtual reality). The latter will be supported by EU funds and enlarged for qualifications in all main economic sectors.

Promoting digital skills in initial education

More emphasis should be put on digital skills in initial education to ensure all students have a minimum digital background. School curriculum and teaching practices increasingly include digital aspects with the introduction of ICT and programming classes in secondary schools in 2017 (European Commission, 2017 and 2018c). The share of teachers who frequently use ICT in class has significantly increased between 2013 and 2018 (from 23% to 56%, above the OECD average of 52%). While they have accelerated since 2020 following school closures, efforts need to continue to improve ICT infrastructure and equipment in school as well as teacher training. Half of principals reported shortage or inadequacy of digital technology for instruction in 2018, double the OECD average before the pandemic (OECD, 2019g). Despite recent investments, the need for equipment and training for ICT use in teaching remains large. Investment planned in the Recovery and Resilience Plan (i.e. the modernisation of around 6 000 IT laboratories) will help.

High-quality training to teachers on how to integrate digital elements in the pedagogical practices is crucial to make the most of available technologies. The use of ICT for teaching has been included in teachers’ initial education, but a relatively large share of teacher declare they highly need additional training (OECD, 2019g). Moreover, while the perceived need for training has increased, participation in professional development in ICT skills for teaching has declined before the COVID-19 crisis (OECD, 2019g). In 2020, a range of measures has been implemented to ensure the continuity of learning following school closures and the transition to remote learning. The “Relevant Curriculum, open education to all” programme aimed at developing competences of teachers in primary and secondary education for the use of ICT tools and online learning platforms (training, webinars, events). 48 regional e-learning experts have been trained to support teachers and open digital resources have been provided via online portals and TV programs. To develop such measures further, Romania could take some inspiration from Chile and Israel, where distance-learning tools are offered to teachers providing information and concrete examples on the potential use of ICT in learning processes, with – in the case of Chile – a special component for rural schools (Box 3.3).

Box 3.3. Integrating ICT into teaching practices: selected policy initiatives

Chile

A range of policy initiatives promotes the digital transformation of teaching practices in Chile. The educational programme “Enlaces” equips schools with ICT technology and provides teachers instructional materials and strategies to incorporate new pedagogical tools into their classes. To develop ICT skills of teachers and to build attitudes conducive to the use of ICT in classrooms, the programme includes in-person training opportunities and distance learning tools, so that teachers can concretely experience the potential of the use of ICT in learning processes. “Enlaces” contains a special component for rural schools (Enlaces Rural) with specific measures including the provision of offline digital resources to schools with limited internet access (Integrando la Ruralidad). “Rural micro-centres” (microcentros rurales) also provide teachers in rural areas with a space to share best practices, especially on pedagogical innovations needed to improve student learning and to receive technical assistance. In 2018, The Education Ministry's Innovation Centre launched a Digital Language Plan, a public-private partnership initiative, for training teachers to use tools that promote computational thinking and programming in the classroom.

Israel

The national programme, Adapting the Educational System for the 21st Century, initiated curricular changes to reflect a close link between competency-based learning goals, innovative pedagogies and the use of ICT in classrooms. Teachers receive training and tools (e.g. classroom-mapping sheet) to plan their use of ICT in the classroom, as well as financial incentives to train (a wage premium). A nationally run website, Educational Cloud, offer extensive digital content for both educators and students. It allows teachers to create and upload digital content and collaborate with other teachers on teaching in their classrooms. Furthermore, the guidelines for establishing an ICT Competent School provide schools with concrete directions on how to use the resource material effectively and collaboratively.

Source: OECD (2019g), OECD (2018f), and Santiago, P., et al. (2017), OECD Reviews of School Resources: Chile 2017, OECD Reviews of School Resources, Paris, https://doi.org/10.1787/9789264285637-en

Keeping labour costs under control

The employment opportunities of youth, particularly the less skilled, might be adversely affected by too high minimum wage levels. Theoretically, a statutory minimum wage set at too high level compared to the median wage could become a barrier to employment for low productivity workers by driving a wedge between productivity and labour costs (OECD, 2018b). High minimum wages can also discourage formal employment, by increasing labour costs, in particular in countries with a high proportion of low-wage earners, a high level of informality and relatively modest law enforcement (Davidescu & Schneider, 2017; Muravyev & Oschepkov, 2016; Mora & Mujo, 2017). The quantitative and qualitative effects of minimum wages on youth employment are empirically ambiguous, though, and depend among other things on the country regulatory environment (OECD, 2015; OECD, 2018b).

The national minimum wage in Romania almost tripled since 2008, the fastest increase by large in European countries, significantly outpacing average wage growth. Nevertheless, the minimum wage remains below the levels seen in all OECD CEE countries, reaching RON 2300 (around EUR 470) in 2021. The wage distribution is relatively compressed, with around 20% of people with a full-time contract earning the minimum wage in 2018 (European Commission, 2020b). Given the relatively low level of labour costs, firms’ high profitability, and increasing tensions in the labour market, negative effects on low-paid employment are found to be minimal so far (Vasile et al., 2017; Pantea, 2020; Heemskerk et al, 2018). Nevertheless, there is limited evidence of the impact of most recent increases of the minimum wage, especially on youth employment. The shift of social security contributions paid by employers to employees in 2018 has likely partly compensated the impact of the minimum wage increases on labour costs.

Raising the minimum wage further could hinder job creation for youth in the formal sector as it has almost reached 60% of the median wage (Figure 3.15). It can also have more adverse effects in regions with an above average unemployment rate and lower wage levels. To avoid excluding some workers from the labour market, the government should refrain from further raising the minimum wage without evaluating its impact on low-productivity workers both at the national and regional level. Limiting increases in labour costs will also be crucial to sustain the recovery of employment and support firms facing a lower level of activity due to the COVID-19 crisis. In 2020 and 2021, the minimum wage rightly increased in line with inflation and productivity growth. Over the medium term, increases of the minimum wage should not be faster than the average wage growth since the ratio of the minimum wage to the median wage is already comparatively high.

Until 2020, the government used to set the minimum wage without objective criteria and a foreseeable timetable. In 2020 2021 and 2022, impact analyses have been performed to guide the government’s decisions. The government should revise the minimum wage level on a regular basis based on a pre-defined methodology taking into account the labour market conditions and social partners’ views. Without a transparent framework and a specific schedule, political considerations and public pressure risk driving minimum wage adjustment (OECD, 2015). The government should ensure that the minimum wage remains attractive to Romanian youth, but also that the minimum wage is set in a way that does not create a disincentive for employers to hire them formally.

The introduction of an objective mechanism for establishing the minimum wage is among the objectives set out in the government programme and is included in the national Recovery and Resilience Plan. The mechanism, planned for 2023, is foreseen to be in line with the upcoming EU Directive establishing a common framework for setting minimum wages in EU member states. Establishing an independent commission of experts as done in Australia, France and the UK would help setting the right level of the minimum wage and would make the decision more transparent and predictable. At the same time, an indexation formula could be used as a benchmark to keep the minimum wage growth in real terms in line with productivity gains. Deviations from the formula would have to be justified in a transparent manner.

Figure 3.15. The minimum wage has converged to the median wage

A separate minimum wage for construction workers was introduced in January 2019 to address labour shortages and reduce undeclared wages. At RON 3000 per month (around EUR 610), it was almost 30% higher than the national minimum wage in 2021. The impact on wage under-declaration is uncertain, but employers risk declaring fewer hours and pay the same salary following this strong hike (Raei et al., 2016). Another minimum wage is also applied to jobs requiring tertiary education, but at a much lower level (RON 2350) and will not be applicable starting from 2022. The necessity and effectiveness of having different minimum wages should be carefully assessed. Particular attention should be given to developments in the construction sector.

Strengthening workers’ adaptive capacity to technological changes

Keeping pace with rapid technological changes, especially in catching-up countries like Romania, requires offering reskilling options to all citizens. Doing so would also sustain productivity gains and related increases in workers remuneration. This can contribute to addressing mismatch on the labour market and improving the employability of older workers.

In Romania, the adult education system is nascent. A large share of the population lacks basic skills that are needed to access adult education and to use digital technologies. Besides, technological change increases the risk of displacement for low- as well as medium-skilled workers, in particular those with a considerable share of repetitive tasks that can be automatized and substituted with new technologies (Nedelkoska and Quintini, 2018). To ensure that all Romanians benefit from opportunities created by technological progress, the authorities should ensure that those who might lose their jobs are supported by an effective and adequate social safety net, conducive to upskilling.

Developing adult education

Around a quarter of Romanian adults have below upper secondary education and may not be well equipped to adapt to a fast changing environment. Furthermore, participation in adult education is low by international standards, although estimates diverge on recent progress made in this area. Since 2015, only 7% of the working age population declared participating in adult education over the last four weeks, well below the OECD average (Figure 3.16). Participation is even lower for the 55-64 age cohort, which is unfortunate given the low employment rate of older workers. At the same time, 21% of employees participated in continuing training courses in enterprise in 2016 and this share has increased over the past decade. Like in most OECD countries, high skilled workers are more likely to participate in training than low-skilled (Figure 3.16) and have much longer training.

Inequality in access to learning opportunities needs to be addressed. Workers in occupations at high risk of automation who could benefit the most from reskilling are less likely to participate in training and have lower training duration (OECD, 2019c). Policies should thus target workers whose occupation risks changing significantly to increase their mobility, as they might require substantive training effort. Training needs are large: the OECD identified 10 out of 127 occupations for which substantive training is required, accounting for between 2 and 6% of the workers in OECD countries (OECD, 2019c). Reskilling options should also be offered to workers in sectors affected by the COVID-19 crisis, for instance by targeting those covered by the short time work scheme.

Policies should also offer remedial programs to provide basic skills needed to participate in vocational training to low-educated workers (OECD, 2019i). Such a program is in place in Romania. The “Second Chance” program, targeted at adults who have not completed primary and lower secondary education, offers the opportunity to complete compulsory education while pursuing family and professional activities and enrols around 16 000 students per year.

Figure 3.16. Participation in adult learning remains negligible

The National Lifelong Learning Strategy 2015-20 defines a 10% target for participation in adult education. A number of measures have been initiated, including the setup of community centres for lifelong learning to reduce fragmentation of the educational offer and to centralise information on needs and available programmes (World Bank, 2018a). Unfortunately, implementation has been delayed. It is important to anticipate training needs and invest now in adult education, as training costs for helping workers to move from occupations at risk of automation can be substantial and are estimated to be relatively high in CEE countries (OECD, 2019c). Doing so requires policy continuity and strong political commitment to establish a framework for developing the educational offer in a coordinated way. Romania is elaborating the new National Strategy for Adult Education 2021-2027, and has started analysing continuing education needs of the adult population.

Boosting demand for training

Training costs are among the main barriers to participation in adult education. Employers have the obligation to ensure, at their own costs, the participation of all employees in professional training programmes. If the employer does not meet this obligation, employees are entitled to a paid training leave, up to 10 days, but do not receive any additional financial support. Adequate and sustainable financing should be put in place to improve the reach and enrolment in life-long learning. Training vouchers could be provided to all low-educated workers and directed towards training in core skills (ICT, language) with a view to prepare them for a more specialized training. For instance, France allocates individual training allowances that are either banked or cumulated over different periods of employment in personal training accounts as well as career advice for beneficiaries (OECD, 2019).

Digital technologies could be used to address financial, organisational and geographical barriers to access to training. Their importance for the continuity of training increased dramatically with the pandemic and associated containment measures. In Romania, participation in online courses is among the lowest in the EU and did not increase in 2020 according to Eurostat. Fostering open education, by defining standards to signal the quality of online courses and certify acquired skills could reduce the cost of training and offer more flexibility. In Germany, the project eVideoTransfer offers digital learning opportunities for workers with low basic skills and limited time for classroom learning.

Lack of information on the availability and the benefit of training is another barrier to participation. More than 75% of the population did not see the need to participate in education and training and only a quarter of the population looked for information on formal training in 2016. Career guidance services are not sufficiently developed (European Union, 2019). Lifelong learning centres providing education and career counselling with a focus on low-skilled workers should be made operational, as it is done in Iceland for instance. Upskilling local public servants to strengthen their guidance capacity is also key, as highlighted by the Portuguese experience (OECD, 2018i).

Large scale awareness campaigns are important tools to improve access to information on learning possibilities and their benefits. In Portugal, broad-based awareness-raising campaigns complemented with public websites played a role in raising interest in learning and thereby participation (OECD, 2018i). In addition, improving the recognition of learning outcomes acquired through non-formal and informal learning in the National Qualifications Framework is crucial to signal the importance of continuous training. Another step would be to introduce an online one-stop shop for information on adult learning that provide information on individuals’ own educational and training record and directs users to potentially relevant learning opportunities based on the qualifications they have already acquired, like it is done for example in Portugal with the Qualifica Passport.

Engaging firms in training provision

While it is crucial for ensuring high relevance of training content, engagement of employers in training provision is limited, including for large firms. In 2015, only 26.7% of enterprises offered continued vocational training, well below the EU average. According to the 2018 Global Competitiveness Index, investment of companies in training and employee development is viewed as among the lowest worldwide (WEF, 2018). Cost of procuring, planning, and delivering training, combined with the short-term productivity loss of employees who participate in training, can be prohibitive (World Bank, 2018c). Employers benefit from financial incentives to provide training, including the immediate deductibility of training costs from taxable income when the costs are incurred. Some OECD countries, like Belgium or Finland, go one step further by compensating firms that provide upskilling opportunities to their employees (OECD, 2019h).

Employers face uncertainty about returns and might fear poaching, in particular because of the relatively high level of skilled emigration. At the same time, investing in employee training can have the opposite effect, fostering employee loyalty and reducing staff turnover (Hoeckel, 2008). Employers might also not have the capacity to anticipate their future training needs. In 2015, only 11% of firms with 50-250 employees regularly assessed their skills needs, the lowest share in the EU. Information gaps could be addressed by building networks of employers to aggregate expertise and practical experience as done in Australia or Ireland. In Ireland, 70 sectoral “Learning Networks” managed by Skillnet Ireland, a public agency, assist businesses to identify and address their skills needs and mutualises training for firms operating in the same industry. Such programmes could be targeted at small companies, which are less likely to see the need for training their workforce or to have a training plan (Kitching and Blackburn, 2002).

Strengthening protection of displaced and gig workers

Displaced workers are not adequately protected against income losses, which has adverse effects on their well-being, but also on labour market efficiency. An adequate social safety net should compensate income losses for households in case of unemployment and protect them against poverty risks. In this respect, it has become more important with the COVID-19 crisis. Providing adequate social protection for displaced workers also improves the quality of matching on the labour market, as job seekers can devote more time to find jobs that match their competences (Wulfgram and Fervers, 2013; Tatsiramos, 2009). Going forward, it will help to cushion the job turnover that is likely to occur as the labour market adapts to new technologies (OECD, 2019e).

Unemployment benefits have a very limited coverage: only approximately 16% of jobseekers received unemployment benefits in 2018 (Figure 3.17). This is due to strict eligibility conditions - claimants have to contribute at least 12 months over the past 2 years - and low benefit duration (OECD, 2018j). The level of unemployment benefits is also well below international standards. Jobseekers can expect to receive around 30% of their previous revenues on average, half less than in advanced economies (Asenjo and Pignatti, 2019). The replacement rates are higher for low-income earners, but remain below OECD standards. In 2020, the payment of unemployment benefits has been extended for those having their benefits expiring during the lockdown, which helped to support job seekers. At the same time, eligibility criteria remained unchanged. New job seekers with short contribution history did not have access to unemployment benefits. The new national Employment Strategy 2021-2027 identifies the need to reform the unemployment benefit system.

The coverage of unemployment benefits should be increased by reducing the required minimum contribution period and introducing some flexibility in the system. For instance, periods when contributions are made could be accumulated across employment spells without a full reset when in receipt of the benefit. Accumulated entitlement could be reduced in proportion to the benefit duration. In addition, replacement rates should increase, especially for low wage earners. Moral hazard problems, such as reduced job search efforts, should be limited, owing to high activation requirements for benefit recipients (Immervoll and Knotz, 2018). A failure to accept an offer of suitable work or to participate in an activation programme results in a complete disqualification from receiving unemployment benefits. Making the replacement rate decreasing with unemployment length could further encourage job search. To limit the fiscal cost of these measures, the length of the benefits could vary with the economic cycle like done in Canada or Poland, extending it in severe economic downturns and shortening it in the upturns (Moffitt, 2014).

Figure 3.17. Many jobseekers are not covered by unemployment benefits

Some segments of the employment protection legislation relative to displaced workers are rather weak in Romania (European Committee of Social Rights, 2018). The notice period for dismissal is only 20 days, the second lowest after Spain, and is fixed. In most OECD countries, this period is conditional to the tenure duration from one week up to six months. In addition, the Labour Code does not include explicit provisions on redundancy compensation. When the recovery will be well underway, severance pays that increase with the number of years in service without excessively increasing dismissal costs and discouraging firms from offering permanent and formal contracts should be introduced as done in many OECD countries, including CEE countries, to compensate lay-off workers for income losses and sustain living standards during the job-search period. This measure should complement a reform of unemployment benefits as discussed above.

To ensure adequate protection of Romanian workers, particular attention should also be given to the development of gig work. According to data collected from four of the largest online labour platforms, Romania was the tenth larger supplier of online labour worldwide, the second larger in Europe (Kässi and Lehdonvirta, 2017). Providing services on online platforms under on-call contracts can enable flexible working solutions and help to increase participation in the labour market. At the same time, digitally delivered freelance work could lead to an increase in the share of workers with atypical contracts that turn into false self-employment and undermine employees’ protection (OECD, 2019e). Options to address that issue include requiring firms to inform employees on their status and rights like in the UK or adding a specific worker category in the labour legislation with specific protection like in Portugal or Italy. Such measures should be accompanied by strict and effective law enforcement.

Table 3.1. Policy recommendations to improve labour market conditions
MAIN FINDINGS	RECOMMENDATIONS (key in bold)
Fostering participation in the formal labour market
Too few unemployed register with public employment services. Spending on active labour market policies is low, especially on training programmes.	Dedicate more resources to reach vulnerable jobseekers, especially in marginalised communities, and to training programmes.
Evaluation of active labour market policies is missing.	Implement systematic assessment of active labour market policies to focus funding on the most effective.
Bureaucracy and lack of effective policy support hamper the development of social enterprises.	Reduce the administrative burden on social enterprises and improve information on available support measures. Facilitate access of social enterprises to microcredit schemes and link them with training and business advice opportunities.
Enrolment in early childhood education is low, especially among Roma and in rural areas. Long-term care services are underdeveloped, undermining women’s labour market participation. Investment in care services is envisaged in the national Recovery and Resilience Plan.	Provide affordable and good-quality early childhood education and care and long-term care services.
Bringing youth in
Too many youth leave school without attaining an upper secondary education level. School closures have deepened learning gaps and accentuated inequality in access to education. The national Recovery and Resilience Plan includes a number of measures to address these issues.	Accelerate measures to support students at risk of dropping out of school and to address learning gaps, especially in disadvantaged areas. After a first evaluation, increase resources further, should they prove insufficient to address the needs.
The share of early school leavers in the Roma community is large. A number of initiatives are in place to reduce school dropout in this community.	Scale up school mediation and provide training courses for teacher in all schools with a high percentage of Roma pupils.
Competences acquired in vocational schools could better match labour market needs.	Strengthen engagement with employers and social partners in the design of VET programmes further. Improve skills forecasting and use it for school network planning.
Participation in the dual-education system remains low, due to difficulties to engage firms in training provision.	Establish a body that coordinates and supports the placement of students in work-based training.
Digital skills are included in curricula, but stakeholders point to a lack of resources and training.	Further increase resources devoted to ICT equipment in deprived schools and training for teachers.
Increases in the minimum wage have been unpredictable and not based on economic fundamentals in the past. Further strong increases can price out unexperienced low skilled workers from the labour market since the ratio of the minimum wage to the median wage is already comparatively high. The government plans to establish a framework for setting the minimum wage in 2023.	Over the medium term, ensure that the minimum wage does not increase faster than the average wage growth. Create a national commission on the minimum wage and consider introducing an indexation formula to keep its growth in real terms in line with productivity gains.
Strengthening adaptive capacity to technological changes
Participation in adult education and incentives to train or provide training are low.	Introduce individual training allowances for low-skilled workers. Provide online information on training courses.
A large proportion of workers do not see the need to retrain.	Expand information dissemination on adult learning, through awareness campaigns and career guidance services.
The current design of the unemployment benefit system provides low income support.	Ease eligibility criteria and increase the replacement rates of the unemployment benefit system, especially of low wages.
The notice period for displaced workers is short and severance payments are optional.	When the recovery is firmly established, extend the notice period for dismissed workers and introduce a minimum severance pay, both increasing with seniority.

References

ANOFM (2020) https://www.anofm.ro/upload/14328/raport_formare_septembrie_2020.pdf

Argatu, R. (2018), “The role of Romanian social enterprises in the alleviation of poverty and social exclusion”, Management & Marketing. Challenges for the Knowledge Society, Vol. 13, No. 4, pp. 1257-1275, DOI: 10.2478/mmcks-2018-0035.

Asenjo, A. and Pignatti, C. 2019. Unemployment insurance schemes around the world: Evidence and policy options, Research Department Working Paper No. 49 (Geneva, ILO).

Bednarik, M., S. Hidas and G. Machlica (2019), "Enhancing the social integration of Roma in Slovak Republic", OECD Economics Department Working Papers, No. 1551, OECD Publishing, Paris, https://doi.org/10.1787/197eb309-en.

Cahuc, P., S. Carcillo and A. Zylberberg (2014), Labor economics, MIT Press, Boston, MA, https://mitpress.mit.edu/books/labor-economics-second-edition.

Card, D., J. Kluve and J. Weber (2015), “What Works? A Meta-Analysis of Recent Active Labour Market Program Evaluations”, NBER Working Papers, No. 21431, www.nber.org/papers/w21431.

Cedefop (2019). Vocational education and training in Romania: short description. Luxembourg: Publications Office. http://data.europa.eu/doi/10.2801/256780.

Chivu L, Ciutacu C, Dimitriu R and Ticlea T (2013) The Impact of Legislative Reforms on Industrial Relations in Romania. Report for ILO. Budapest.

Coaliţia pentru Dezvoltarea României (CDR), 2018, Barometrul forţei de muncă https://fic.ro/Documents/view/CDR-study-on-the-labour-markets-main-results.

Davidescu, A. A., & Schneider, F. (2017). Nature of the Relationship between Minimum Wage and the Shadow Economy Size: An Empirical Analysis for the Case of Romania (No. 11247). IZA Discussion Papers.

Desiere, S., K. Langenbucher and L. Struyven (2019), “Statistical profiling in public employment services: An international comparison”, OECD Social, Employment and Migration Working Papers, No. 224, OECD Publishing, Paris, https://dx.doi.org/10.1787/b5e5f16e-en

Donado, A. (2015). Why do unionized workers have more nonfatal occupational injuries? Industrial and Labour Relations Review, 68(1), 153–183

DZHW (German Centre for Higher Education Research and Science Studies) 2018. Social and Economic Conditions of Student Life in Europe. EUROSTUDENT VI 2016-2018 Database http://database.eurostudent.eu/ accessed in August 2019

European Commission (2014a) European Minimum Income Network country report Romania Analysis and Road Map for Adequate and Accessible Minimum Income Schemes in EU Member States

European Commission (2014b), “European area of skills and qualifications”, Special Barometer, No. 417, https://doi.org/10.2766/75675.

European Commission (2017) Europe's Digital Progress Report.

European Commission (2018a) European Construction Sector Observatory, country profile Romania, June 2018.

European Commission (2018b) Assessment Report on PES Capacity 2018.

European Commission (2018c) 2018 monitoring report.

European Commission (2019a) Commission Staff Working Document, Country Report Romania 2019, Brussels. Retrieved from: https://ec.europa.eu/info/sites/info/files/file_import/2019-european-semester-country-report-romania_en.pdf.

European commission (2019b) Social enterprises and their ecosystems in Europe | Country report Romania https://ec.europa.eu/social/BlobServlet?docId=20959&langId=en.

European Commission (2020a) Education and Training Monitor 2020, Romania.

European Commission (2020b), Commission Staff Working Document: Country Report Romania 2020.

European Commission (2021), COMMISSION STAFF WORKING DOCUMENT, Analysis of the recovery and resilience plan of Romania.

European Committee of Social Rights (2018) European Social Charter Conclusions 2018 ROMANIA.

Fenn, P., & Ashby, S. (2004). Workplace risk, establishment size and union density. British Journal of Industrial Relations, 42(3), 461–480.

Forastieri, V. (1999). Improvement of working conditions and environment in the informal sector through safety and health measures. Occupational Safety and Health Branch Working Paper OH/9907/08. Geneva: International Labour Office

FRA - European Union Agency For Fundamental Rights (2016), Second European Union Minorities and Discrimination Survey, Roma – Main Results, European Union, Agency for Fundamental Rights.

FRA - European Union Agency for Fundamental Rights (2018), Transition from education to employment of young Roma in nine EU Member States, European Union, https://fra.europa.eu/sites/default/files/fra_uploads/fra-2018-eu-midis-ii-roma-transition-education-employment_en.pdf.

Goujard, A., A. Hijzen and S. Thewissen (2019), "Améliorer les performances du marché du travail en France: mise en oeuvre de la Stratégie pour l’emploi de l’OCDE", OECD Economics Department Working Papers, No. 1559, OECD Publishing, Paris.

Grundke, R. et al. (2018), “Which skills for the digital era?: Returns to skills analysis”, OECD Science, Technology and Industry Working Papers, No. 2018/09, OECD Publishing, Paris, https://doi.org/10.1787/9a9479b5-en.

Heemskerk, F.; L. Voinea; A., Cojocaru, (2018), “Busting the Myth - The Impact of Increasing the Minimum Wage: The Experience of Romania” Policy Research Working Paper; No. 8632. World Bank, Washington.

Heyes, J. and Hastings, T.M. (2017) The Practices of Enforcement Bodies in Detecting and Preventing Bogus Self-Employment. Report, European Platform Undeclared Work, European Commission.

Hoeckel, K. (2008) Costs and Benefits in Vocational Education and Training, Paris: Organisation for Economic Cooperation and Development, 8, 1-17.

ILO (2018a). Women and men in the informal economy: A statistical picture. ILO.

ILO (2018b) Care work and care jobs for the future of de cent work International Labour Office – Geneva: ILO, 2018. https://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/---publ/documents/publication/wcms_633135.pdf

Immervoll, H. and C. Knotz (2018), "How demanding are activation requirements for jobseekers", OECD Social, Employment and Migration Working Papers, No. 215, OECD Publishing, Paris, https://doi.org/10.1787/2bdfecca-en.

Kalyva A, Savina Princen, Alexander Leodolter and Caterina Astarita (2018) Labour Taxation and Inclusive Growth European Commission Directorate-General for Economic and Financial Affairs

Kässi O. Vili Lehdonvirta, (2018) Online labour index: Measuring the online gig economy for policy and research, Technological Forecasting and Social Change, Volume 137.

Keogh H., (2009) The state and development of adult learning and education in Europe, North America and Israel UNESCO Institute for Lifelong Learning, 2009 June 2009

Kitchen, H., et al. (2017), Romania 2017, OECD Reviews of Evaluation and Assessment in Education, OECD Publishing, Paris, https://doi.org/10.1787/9789264274051-en.

Kitching, J. and R. Blackburn (2002), The nature of training and motivation to train in small firms, Small business research centre, Kingston University.

Kuczera, M. (2017), “Striking the right balance: Costs and benefits of apprenticeship”, OECD Education Working Papers, No. 153, OECD Publishing, Paris. https://doi.org/10.1787/995fff01-en

McKinsey, (2018), The rise of digital challenges.

Militaru, E., Popescu, M. E., Cristescu, A., & Vasilescu, M. D. (2019). Assessing Minimum Wage Policy Implications upon Income Inequalities. The case of Romania. Sustainability, 11(9), 2542.

Moffit, Robert A. (2014), “Unemployment benefits and unemployment”, IZA World of Labour, 13, May, 1-10.

Mora, J. J., & Muro, J. (2017). Dynamic effects of the minimum wage on informality in Colombia. LABOUR, 31(1), 59-72.

Muravyev, A., & Oshchepkov, A. (2016). The effect of doubling the minimum wage on employment: evidence from Russia. IZA Journal of Labor & Development, 5(1), 6.

Nedelkoska, L. and G. Quintini (2018), “Automation, Skill Use and Training”, OECD Social, Employment and Migration Working Papers, No. 202, OECD Publishing, Paris, https://doi.org/10.1787/2e2f4eea-en.

OECD (2010) Learning for Jobs, OECD Reviews of Vocational Education and Training, OECD Publishing, Paris, https://doi.org/10.1787/9789264087460-en.

OECD (2012), Starting Strong III: A Quality Toolbox for Early Childhood Education and Care, OECD Publishing. https://doi.org/10.1787/9789264123564-en.

OECD (2015), “Recent labour market developments with a focus on minimum wages”, in OECD Employment Outlook 2015, OECD Publishing, Paris, https://doi.org/10.1787/empl_outlook2015-5-en.

OECD (2016a), “Skills for a Digital World: 2016 Ministerial Meeting on the Digital Economy Background Report”, OECD Digital Economy Papers, No. 250, OECD Publishing, Paris, https://doi.org/10.1787/5jlwz83z3wnw-en.

OECD (2016b), "The NEET challenge: What can be done for jobless and disengaged youth?", in Society at a Glance 2016: OECD Social Indicators, OECD Publishing, Paris, https://doi.org/10.1787/soc_glance-2016-4-en.

OECD (2016c), Investing in Youth: Australia, OECD Publishing, Paris, https://doi.org/10.1787/9789264257498-en.

OECD (2017a), The Pursuit of Gender Equality: An Uphill Battle, OECD Publishing, Paris, https://doi.org/10.1787/9789264281318-en.

OECD (2017b), “A good start for equal parenting: paid parental leave”, The Pursuit of Gender Equality: An Uphill Battle.

OECD (2018a), International Migration Outlook 2018, pp 298, OECD Publishing, Paris, https://doi.org/10.1787/migr_outlook-2018-en.

OECD (2018b), Job Creation and Local Economic Development 2018: Preparing for the Future of Work, OECD Publishing, Paris, https://doi.org/10.1787/9789264305342-en.

OECD (2018c), Good Jobs for All in a Changing World of Work: The OECD Jobs Strategy, OECD Publishing, Paris, https://doi.org/10.1787/9789264308817-en.

OECD (2018d), OECD Reviews of Labour Market and Social Policies: Lithuania, OECD Publishing, Paris. https://doi.org/10.1787/9789264189935-en.

OECD (2018e) Co-Ordinating Educational Levels and Sectors to Improve Student Trajectories.

OECD (2018f), Responsive School Systems: Connecting Facilities, Sectors and Programmes for Student Success, OECD Reviews of School Resources, OECD Publishing, Paris, https://doi.org/10.1787/97892 64306707-en.

OECD (2018i) Skills Strategy Implementation Guidance for Portugal, Chapter 2 Raising Awareness Of The Value Of Skills And Adult Learning In Portugal.

OECD (2018j), "Unemployment-benefit coverage: Recent trends and their drivers", in OECD Employment Outlook 2018, OECD Publishing, Paris, https://doi.org/10.1787/empl_outlook-2018-9-en.

OECD (2019a), Talent Abroad: A Review of Romanian Emigrants, OECD Publishing, Paris, https://doi.org/10.1787/bac53150-en.

OECD (2019c), OECD Skills Outlook 2019: Thriving in a Digital World, OECD Publishing, Paris, https://doi.org/10.1787/df80bc12-en.

OECD (2019d) PISA 2018 Results (Volume I)

OECD (2019e), OECD Employment Outlook 2019: The Future of Work, OCDE Publishing, Paris, https://doi.org/10.1787/9ee00155-en.

OECD (2019g) "Providing opportunities for continuous development", in TALIS 2018 Results (Volume I): Teachers and School Leaders as Lifelong Learners, OECD Publishing, Paris, https://doi.org/10.1787/c2037a8f-en.

OECD (2019h), Getting skills right: Creating responsive adult learning systems, OECD Publishing, Paris

OECD (2019i), Getting skills right: engaging low skilled adults in learning, OECD publishing Paris

OECD (2019j) Negotiating Our Way Up: Collective Bargaining in a Changing World of Work, OECD Publishing, Paris, https://doi.org/10.1787/1fd2da34-en.

OECD, (2020a) International Migration Outlook 2020, OECD Publishing, Paris,

OECD, (2020c) https://www.oecd.org/cfe/leed/Romania.pdf

OECD (2020d), “Public employment services in the frontline for employees, jobseekers and employers”, OECD Policy Responses to Coronavirus (COVID-19), OECD Publishing, Paris,, https://doi.org/10.1787/c986ff92-en.

OECD, (2020e) Who Cares? Attracting And Retaining Care Workers For The Elderly

OECD (2020f) "Improving access to quality early education in Romania", OECD Education Policy Perspectives, No. 3, OECD Publishing, Paris, https://doi.org/10.1787/f398e488-en.

OECD (2020g) "Improving educational equity in Romania", OECD Education Policy Perspectives, No. 4, OECD Publishing, Paris, https://doi.org/10.1787/f4a8c506-en.

OECD (2020h), "Improving the teaching profession in Romania", OECD Education Policy Perspectives, No. 1, OECD Publishing, Paris, https://doi.org/10.1787/3b23e2c9-en.

OECD (2021b) Teaching and learning in VET: Providing effective practical training in school-based settings OECD Policy Responses to Coronavirus (COVID-19) https://www.oecd.org/coronavirus/policy-responses/teaching-and-learning-in-vet-providing-effective-practical-training-in-school-based-settings-64f5f843/

OECD, (2021c) What have countries done to support young people in the COVID-19 crisis?, OECD Policy Responses to Coronavirus (COVID-19), http://oe.cd/covid-youth-supportOECD (2021d) The Updated OECD Youth Action Plan Building Blocks for Future Action https://www.oecd.org/employment/youth/The-Updated-OECD-Youth-Action-Plan.pdf

OECD, (2021e), Investing in Youth Slovenia, http://oe.cd/youth-slovenia

OECD (2021f), Teachers and Leaders in Vocational Education and Training, OECD Reviews of Vocational Education and Training, OECD Publishing, Paris, https://doi.org/10.1787/59d4fbb1-en.

OECD/European Union (2017), Boosting Social Enterprise Development: Good Practice Compendium, OECD Publishing, Paris, https://doi.org/10.1787/9789264268500-en.

OECD/European Union, (2018), Inclusive Entrepreneurship Policies: Country Assessment Notes Romania, 2018

Parlevliet, J. and T. Xenogiani (2008), "Report on Informal Employment in Romania", OECD Development Centre Working Papers, No. 271, OECD Publishing, Paris, https://doi.org/10.1787/241073811260.

Polese, A., Kovács, B., & Jancsics, D. (2018). Informality ‘in spite of’ or ‘beyond the state: Some evidence from Hungary and Romania. European Societies, 20(2), 207-235.

Popescu, R. (2021) ‘Romania country note’, in Koslowski, A. Blum, S., Dobrotić, I., Kaufman, G. and Moss, P. (eds.) International Review of Leave Policies and Research 2021. https://www.leavenetwork.org/annual-review-reports/

PwC (2019) Workforce Disruption Index https://www.pwc.ro/en/press-room/press-releases-2019/pwc-report--over-the-next-ten-years--600-000-jobs-in-romania--af.html.

Raei, F. et al. (2016), Getting minimum wages right in Central Eastern and South Eastern Europe,

Romanian Agency for Quality Assurance in Higher Education (ARACIS) (2016) 2016 Activity report http://www.aracis.ro/fileadmin/ARACIS/Publicatii_Aracis/Publicatii_ARACIS/Engleza/ARACIS_Activity_Report_2016_EN.pdf.

Pantea S. (2020) “The effect of minimum wage hikes on employment: Evidence from regional panel data from Romania”, Economic Systems, Volume 44, Issue 3, doi.org/10.1016/j.ecosys.2020.100805.

Sorbe, S. et al. (2019), “Digital dividend: Policies to harness the productivity potential of digital technologies”, OECD Economic Policy Papers, No. 26, OECD Publishing, Paris, https://doi.org/10.1787/2226583X.

Spasova, S., Baeten, R., Coster, S., Ghailani, D., Peña-Casas, R., & Vanhercke, B. (2018). Challenges in long-term care in Europe. A study of national policies, European Social Policy Network (ESPN), Brussels: European Commission.

Tatsiramos, Konstantinos, 2006. "Unemployment Insurance in Europe: Unemployment Duration and Subsequent Employment Stability," IZA Discussion Papers 2280, Institute of Labor Economics (IZA).

Tergeist, P. and D. Grubb (2006), “Activation Strategies and the Performance of Employment Services in Germany, the Netherlands and the United Kingdom”, OECD Social, Employment and Migration Working Papers, No. 42, OECD Publishing, Paris. https://doi.org/10.1787/341116536484

Toderita A. et al. (2018) “Inclusion of Roma living in Rural Areas: Social Dimension of the European Funds for Rural Development 2014-2020 in Romania”, CRPE Policy Memo 73, July 2018.

Toderiță, A., A. Damian, C. Meiroșu (2019), “Access of young vulnerable NEETs to Youth Guarantee measures in Romania”, CRPE Policy Memo nr. 76, August 2019.

UN (2020) https://data.unwomen.org/sites/default/files/inline-files/Whose-time-to-care-brief_0.pdf

Vasile, Valentina & Popescu (Andreica), Madalina & Militaru, Eva & Pele, Daniel Traian & Mazurencu, Miruna & Ilie, Simone & Migailescu, Adina & Serban, Adela. (2017). Support for establishing a minimum wage-setting mechanism in Romania.

Vasilescu; C., 2018 Social and employment policies in Romania, European Parliament’s Committee on Employment and Social Affairs Economic, Scientific and Quality Life Policies,

Vlădescu, C., Scîntee, S. G., Olsavszky, V., Hernández-Quevedo, C., & Sagan, A. (2016). Romania: health system review. Health systems in transition, (18/4), 1-170.

Weil, D. (2008), “A strategic approach to labour inspection”, International Labour Review, http://onlinelibrary.wiley.com/doi/10.1111/j.1564-913X.2008.00040.x/full.

Williams C., Bejaković P., Mikulić D., Franic J., Kedir A., I. Horodnic I. (2017) An Evaluation of the Scale of Undeclared Work in the European Union and Its Structural Determinants: Estimates using the Labour Input Method https://op.europa.eu/en/publication-detail/-/publication/8c3086e9-04a7-11e8-b8f5-01aa75ed71a1/language-en.

Williams C. (2021), Towards integrated strategy for the transition to formality: Road maps for Azerbaijan, Kyrgyz Republic, Tajikistan and Uzbekistan, ILO, https://southsouthpoint.net/wp-content/uploads/2021/02/C-William-Towards-Integrated-Strategy-for-the-Transition-to-Formality-1.pdf

World Bank (2014), World Bank, Diagnostics and policy advice for supporting Roma inclusion in Romania.

World Bank (2017) SABER country report workforce development country report Romania 2017 http://documents.worldbank.org/curated/en/147031513776857610/pdf/BRI-SABER-WfD-Romania-Country-Report-2017-PUBLIC.pdf.

World Bank (2018a) Romania--Systematic Country Diagnostic and background notes.

World Bank (2018b) Romania Public Finance Review: Enhancing the Efficiency of Public Spending in Pre-University Education.

World Bank (2018c) Europe Skills for Competitiveness Leveraging Skills for Competitiveness in Europe http://documents.worldbank.org/curated/en/657511543953734339/pdf/Nov-1-2018-Final-report-leveraging-skills-for-competitiveness-in-EU-P165578.pdf.

World Bank, (2019), Early Childhood Development, Romania, SABER Country Report, http://wbgfiles.worldbank.org/documents/hdn/ed/saber/supporting_doc/CountryReports/ECD/SABER_ECD_Romania_CountryReport2019.pdf

World Bank, (2020a), Enterprise Surveys www.enterprisesurveys.org The World Bank Group

World Bank, (2020b), Markets and People, Romania Country Economy Memorandum. International Development in Focus;. Washington, DC: World Bank.

World Economic Forum (2019) The Global Competitiveness Report 2019, http://www3.weforum.org/docs/WEF_TheGlobalCompetitivenessReport2019.pdf.

World Health Organisation (2020) https://www.euro.who.int/__data/assets/pdf_file/0008/426383/LTC-Romania.pdf

Wulfgram and Fervers (2013). “Unemployment and Subsequent Employment Stability: Does Labour Market Policy Matter?”, IZA Discussion Paper, No. 7193.

╳

Metadata, Legal and Rights

This document, as well as any data and map included herein, are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. Extracts from publications may be subject to additional disclaimers, which are set out in the complete version of the publication, available at the link provided.

https://doi.org/10.1787/e2174606-en

The use of this work, whether digital or print, is governed by the Terms and Conditions to be found at https://www.oecd.org/termsandconditions.