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Learn MoreHigh economic growth and a vast labour exodus to Western Europe have created a labour shortage in many sectors of Romania’s economy.
As a result, growing wage pressures could have a negative impact on foreign direct investment, slowing the country’s economic growth.
Businesses in some sectors have difficulties in finding skilled workers, while facing rising labour costs. However, mounting wages and remittances from abroad has led to rising consumer demand.
In light of Romania’s accession to the EU in January 2007, the country is facing labour shortages in a number of sectors:
In order to tackle the labour crisis, the Romanian government is encouraging repatriation, while attracting workers from outside the EU to fill gaps in the labour market. Businesses are facing lower profits due to production losses and higher wages.
Romania’s current labour shortage results from the combined effects of the country’s economic boom and mass exodus of labour migrants:
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Source: Eurostat.
While businesses in some sectors are under wage pressures and have started to employ foreign workers, Romania’s consumer purchasing power is continuing to rise due to high economic growth and workers’ remittances from abroad.
While migration keeps unemployment low and remittances high, shortages in the labour market cause economic losses and create wage pressures for businesses:
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In light of Romania’s labour emigration and rising wage pressures, the country will become less attractive to foreign investors, causing the economy to grow at a slower pace. However, increased remittances from abroad will help to raise consumer purchasing power.
Romania’s government has undertaken a number of initiatives in order to tackle the labour crisis and encourage Romanians to stay or return to the country:
The sheer size of Romania’s emigrated workforce, however, can make this enterprise only a partial success.
By 2014, all restrictions on the free movement of people within the EU will have been removed, thus, contributing to another wave of labour migration from Romania. Between 2006 and 2020, Romania’s population is expected to decrease by 5.7% from 21.6 million to 20.4 million:
Romania’s labour exodus is likely to result in the country becoming an attractive destination for migrants from non-EU countries. While businesses will compete for skilled Romanian workers, they will also have the option to employ foreign workers at lower wages. Consumers will rely even more on foreign remittances as wages of unskilled workers will compete with those of foreign migrants.
The Romanian government plans to spend EU structural funds on rural development. According to its National Action Plan for Employment from July 2006, it intends to create 140,000 jobs and undertake professional training of 15,000 people in rural areas, which will help regional development.