Analysis: Romania had third most reduced occupation rate of 15-64 years-olds in semester 1

Romania is the EU country with the third most reduced occupation rate for people agend between 15 and 64 years – 63%, in the first semester of the ongoing year, according to an Alpha Bank Romania monthly analysis “En detail Macroeconomy.”   “In semeter 1, 2023, Romania was among EU countries with the third lowest occupation rate of 15-64 year old people, 63% following Italy and Greece, and the 12th largest lowest labor intensity measured as an averege number of hours worked , which corresponds to 113 days of 8 hours each out of the 124 working days of the semester. Considering the area, labor intensity in Romania is10% lower than Poland, which has the highest labor intensity in EU, and by 1.2% compared to Czechia, but 4.4% higher than in Hungary”, the analysis of the occupied population in the area says.   According to the source, the significant reduction of the annual GDP rate in semester 1, 2023, agains the annual growth rate in semester 1, 2022, has also affected the occupation dynamic in the area.   In Romania alone has GDP continued to grow in semester 1, 2023, although with an annual increase rate slower than the one of semester 1, 2022 (1.7% vs. 5.6%).   In countries of the area, GDP contracted in Semester 1, 2023 following significant annual increases in semester 1, 2022;in Czechia with 0.6%, after a 4.2% increase, in Hungary by 1.8% after 7.3%, in Poland with 0.8% after an 8% increase and in Germany, which is the main commercial partner in the area, with 0.3% after an increase of 2.9% increase. The impact of those evolution on occupation was different.   In Romania, the number of occupied people dropped in services and industry and went up in constructions and agriculture, the negative contribution of the first two sectors to the total number of occupied people exceeding the positive evolution of the other two sectors.   The analysis shows the fact that the drop of the number of occupied people in services, a sector which continued to be the GDP increase engine despite the more reduce fraction compared to semester 1, 2022, indicates the fact that the market is expecting the low demand for services to persist.   “Why is the adjustment of occupation in Romania made on the extensive side of the number of occupied persons and not on the intensive part of the average number of hours worked per occupied person, compared to the other countries in the area? The main reason is that the labor market is more relaxed than in countries in the area and the hiring/firing processis is considered less expensive than the modfication of the number of hours worked by an occupied person, the part time hiring being less used,”the analysis shows.