Popa (BNR): Romania has a persistent labor deficit more severe than EU average

Romania has a persistent labor deficit more severe than the EU average. It is more seriously manifested for occupations with elementary competences, but also persists in IT&C, sciences, engineering and health, said Cristian Popa, member in the BNR administration board in a statement on Linkedin.   “There have been a lot of comments about immigration of late . The most interesting analysis on this topic can be found in the latest BNR Report on Inflation, devoted to the labor market. The main conclusion is that Romania has a persistent labor force deficit (insufficient or unfit offer for job needs/demands ) more severe than the EU average. The phenomenon can be seen in opinion polls and labor market tension: 40% of companies consider the shortage of trained personnel is an important problem”, said Cristian Popa.   He mentioned that “this deficit strikes both at the bottom and top,” and it mostly manifest for occupations with elementary competences, and in fields like IT&C, sciences, engineering and health.   “Paradoxically, the labor market is, at the same time, relatively tense (with labor force deficit), but it also has important reserves. That is because we have one of the lowest labor force participation rate in EU ( people who could workbut do not, especially among young people, women and gypsies) and one of the highest rate of young people who do not have jobs, do not attend a form of education and do not participate in professional training activities. Demography is not favorable: the share of older people went up to 20% in 2024 (against 16% in 2013), the average age is 44 years (40.5 years in 2013), and the overall population is foreseen to drop by 10% by 2035. Surprisingly, we are not getting younger. But the ageing of the population directly influences the labor force available on medium and long term,” Popa said. Speaking about migration, after more than two decades of net negative migration, Romania went to plus in 2022-2023, the BNR official said: “That does not mean that all Romanians have returned home or tried not to leave any more, but the phenomenon cooled down and they tried to come back home. On the average, over 200,000 people emigrated annualy in the last ten years. But in 2023, Romania had about 324,000 immigrants . Two mechanisms contributed to that: the increase and maintenance of the annual non-EU worker contingent at 100,000 since 2022 and the return of parts of the diaspora after the pandemic”.   Therefore, the number of immigrants has grown especially because of workers from Nepal, Sri Lanka, Vietnam and other non-EU countries (mainly untrained workers from developing countries or from Ukraine) and fewer from EU, while emigration meant trained workers, Popa said.   “Net positive migration is a useful market corection (appearing when labor demand is high and salaries and living conditions are attractive), but the situation could have been better. The ideal situation could have been to keep trained workers, backing productivity. However, net positive migration is better than net negative one. The analysis presents several medium and long term solving solutions/ policies,” Popa concluded.   According to the lasted BNR report, even though there have been improving signals, thelabor force deficit is an urgent, structural problem which can be solved only on an average and long term through active social policies, from improving the quality of the education system and its capacity of delivering candidates with training fit to employers' demands to improving the quality of life, so that the decision of having children and remaining in the country could become a natural one.   “Present challenges in the labor market in the context of the fourth industrial revolution gravitates around the integration f new technologies based on artificial intelligence, manipulating big data bases, robotization and automation of the production process. Human resources are most in demand for activities based on elementary competences. In this context, the solution of analysed structural problems becomes essential, especially for the quality of the education act and the migration of highly trained labor force, in order to train and preserve a resilient candidate base (able to cope with present challenges), with implications on most macroeconomic indicators, from growth potential and competitiveness to price stability,” the BNR analysis shows.   According to the study, the ageing of the population and variations in the population structure on age groups directly influence the labor force available on an average and long term. In Romania, people at least 65 years old have recorded a constant growth since 2013, of about 17% until 2024.   The share of older persons reached 20% of inhabitants in 2024 (compared to 16.3% in 2013), while the average age went up to 44 years against 40.5 years in 2013. Although the total populaton stopped its decline of late, demographic projections made by Eurostat anticipate a 10% drop until 2035, the report shows.   “However there are certain positive evolutions of the young population: the share of people aged up to 15 years improved as of 2017 and maintained above the EU average at present. Although the negative rate of the natural growth dropped in the last two years, it is stillunder the level recorded in the year before the Covid 19 pandemic”: - 4.4% in 2023 against -3.1% in 2019 (the European average was -2.6% and -1.1% respectively). Although the gender report shows a slight predominance of women (in 2024 there were 6% more women than men), the age group analysis shows that until the age of 55, men are a majority,” the report mentions.   Although the present demographic situation, both at national and European levels, seems to affect the sustainability of the labor force offer, there are premises for better tendencies. At the end of 2023, EC elaborated a set of recommendations for European countries, as an answer to the major demographic changes they undergo, the BNR analysis shows.   “Instruments are structured around four main pillars: personal life-work balance (with stress on insuring access to shild care services in order to reduce gender inequality), turning to account young people's potential ( mainly by reducing territorial disparities), promoting the well being of older generations (encouraging active ageing- through flexible work programs in good health conditions), migration managing (attracting non-EU workers and creating easy life conditions for them)”, the cited report mentions.