LABOUR

RECENT DEVELOPMENTS

With technological advancement changing working conditions and labour relations, there is a fundamental need for all actors on the labour market to find better suited alternatives and upgrade current practices.

Early 2020 found Romania’s labour market benefiting from the strong economic growth of the past years but facing labour shortages. In 2019, employment of the working age population (15-64) was 65.8% compared to the EU average of 73.1%, and the unemployment rate dropped to 3.9%, its lowest level in the last 20 years. In just a few months, as a result of the effects of COVID-19, the unemployment rate increased from 3.9% in February to 5.4% in July 2020. 

According to the National Institute of Statistics, the COVID19 pandemic affected the labour market by moderately decreasing the employed population and the employment rate and increasing the number of unemployed and the unemployment rate. In the second quarter of 2020, the active population of Romania was 8987 thousand people, of which 8505 thousand people were employed and 482 thousand people were unemployed.

According to the National Institute of Statistics, the COVID19 pandemic affected the labour market by moderately decreasing the employed population and the employment rate and increasing the number of unemployed and the unemployment rate. In the second quarter of 2020, the active population of Romania was 8987 thousand people, of which 8505 thousand people were employed and 482 thousand people were unemployed. The employment rate of the working age population (15-64 years) was, in the second quarter of 2020, 65.2%, a decrease compared to the previous quarter of 0.2 percentage points. The unemployment rate was 5.3% in August, down 0.1 percentage points from the previous month, but up 1.5 percentage points compared with the same month of 2019, according to data from the National Institute of Statistics (INS).

Available jobs declined during the pandemic and, despite efforts by employers to protect their employees, there were redundancies in several sectors. 

The least affected sectors were IT, telecom, financial and courier logistics and the highest impact was felt by the sectors like transportation, HoReCa, production, tourism and commerce, whose employees faced challenges such as job losses, technical unemployment or pay cuts. 

However, signals from the market became more positive within the last couple of months of 2020, with job platforms reporting an increase of 20% in the number of companies which posted jobs on their platforms between July and September, as compared to the same period in 2019, while the total number of jobs posted in Q3 of 2020 was similar to 2019’s figure, at approximately 80,000.

Still, the effects of COVID-19 on the labour market in Romania over the medium to long term are difficult to predict, as the factors which generated labour shortages and a mismatch between supply and demand for labour in the past continue to influence the dynamics of the labour market. Thus, the negative demographics and external migration, the low level of the participation rate, the high inactivity rate, the quantitative and qualitative discrepancies between the supply of the education system and the real needs of the labour market, and the fact that access to the labour market remains limited for certain groups are still relevant today. 

The population continues to decrease due to a negative natural growth rate and massive outward migration. According to a study carried out by KPMG and the National Institute for Economic Research  for the Concordia Employers’ Confederation, for the entire period 1990-2018, in Romania, the natural demographic decline exceeded 1,000,000 inhabitants. If the trends continue, considering the significant impact of net (official) migration, the total population will decrease from 19.6 million people in 2016, to 18 million people in 2030. In 2018 alone, according to the European Commission’s 2020 European semester country report, more than 2.5 million Romanians resided in other Member States, making Romanians the largest group of EU citizens of working age (20-64) residing in another state.

Demographic developments have a heavy impact on the labour market and economic dependence indicators.  According to the PwC Workforce Barometer developed by PwC Romania for CDR (Coalitia pentru Dezvoltarea Romaniei)  in 2018, the long-term forecasts showed that the number of employees will continuously decrease, the number of people involved in economic activity will stagnate, while the number of pensioners will continuously grow and will soon reach a 1: 1 ratio versus employed people. This will generate significant pressure to increase productivity so that the active labour force can sustain economic growth and provide for the dependent population.

Despite a slight improvement, inactivity remained high, amounting to 31.6% (Q3 2019) of the overall population, and labour market policies had little impact on reducing inactivity. KPMG and NIER’s study concluded, based on the statistical analyses conducted at the date of the report, that important segments of the population, about 2 million people, were not found on the labour market and were also not included in the education and training system. 

The percentage of young people neither in education nor in employment and training (NEET) is among the highest in the EU. According to the National Institute of Statistics in 2019 the unemployment rate for young people (15-24 years) was 16.8%.  

Furthermore, Romania’s skills mismatch issues have deepened over the last few years and the European Commission has drawn attention to the widening gap between education and work and the need for massive reskilling. KPMG and NIER’s study indicates a match between the education and current job requirements of young people of only 44.1%. 

If the current trends are maintained, the employed population will continue to decrease significantly The KPMG and NIER study forecasts decline of the employed population from 8.4 million in 2016 to 8.2 million in 2020, to 7.3 million in 2030. Furthermore, in the absence of coherent measures to boost the labour market, the study forecasts that by 2023 the economy will have a labour deficit of approximately 500,000 people.

In a post-COVID context, while many would expect the labour shortage to decline significantly considering the impact of COVID-19 on the economy and businesses, companies are still faced with a qualitative labour shortage, and have difficulties in finding the right skills. In the absence of radical, immediate measures, there are clear signs that the skills shortage will continue to negatively impact Romania in the coming years.

2020 has also been the year that accelerated the transformation of the workplace to an extent never anticipated.  With large numbers of employees moving to remote working due to COVID-19, ways of working have changed and this is a trend that is expected to continue post pandemic. According to recent surveys, the majority of employers will maintain an element of remote working in the future, most of them opting for hybrid approaches. This is line with employees’ interests as most do not wish to return to working from the office exclusively and desire more flexibility in terms of work location, working hours or flexibility of work contracts.
 

Many of the shortfalls, as well as areas to improve, were accentuated by the Covid-19 pandemic and while in some respects there was fast progress in a positive direction, other areas still require significant work to enable effective and sustainable economic development.

For instance, digitalising labour relations to a higher extent is of great importance to reducing bureaucracy and ineffectiveness in the long run. A national legal framework in line with the eIDAS Regulation should be put in place as soon as possible, while the use of digital channels of communication between companies and public authorities on labour related matters should also be increased. 

Positive measures were taken by the Government in 2020, in the midst of the health crisis, in terms of flexibility of work, such as unilateral telework decisions or Kurzarbeit (short time work). However, flexibility will continue to be a topic of discussion in the future and important measures in relation to, for example, allowing multiple employers for one contract, more flexibility in setting days off or allowing more leeway in organizing the working hours within the work week would represent important steps forward. 

Social dialogue continued to be at the centre of discussions in Parliament and there is still significant scope for improving consultation and real dialogue between the state authorities, employers and trade unions. 

While increases in the minimum wage are a good indicator of improving employment conditions, rises at a higher rate than the growth in labour productivity and lack of serious impact analysis of such increases could have a negative impact on the viability of certain business sectors/industries, and lead to concern among employers’ organizations at an accentuated lack of predictability. There is a strong need for the resumption of dialogue between the Government, trade unions and employers on this issue, to put in place a transparent and measurable system to establish the minimum wage based on market and economic research and alignment with EU systems and practices. 
 

Romania is set on the path of a rapidly ageing and shrinking population, and, based on current trends which indicate that it will become one of Europe’s “oldest” nations in the next few decades, maintaining a sound, coherent and, most importantly, sustainable system of social security services and legislative stability is of utmost importance for the health of public finances and that of the general macroeconomic balance. 

In order to address the investment needed in human capital as the main instrument for ensuring competitiveness and economic growth, current legislation fails to do enough to encourage companies' involvement in initial training (which for a long time was the exclusive prerogative of the national education system), nor does it adequately involve the state in supporting training organised by employers through incentives or the provision of facilities. Dialogue between the state authorities and the business community is strongly needed to bring together learning experience and the right skills within the working environment.
 

In recent years, some progress has been made in technical and professional education, in the sense that the professional system is seen again as a medium and long-term option for the development of crafts, and an opportunity to ensure a close link between education and the labour market. However, developing a participatory system between the public and private sectors which takes into account the demographics, resources and future labour and business market needs are essential to ensure predictability of any development strategy. 

Given the fast speed of technological change, reactivity will not be enough to remain competitive on the labour market. The FIC appreciates that skills are critical for the medium and long term development of the labour market and at the same time for the economic development of Romania. An extensive digital literacy program should be implemented across the country for the adult population, allowing them to quickly redeploy to the more automated jobs of the future. With an average of 15% of all companies’ workforces being at risk of disruption in the horizon up to 2025, it is digital skills, together with those which are critical for transition to the workplace of the future, such as communication, creativity, adaptability, critical thinking, and empathy that must be on the agenda of all stakeholders, both public and private.  
 

AREAS FOR IMPROVEMENT

Labour market flexibility

The flexibility of the labour market has been under serious stress during the last year and the situation is expected to continue for this year as well.
It is now more than obvious that flexibility of work relations and the adaptability of employees are key in building a flexible labour market, that will absorb shocks well.

The voice of the business environment was heard by the Government, which took measures such as introducing ”Kurzarbeit” – short time work – and other flexibility measures. These have included allowing unilateral telework decisions, and enabling the organization of a work programme with different entry hours for employees. It is true that these measures are applicable only for the current, extraordinary situation (the health crisis) but we believe that if they prove efficient, there will be a good case for maintaining them as part of business as usual.
Other measures proposed included electronic signatures, and reduced bureaucracy in applying health and safety measures.
 

FIC RECOMMENDATIONS

We believe that flexibility should not be a cause for concern for employees, who will be better off in the long run if such measures are implemented. Teleworking, which was initially very reluctantly received, is now very popular among employees and is also contributing to public health while keeping businesses going.

Other flexibility measures (e.g. electronic signatures, reduced bureaucracy in applying health and safety measures) have not, however, been addressed. The adaptability of employees was left only to the private sector and this will only bring strength to those companies which are able – from a managerial and financial point of view – to invest in online education tools.
 

FIC RECOMMENDATIONS

This may create a gap between categories of employees. The government’s intervention in this field has been rather inadequate. The financial support for teleworking (2500 lei for equipment for each employee doing telework) was drafted in such a way that benefited only to those who already had the means, leaving those in need behind.

FIC RECOMMENDATIONS

FIC RECOMMENDATIONS

Important steps have been taken to improve flexibility in work relations, but other measures could also be considered, such as: 

  • More flexibility in setting vacation days and days off in general
  • More flexibility for fixed term labour contracts
  • New labour contracts - e.g. allowing multiple employers for one contract
  • More flexibility in organizing the working hours within the 48 working hour week

The adaptability of employees has not been addressed yet. We believe that employers must be encouraged to provide more training to employees, to help them upskill and also acquire new skills, to cope with the changes that we will face, sooner rather than later.

Digitalisation of labour relations

Digitalisation has already been changing production processes in many sectors, but today it can fundamentally transform working conditions and labour relations due to the pandemic. It has become essential for all actors on the labour market to find alternatives to physical communications and to the handwritten signature. 

FIC RECOMMENDATIONS

FIC RECOMMENDATIONS

Currently, the technology is well developed to allow for digital signing of individual labour contracts, addendums, medical leave certificates, health and safety training documents, etc. and to support the communications function in a secure manner. This technology has already been implemented for commercial purposes across various industries (e.g. banking, telecom, utilities). 


Few steps have been made in these directions. During the state of emergency over COVID-19, the Ministry of Labour shifted to electronic communication and a draft legislative initiative acknowledged the importance of a digital upgrade in labour relations (electronic signature, storage). However, the later draft does not allow for enough flexibility and it risks being too bureaucratic and counterproductive, generating the opposite effect; less digitalisation. 

An EU framework for regulating electronic signatures for use in multiple contexts, including its application in labour relations, is already in place.
 

FIC RECOMMENDATIONS

FIC RECOMMENDATIONS

Given that digitalisation of labour relations is extremely important both to limit the impact of the pandemic (in the short-term) and to reduce bureaucracy and inefficiencies (in the medium and long-term), a national legal framework in line with the eIDAS Regulation should be put in place as soon as possible. This framework should be by no means restrictive, but flexible and proportional in terms of both costs and effort, allowing for the use of all types of signature that provide enough safety guarantees for the parties involved. Drawing from market experience with using electronic signatures in commercial circumstances, both certified and advanced signatures should be allowed for any documents signed in labour relations. 

Digital channels should be used extensively when companies and public authorities communicate on labour related topics and related applications (most importantly REVISAL) and should be upgraded to accommodate recent changes in legislation and provide valuable output for all stakeholders involved.
 

Improving the framework for social dialogue institutions

Social dialogue has been at the centre of discussions – and tensions – between employers, trade unions and the authorities for the last few years.

The Tripartite National Council for Social Dialogue, the Social and Economic Council, and the Social Dialogue Committees are the most relevant institutional creations but there are numerous other groups, both formal and informal, most of which bring the same actors to the table (for example, the ad-hoc tripartite social dialogue meetings at the Ministry of Labour, the civic dialogue meetings organised by NGOs on specific social topics etc).

In spite of the existence of numerous frameworks for discussion, the state authorities (Parliament and Government), generally, do not encourage real dialogue. Their role is therefore mostly formalistic. The general feeling is that institutional social dialogue is about „ticking the boxes” in a process provided for by law, rather than about real consultations.
 

FIC RECOMMENDATIONS

The obstruction of social partners from actively and efficiently contributing to social dialogue is also carried out by organising very important meetings at very short notice (in some cases, the invitation is sent only a few hours ahead of the event).

The health crisis has shortened consultation terms further. The social partners understood the situation and tried to help the Government through this difficult time.

The trade unions found support in Parliament to pass some quite important pieces of legislation (e.g., the law on the minimum expenditure basket, based on which the minimum wage will be calculated). 
 

FIC RECOMMENDATIONS

The trade unions also put increasing pressure on the authorities to change the Social Dialogue Law. Their proposals found support in Parliament and the Labour Committee included their amendments in the draft law. The most important changes the trade unions support touch upon three important aspects of social dialogue:

  • The decision-making process in the company’s management 
  • Access to negotiations, especially at company level
  • The right to strike

On all three topics above, the amendments introduced into the draft law tip the balance in favour of the trade unions.
 

FIC RECOMMENDATIONS

The involvement of national confederations in negotiations at company level would not boost social dialogue. Nor would the obligation to open yearly negotiations both at company level and at sector level. According to international conventions, negotiations are meant to be free, not mandatory.

Moreover, the right to strike during the duration of a Collective Agreement if 30 employees claim their individual rights are not observed, would also be a deterrent to social dialogue. The balance of power would be shifted in trade unions’ favour if the new law is passed with all the current amendments.

At a more general level, the draft law on social dialogue, as presented for voting in Parliament, is not a sound piece of legislation and could do more harm for social dialogue, despite the trade unions’ satisfaction in gaining more power in the short term. The draft law is focused more on forcing social partners into dialogue instead of building bridges founded on common interests. The very notion of social dialogue is founded on free will. Take this away and social dialogue will no longer exist; it will instead be mimicked.
 

FIC RECOMMENDATIONS

FIC RECOMMENDATIONS

The FIC recommends and supports the clarification of the social dialogue situation in Romania and this should be done on three main axes:

  1. Reinforcing institutional social dialogue. The tripartite meetings should have more weight in the decision-making process at Government level. The Economic and Social Committee’s role in the legislative process should be taken more seriously. The Sectorial Committees must be reshaping, in order to better reflect the role of the representative organizations and could also receive a more important role in social dialogue itself, in the context of the increasing effort to upskill and reskill employees.
  1. Redesigning the sectorial landscape. Defining the economic sectors much more accurately than today, would allow social partners to be closer, to find more common interests and to be better represented.
  2. Changing the legislation on social dialogue in support of the above-mentioned objectives and with the aim of increasing the attractiveness of social dialogue for the social partners, rather than giving the power to one party or another, and definitely not by compelling parties to enter dialogue.

Labour costs

The minimum wage has increased every year since its introduction in 2000, through HG No. 296/1999. On average, it has increased by 13% annually and in many cases twice per year. 

The business environment raised objections to these increases throughout the years, because there was no transparent mechanism to justify it, even though all social dialogue partners had agreed on the need for such an instrument – a mechanism that would take into consideration stable and predictable macro indicators. Yet in the same way, in the absence of impact studies, the Government has decided to raise the minimum wage again starting from 1 January 2021.

FIC RECOMMENDATIONS

FIC RECOMMENDATIONS

The business environment raised objections to these increases throughout the years, because there was no transparent mechanism to justify it, even though all social dialogue partners had agreed on the need for such an instrument – a mechanism that would take into consideration stable and predictable macro indicators. Yet in the same way, in the absence of impact studies, the Government has decided to raise the minimum wage again starting from 1 January 2021.

FIC RECOMMENDATIONS

FIC RECOMMENDATIONS

The FIC believes that it is necessary to have a minimum wage policy and to be aligned with the best practices in other EU countries. We also consider that it is essential for the framework of the minimum wage increase to be predictable, so that it is easier for businesses to plan ahead.

This would provide more stability and predictability to the economic environment in Romania and create realistic premises for growth. Furthermore, the open dialogue begun in 2016 between all relevant partners (Government, trade unions and employers) should be resumed. The FIC has proposed that decisions on the level of the minimum wage should be based on market & economic research, which should identify and evaluate both the benefits and the associated risks for companies’ profitability and competitiveness in the medium and long term of any changes in the minimum wage. Increases should take into consideration certain key indicators such as the cost of living, the inflation rate, social inclusion, etc. Currently Romania is one of only seven EU countries which does not benefit from a transparent and measurable system for establishing the minimum wage.

This would provide more stability and predictability to the economic environment in Romania and create realistic premises for growth. Furthermore, the open dialogue begun in 2016 between all relevant partners (Government, trade unions and employers) should be resumed. The FIC has proposed that decisions on the level of the minimum wage should be based on market & economic research, which should identify and evaluate both the benefits and the associated risks for companies’ profitability and competitiveness in the medium and long term of any changes in the minimum wage. Increases should take into consideration certain key indicators such as the cost of living, the inflation rate, social inclusion, etc. Currently Romania is one of only seven EU countries which does not benefit from a transparent and measurable system for establishing the minimum wage.

Pensions & social security

Public expenditure on social security services surpassed 45% of all general government revenues in 2018, making it by far the main cost in Romania’s budget and amounting to 10% of GDP. Moreover, public wages and social transfers now account for 81% of fiscal revenues and social contributions, marking a steep, dangerous 25% increase in just 3 years. Consequently, maintaining a sound, coherent and, most importantly, sustainable system of social security services is of paramount importance for the health of public finances and that of the general macroeconomic balance. The strong growth trends seen over the last decade for these expenditures, as well as prospects for further unsustainable increases in this sector provide several reasons for serious concern.

FIC RECOMMENDATIONS

In the meantime, the granting of over-generous special pensions for certain public employees has only made matters worse. In the long term, the sustainability of the public pensions system is precarious and demographic forecasts are adverse: Romania is set on the path of a rapidly ageing and shrinking population, and, based on current trends, will become one of Europe’s “oldest” nations in the next few decades, according to research by both the EU and the UN. 

Unfortunately, the major pension system overhaul in 2010-2011, which helped stabilise this situation, has been completely rolled back in recent years. All positive measures contained in Law No. 263/2010 have been reversed in several ways which effectively turn the public pension system (PAYG and special pensions) back to its 2009 state, when it was considered by independent research to be the most unsustainable among EU member states. Furthermore, the new public pension legislation issued at the end of 2018 has since drastically increased pension expenditure and will certainly be cumbersome for the country’s public finances. 

FIC RECOMMENDATIONS

Consequently, the public pension system on its own is not enough to secure adequate, sustainable pensions for future generations of Romanians. Therefore, the continued development of the private pension system launched in 2007-2008 is essential to improve the general capacity of the pension system to meet the expectations of the active population.

Meanwhile, private pension funds have continued to grow and consolidate and have even started to make a considerable positive difference in the country’s growth and the development of capital markets. 

FIC RECOMMENDATIONS

Since their launch in 2007-2008, private pension schemes in Romania have earned more than 8 million members (individual accounts), reached combined net assets under management of about EUR 15bn and posted robust investment performance. The 2nd Pillar funds posted an average annual return of 8% from the date they were set up until the end of September 2020, while the average annual return of 3rd Pillar voluntary funds for the same period is about 5%. 

FIC RECOMMENDATIONS

FIC RECOMMENDATIONS

The FIC recommends the preservation of legislative stability in the private pensions sector and the protection of the system’s general viability. We strongly recommend that the mandatory private pensions (2nd Pillar) system should remain unchanged, after GEO 114/2018 severely affected the viability of the system and GEO 1/2020 has helped the industry bounce back. Further measures to encourage the growth in coverage of voluntary pension funds (3rd Pillar), including an increase in tax deductibility for employers’ payments to these pension funds from the current EUR 400 per year to EUR 1,000 per year, are also desirable in the short to medium term.

Professional training

Romania’s economic growth could be considerably affected by the deficit of skills in the current labour market as well as by skills mismatches, which have persisted over the course of recent years. The European Skills Index, measuring the performance of EU Member States in terms of the skills of their workforces, places Romania at the bottom. The problem is particularly acute for skills development and activation (Cedefop, 2019). Additionally, the vertical mismatches (rate of overqualification), while still below the EU average, has almost doubled over the last decade. The European Commission highlights these issues in the latest European Semester country report showing that in 2018 approximately 18% of workers with tertiary qualification were employed in roles that required a lower level of qualification, while 28% of the employed young people (aged 25-34) with tertiary education were occupying a job that required tertiary education, but their education or skills did not match the requirements of the job  (Eurostat, Mismatch Indicators). 

FIC RECOMMENDATIONS

The fast advancement of technology has led to increased demand for higher level education, which, if not taken into consideration soon in the education and training system, will result in an inability to generate a well-qualified and equipped labour supply. In 2018, in Romania, only 0.9% of adults aged 25 – 64 had a recent learning experience, a significantly lower number compared to the EU average of 11.1%. With the number of jobs available that require only a basic level of education being low, the current situation is particularly concerning. 

Aside from the educational system, professional training is inextricably linked to a healthy labour market. Current legislation fails to do enough to encourage companies' involvement in initial training (which for a long time was the exclusive prerogative of the national education system), nor does it adequately involve the state in supporting training organised by employers through incentives or the provision of facilities.
 

FIC RECOMMENDATIONS

Investment in Human Capital is a priority for the EU as it is the main instrument for ensuring competitiveness and economic growth. Although all Member States have identified common challenges in this area, like ageing societies, skills deficits in the workforce and global competition, it is the responsibility of each Member State to adopt the best policies for training and education. 
Romania currently has a deficit of qualified workers in certain regions, and although a legal framework currently exists for apprenticeships, the number of participants in this type of vocational training is still low.  A further challenge is unemployment among higher education graduates (especially young graduates) and difficulties in securing their professional inclusion. 
 

FIC RECOMMENDATIONS

FIC RECOMMENDATIONS

The FIC’s policy is to encourage more flexible mechanisms, allowing companies to become more involved in training during schooling so that future employees (current students) may acquire practical knowledge during their studies. Consequently, the FIC supports legislative changes to promote dual education, apprenticeships, internships and on-the-job training.
The FIC encourages dialogue between the state authorities and the business community to bring together learning experience and the right skills needed within the working environment. This should be achieved by:

  • Adjusting the current legal framework on apprenticeships and high education graduates as well as practical measures to support employers’ involvement in training young people (high school pupils and students) to prepare them for future jobs on the labour market.
  • Increasing the financial incentives offered by the state for all participants involved (for employers as well as employees).
  • Raising awareness of professional training. This requires multi-stakeholder partnerships with a role of regularly monitoring and reporting on the evolving needs of the Romanian economy and skills acquisition. 
  • Support schemes for students in rural areas, disadvantaged groups and non-traditional students to participate in tertiary education 
  • Developing the lifelong learning framework and introducing the concept of lifelong learning in children’s early education 
     
  • Education campaigns for pupils/ students concerning the market’s needs in terms of jobs, and how to acquire the right vocational training to enter these professions.
  • Developing and implementing training for professional reconversion and programs for those aged 55+ (e.g. digital competencies, etc.)

We are confident that by taking the right measures, an attractive environment will be created that will have a positive impact on the labour market.

Technical and professional education

Enhancing the general reputation of professional schools

After the fall of the communist regime, the general reputation of technical and professional schools fell significantly. This was a direct consequence of the destabilisation of the economy (with tens of thousands of workers losing their jobs) and the emergence of numerous private universities (which gave the illusion of a successful white-collar career but had low academic standards).

Over time, the professional schools became something of a “scarecrow” for potential students, an icon of a failed educational system, with a low reputation. Moreover, they generally failed to attract the best teachers. 

FIC RECOMMENDATIONS

In recent years, however, following the direct involvement of multinational companies in the education system through various long-term projects (e.g., Oilmen’s school, Kronstadt in Brasov, the auto school in Pitesti etc.) combined with the strengthening of standards in national examinations, the professional schools have experienced slow but steady progress. This trend is obviously a good sign, but the combined efforts of private and public actors must continue.

FIC RECOMMENDATIONS

FIC RECOMMENDATIONS

The FIC understands the crucial importance of technical and professional education in developing the next generation of professionals and also acknowledges the urgent need for greater involvement by the private sector in the Romanian educational system. Consequently, the FIC is willing to cooperate with the Government and other social actors (employers’ confederations and trade unions, NGOs etc.) to help develop a sustainable, long term, national strategy and policies for the professional education system based on KPIs.

Furthermore, the FIC, through its members, is ready to get involved in communication activities, to raise awareness in Romanian society of the importance of professional education. 

The appeal of professional schools could also be raised by official school visits, focused mainly towards 7th and 8th graders, by highly successful professionals in the industry, who have invested and developed partnerships in the dual system (practical and theoretical education) and standard professional education (e.g.: German investments in Brasov, ENGIE partnerships with the Mihai Bravu high school in Bucharest, Renault Romania, etc.), who could present their success stories and educational offers to children and teachers and elaborate on the vocational paths they can follow, when choosing a profession.

The sessions should concentrate on the specific educational offers (scholarships, support, certifications gained, the learning process and prospects for being hired) as well as on new technologies and work procedures used in heavy industry to eliminate misconceptions about the blue-collar work environment and to increase its appeal as a successful employment choice for the future. 

During the months of February-May, authorities in the education sector should organize dedicated events, within schools or on-line, in partnership with the companies which have requested to CNDIPT and their partner-schools the development of either dual (practical and theoretical) or standard professional classes, for students in the early stages of education (7th or 8th grade) and their parents, to which they should invite company representatives to present technical education opportunities and practice offers, along with career counselling sessions.

A special focus of these meetings should be placed on meetings / exchanges between company representatives and the parents of these students, as career decision-making within a family is highly influenced by adults and sometimes misconceptions and stereotypes are very active with regard to professional education, leading to the elimination of such an option. 
 

The responsibility for these meetings to take place, should be shared by the Inspectoratul Scolar Judetean, in partnership with the management of the schools which administer the 8th grade cycle, with some KPIs defined by CNDIPT (e.g. minimum no of presentations given, minimum no of students / parents attending presentations), which can also activate/enable the companies which have requested classes in either the dual system or standard professional education to give these presentations.    

In conjunction with representatives of the European Union, the authorities should also identify policies and mechanisms to finance the investments made by companies (in transportation, accommodation, scholarships, materials, devices and educational apparatus) and, thus, encourage their involvement.
 

A special focus within the current dual professional education methodology which acknowledges several types of expenditures as being deductible (scholarships, transportation, accommodation, materials and devices) should be the acknowledgment as being deductible of the labour costs supported by the companies involved in the dual learning education system for the tutors/employees who are taken out of production and allocated to teach young professionals. or the setting up of a financing support mechanism. Local authorities (e.g. townhalls) should be encouraged to help companies by providing accommodation in the housing facilities of high schools or canteen services for students who come from a long distance.

Local authorities and the schools / colleges which administer school-related housing facilities or canteen services should allocate a relevant percentage of their housing facilities (e.g. 50%) for students in the standard professional / dual education system and prioritize them in comparison with other categories who are sometimes offered housing within schools (adults, university students), even though other facilities are available for adults.   
 

Reorganizing the technical and professional education syste

In recent years, some progress has been made in technical and professional education, in the sense that the professional system is seen again as a medium and long-term option for the development of crafts, and an opportunity to ensure a close link between education and the labour market. However, the vocational system still tends to focus more on the needs and interests of teachers rather than those of students.

FIC RECOMMENDATIONS

FIC RECOMMENDATIONS

The FIC acknowledges the importance of reorganising the education system and suggests that this should be based on the following principles:

  • Creating a system centred on the needs of students and employers, which aims to provide the practical skills and technical knowledge needed for successful incorporation into the labour market.
  • Developing a stable and predictable system, linked to the labour market’s needs. This would require inter-ministerial committees to ensure good coordination between the three main actors involved in public policy development and the modernisation of VET (vocational education and training) in Romania, as well as the development of accurate analysis and forecasting mechanisms for the medium and long term.
  • Developing a participatory system which includes an assessment of social actors, studies (including prognosis) of the main economic actors by area, high schools and available data on teachers, as well as analysis of population demographics in those areas, in order to identify future labour market needs. 

Many employers and non-governmental associations have proposed setting up school campuses based on regional needs and the level of development of the regions, (for example to encourage the relocation of existing schools and bring them into close proximity to large industrialised areas) or supporting companies which already have a concrete plan for the development of local VET (e.g. Brasov, Continental Timisoara, etc.). These regional campuses would facilitate the learning mobility of pupils according to their abilities, and areas of interest of employers.

For recording, storing and analysing data on Technical and Professional Education, creating an Interoperable Management Information System (IT) would support those involved in this process.

 

 

The FIC recommends that public authorities should initiate a reorganisation strategic plan for the technical and professional education system (with support from interested companies) based on current geographical needs. 

The FIC is aware of the complexity of this process and is willing to get involved in helping the Romanian Government to update its strategy for technical and professional education.

Skills for the future

Considering the rapid pace of change driven by technological development, Romania needs a solid strategy for developing the right skills and training systems to able to keep pace with the rapid changes in technology. COVID-19 accelerated this need. The lockdown forced businesses, public sector and schools to move to an online environment and found many unprepared. The pandemic highlighted the urgency of the reforms needed to achieve massive upskilling and retraining in the area of digital skills.

According to the World Economic Forum’s Future of Jobs 2020 paper, new data suggests that globally, on average, 15% of a company’s workforce is at risk of disruption in the horizon up to 2025, and 6% of workers are expected to be fully displaced in the context of continuously expanding new technologies in all markets and sectors and economic systems which are more interconnected that ever before in history. Furthermore, the WEF estimates that by 2025 approximately 44% of the skills that employees will need to perform their roles effectively will change. 

FIC RECOMMENDATIONS

This emerging disruption, in some cases accentuated by the pandemic related health crisis, of jobs and skills, leads to an accentuated need for mass reskilling and upskilling.

In this context, governments need to provide consistent support for reskilling and upskilling workers at risk of being displaced and create incentives for investment which will provide stronger safety nets for workers in the midst of job transitions. Furthermore, flexible policies that value technology and incentivise employers’ participation in developing digital skills will be more important than ever.

Studies also show that while half of current work can be automated, in the medium-term automation will transform blue collar/low skilled jobs into skilled, professional jobs. As people will work alongside machines, at least basic digital skills will be required at all professional levels. 

FIC RECOMMENDATIONS

Another important issue will be the rapid pace of change. People of all ages should be ready to learn during their entire life, re-skill, to work flexibly and move around the country for work. As the exact jobs of the future are as yet unknown, other skills than digital ones that are critical for transition to the workplace of the future include social and emotional skills such as communication, creativity, adaptability, critical thinking, and empathy. 

According to Eurostat data, in Romania, out of the population aged 24-64, only 1.3% were enrolled in any purposeful learning activity in 2019, whether formal, non-formal or informal, undertaken on an ongoing basis with the aim of improving knowledge, skills and competence. This indicator is in decline compared to 2014 (1.7%) and well below the EU average (10.8%). This is also very far from the EU 2020 15% target which aims to develop a skilled workforce which responds to labour market needs and to promote job quality.
 

FIC RECOMMENDATIONS

The extent to which the local economy will grasp the benefits of the 4th industrial revolution by continuing to attract investment and business development will much depend on its capacity to develop a pro-active approach to this issue and future oriented policy responses. 

FIC RECOMMENDATIONS

FIC RECOMMENDATIONS

Given the fast speed of technological change, reactivity will not be enough to remain competitive on the labour market. The FIC appreciates that skills are critical for the medium and long term development of the labour market and at the same time for the economic development of Romania. An extensive digital literacy programme should be implemented across the country for the adult population allowing them to quickly redeploy to the more automated jobs of the future. This could be facilitated by public incentives. 

Educational curricula should also be upgraded to include up to date digital skills, from very early ages (including kindergarten). This should ease interaction with technology at all ages and enable acquisition of transversal competences. 

advancement and establishing appropriate measures to fund reskilling or upskilling, tapping into government funding, using free learning to minimise costs or sharing the costs with other stakeholders in or outside the industry, while motivating employee engagement in the process, are measures that should be taken by both public and private social actors. 

A similar approach should be taken in relation to social and emotional skills in order to make job adjustment more effective and to prepare workers for life-long learning.