The Ministry of Labor, Family and Equal Opportunities, the World Bank and the OECD organized a workshop to discuss labor market vulnerabilities in Romania on April 17 2008. The workshop was opened by the Minister of Labor, Family and Equal Opportunities, Paul Păcuraru and World Bank Country Manager Benoît Blarel. The participants included the staffs of the Ministry of Labor, Family and Equal Opportunities; Ministry of Foreign Affairs; Ministry of Economy and Finance; Ministry of Small and Medium Sized Comp., Trade, Tourism and Liberal Professions; National Institute of Statistics as well as representatives of the international organizations, research institutes and trade unions. In his opening remarks, Mr. Păcuraru indicated the need to strengthen the linkages between academic research and public policy making. He observed that even though certain parts of Romania enjoy high economic growth and increased living standards, the challenge for policy makers is to encourage job creation in the regions that currently lag behind. Mr. Păcuraru observed how some interventions that are meant to solve a development problem may end up having unintended consequences, one example being the evidence that suggests excessive controls through inspection agencies tend to increase the prevalence of informal sector employment. Mr. Păcuraru concluded his remarks by noting the need for high quality and relevant data collection, especially in the area of informal employment. Mr. Blarel welcomed the conference as an opportunity to have a fresh look at labor market vulnerabilities from different perspectives. He noted that transition from centralized to market economy has been challenging in Romania. The 1990s were characterized by a drop of the GDP per capita and increase in poverty, followed by a relatively strong growth performance and reduction in poverty. Not all segments of the population were affected from the bust and boom periods in the same manner, however. During the recession years the distribution of consumption shifted favorably to the poor while during the economic boom distribution of consumption shifted to favor the wealthy. Further analysis of the nature of these trends reveals that unemployed adults and those who are self employed in the agriculture sector were about twice more likely to be poor compared to the others. In this context, Mr. Blarel emphasized that an in depth analysis of the linkages between informality, poverty and different types of employment is of particular importance for policy making. The morning session of the workshop focused on the prevalence and implications of informal employment in Romania. The afternoon session started with a presentation on employment dynamics since 1996, illustrating how individuals of different backgrounds changed jobs and occupations during the transition to market economy. It continued with a presentation on the characteristics of working poor in Romania. The key findings included the prevalence of a relatively large informal sector in Romania when compared with other countries; high and increasing share of adults who are not in the labor force; almost complete absence of movement of employees across sectors during a period where agriculture and manufacturing sectors lost ground and service sector started to play a more important role in the economy; and continued high risk of being “working poor” among those who are self-employed in the agriculture sector, those who are uneducated or unskilled, elderly and Roma. The workshop was characterized with lively discussions on the functioning of labor markets. Among the topics that were suggested as future research priorities are (i) the impact of taxation on informal employment; (ii) the extent to which increases in pensions are responsible for the increasing share of adults who are out of labor force; and (iii) formulation of agriculture sector policies to improve the living standards of those who are self-employed in this sector; and (iv) the impact of out-migration and remittances on labor supply in Romania. As a follow-up to this event, in June 2008 the World Bank will issue a report on labor market vulnerabilities in Romania. The OECD will issue a report on informal employment at around the same time, Romania being one of the three countries that will be studied in depth. ### For more information about the World Bank's work in Romania, visit
http://www.worldbank.org.ro |
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