In the 1st semester of 2023, Romania was among the EU countries with the third lowest employment rate of the population aged 15 at 64.63%, after Italy and Greece, and with the twelfth highest labor intensity index, measured as average hours. worked by an employee, which corresponded to 113 days of 8 hours out of 124 working days of the semester.

Labor intensity is determined by the ratio of the number of months actually worked in a year by household members of working age to the total number of months that could theoretically be worked by the respective persons in the same year.

Relative to the region, Romania’s labor intensity is almost 10% lower than Poland, which has the highest labor intensity in the EU, and 1.2% compared to the Czech Republic, but 4.4% higher than Hungary.

Labor intensity is determined by the ratio of the number of months actually worked in a year by household members of working age to the total number of months that could theoretically be worked by the respective persons in the same year.

A significant decrease in the annual level of GDP in the first half of 2023 compared to the annual indicator of the first half of 2022 also affected the dynamics of employment. Only in Romania did GDP continue to grow in the first half of 2023, albeit at a much lower annual rate compared to the first half of 2022 (1.7% compared to 5.6%).

In the countries of the region, GDP decreased in the first half of 2023 after a significant annual growth in the first half of 2022: in the Czech Republic by 0.6% after growing by 4.2%, in Hungary by 1.8% after growing by 7.3%, in Poland by 0.8% after growing by 8%, and in Germany, the region’s main trading partner, by 0.3% after growing by 2.9%. The impact of these events on employment varied.

In Romania, the slowdown in GDP growth led to a reduction in the number of employed people and the preservation of the average number of hours worked per employed person. In countries in the region where GDP contracted, the number of people employed continued to grow, with the exception of Hungary, where it stagnated and the average number of hours worked per person employed decreased. Both the number of employed and the average number of hours worked continue to grow in Germany.

In Romania, employment decreased in services and industry and increased in construction and agriculture, with the negative contribution of the first two sectors to total employment exceeding the positive contribution of the other two sectors.

A decline in the population employed in services, a sector that continues to be the engine of GDP growth despite lower traction compared to the first half of 2022, suggests that the market expects weak demand for services to persist. In the countries of the region, the number of people employed in the service sector continued to grow and was the main driver of the growth of the employed population.

The dynamics of labor intensity did not change in Romania, the average number of hours worked per employee remained unchanged, which indicates that the total number of hours worked and the number of employees changed in parallel (Fig. 5). In the Czech Republic and Hungary, labor intensity tended to increase during periods of rapid economic growth and tended to decrease during periods of economic recession. In Poland and Germany, the decline in labor intensity occurs after an economic boom, indicating that the market anticipated the downturn that followed.

Why is it that in Romania, unlike other countries of the region, employment is adjusted on the extensive side, the number of employed persons, and not on the intensive side, the average number of hours worked per employed person? The main reason is that the labor market is more relaxed than in countries in the region, and therefore the hiring/firing process is considered less expensive than changing the number of hours worked per employed person, part-time and/or temporary employment is underutilized.

On the one hand, in the first half of 2023, the standard unemployment rate and the extended unemployment rate (5.5%, 9.3%) were higher than the level of the countries of the region (2.5%, 6.5%) in the Czech Republic, ( 2, 7%, 4.8%) in Poland, (4%, 5.9%) in Hungary, (2.9%, 6.8%) in Germany. On the other hand, the share of part-time workers in the employed population (3.6% compared to 5.9% in the Czech Republic, 5.6% in Poland, 4.3% in Hungary and 30.1% in Germany) and those who have a temporary contract (1.4% compared to 15% in Poland, 5.8% in the Czech Republic, 5.3% in Hungary and 9.7% in Germany) was systematically lower than the level recorded in the countries of the region over the last 5 years

It is also possible that the labor market in Romania perceives the causes of the GDP slowdown as long-lasting, and for this reason a part of the employed population is excessive.