Statistics announced on Monday that unemployment fell in October to 5.4%, equivalent to about 446,000 unemployed. But numbers should be treated with caution.

In addition to the unemployed, we have more than 200,000 inactive Romanians in the labor market who want to work but cannot start working. They form what in statistical analysis is called “additional potential labor.” In addition to the 200,000, we must also count more than 110,000 people who work part-time and who were willing to work more hours than they are now considered part-time. In essence, underemployment is the new unemployment, even if it is disguised. If we add those who refused to look for work (about 140,000 people), the numbers are much higher.

That’s right, the unemployment rate is the most visible indicator obtained from the household labor force survey, which is used to “decipher” many economic and social aspects. In addition, to get a complete picture of the situation and development of the labor market, the INS annually publishes a set of 3 indicators representing categories of the employed or inactive population that have some similarities with the unemployed population. and a different degree of attachment to the labor market (compared to the standard situation of the category to which they belong), namely:

• part-time employment;

• inactive people who are looking for work, but do not have the opportunity to start work;

• inactive people who are not looking for work, but are ready to start working

More than half of the “unemployed” have low education, another 43.4% have secondary education. In addition to this category, underemployment, we also have emigration, which reduces the available labor force in Romania and lowers the unemployment rate.

According to one report just released According to the World Bank, almost 3 million Romanians of working age work abroad.

Among the Romanians who went abroad, a quarter have a higher education. Brain drain can have serious consequences for Romania’s future development, and cities such as Bucharest, Cluj, Iași and Timişoara are fully feeling this pressure on the labor market.

A significant problem here is that the number of jobs created by the economy – especially well-paid jobs with career prospects – is declining. According to some labor market specialists, the number of Romanian graduates with higher education is increasing significantly, while the number of jobs requiring higher education is not increasing as much. In other words, there is a very wide gap between what the real economy offers and what the generations entering the labor market with increasingly higher qualifications offer.

In theory, a low rate means that workers are able to take care of themselves, that the labor market is strong, and that employers and workers exchange the factor of production “labor” well.

In 2023, the number of workers receiving the minimum wage increased significantly to reach 1.897 million. Practically, this is a 52% increase compared to December 31 and represents almost a third (28%) of all employment contracts.

Economists consider the unemployment rate as an indicator of pressure in the bowels of the economy. But if many workers are unemployed, low unemployment does not necessarily mean a strong labor market. The fact that salaried workers get and stay in low-wage jobs is a sign of insufficient supply of jobs.

We have 140,000 people who refuse to look for work. Mostly 45-50 years, then 35-40 years

Discouraged persons are inactive persons who are ready to work in the next two weeks (including the week in which the interview took place), who stated that during the last 4 weeks (including the control week) they searched for a job by passive methods or that they did not look for a job because I believe that there is no suitable job.

Where to start labor market reforms? 5 main directions

1. Parametric reform of the state pension system, with the cancellation of special pensions and their recalculation based on the principles of the state accumulation system (pension points), while observing the principle that no pension in payment can and will not be reduced. At the same time, the method of indexation of the pension score will be revised to ensure a constant connection between its value as a basis for calculating the replacement income from work (pension) and the main remuneration of the factor of labor production, respectively, wages. ;

2. Reforming labor market institutions by returning to a holistic system of labor relations based on a collective labor agreement at the national level simultaneously with the creation of a partnership mechanism for establishing the minimum wage with the active involvement of social partners;

3. Reform of public service remuneration by creating a single system of official salaries for all civil servants as for contract personnel. Solving the problem of accumulating old-age pensions with wages in the public service by establishing certain mechanisms to stimulate active aging, on the one hand (participation in the labor market and beyond the standard retirement age), and on the other hand, to limit the abuse and waste of public resources;

4. Reform of local state administration, in particular through the unification of UAOadhering to the principle of their economic and fiscal viability in order to reduce their recourse to state budget resources;

5. Reform of social health insurance to reduce waste in the system and also tie the services offered to the patient to the size of the contribution to the social health insurance system. This reform should be aimed at creating a dual system consisting of a basic non-contributory component financed directly from the state budget and a contribution component effectively financed by social health insurance contributions, and in which the services offered are linked to the amount contribution, as well as the duration of the contribution period accumulated in the system.

These would be the main five areas of reform, to which would be added the need to develop a new law on the unemployment insurance system and measures to promote employment, which would completely replace the current regulatory act (Law 76/2002), such as the reform of the labor inspection, said an expert of the local labor market.