Romania: Latest developments in working life Q2 2019
Strikes in the manufacturing, energy and transport sectors, and the introduction of a new pension law are the main topics of interest in this article. This country update reports on the latest developments in working life in Romania in the second quarter of 2019.
Labour disputes continue
The second quarter of 2019 saw the continuation of several labour conflicts that had begun in the first few months of the year.
On 4 March, workers at the Electrolux plant in Satu Mare County walked out after management and the company’s trade union (SAMUS) failed to reach an agreement on wages during collective bargaining. In April, the strikers organised a caravan that travelled throughout the country and finished its journey in front of the Swedish Embassy in Bucharest. The caravan was supported by the National Trade Union Confederation (Cartel ALFA) and aimed to raise awareness of the strike, encourage the Swedish management of Electrolux to become more involved, highlight the inflexibility of local management during negotiations and highlight the lack of meaningful social dialogue.
The strike ended on 8 May, after SAMUS and the local management concluded a new collective agreement. This agreement included a wage increase for each worker of 5.5% with a bonus of RON 240 gross (€51 as at 12 August 2019) per month as of 9 May 2019, and a 5.5% increase with a bonus of RON 480 (€101) per month as of 1 January 2020.
On 30 April, approximately 100 workers from electrical equipment plant Electroaparataj in central Romania went on strike. The major shareholder of the factory is the investment fund Broadhurst, following privatisation of the plant in 1997. The protesters were affiliated to the Valahia TU, which is affiliated to the Cartel Alfa TU Confederation. The strikers demanded a wage increase of 20% above the minimum wage, the implementation of a clear wage scale and promotion mechanism, increased meal vouchers, additional seniority pay, holiday bonuses, reimbursement for transport, and subsidies for healthcare. After 10 days, the management of the company announced that the protesters’ requests could not be met as the factory was going to be closed in March 2020. Despite this announcement, the strike continued and the outcome remained unclear as of the end of Q2 2019.
On 10 May, workers began a spontaneous strike at the Astra Rail Industries factory in Arad. Three days later, a solidarity strike took place at the Astra Rail Industries factory in Caracal. The strike was triggered by two factors.
- The company management decided to deduct the cost of airfare (from India to Romania) from the salary of hundreds of Indian nationals who were recently brought to work at the factory.
- The company planned to apply much lower wage increases for all workers than was promised by the previous management.
Five days into the strike, the management reached an agreement with the protesters to pay salaries for three out of the five strike days. The agreement also included gross wage increases of RON 250 (€53), which represents around 20%, from May 2019 and RON 100 (€21) from September 2019.
Parliament gives go-ahead to new pension law
At the end of June, the parliament voted in favour of a new pension law that was previously debated among social partners. The law was first voted upon in December 2018, but the parliamentary opposition challenged it in front of the Constitutional Court. In May 2019, the court ruled that several of the law’s articles were unconstitutional and so the draft was revised before being sent for a second vote.
The new law increases the benchmark that is used for calculating individual pensions (the pension point) by 15% in September 2019 and by 70%, in nominal terms, until September 2021. From 2022 onwards, the benchmark will increase each year by the annual inflation rate, plus 50% of the real growth in the average gross salary.
The law also sets the retirement age at 65 years for men and 63 for women, with a minimum retirement contribution of 15 years. A reduction of six years is applied for women who have given birth to three children (and raised until the children reached the age of 16) as long as they have completed the minimum contribution period. The planned reduction is extended by one additional year for each child beyond the first three.
The draft law was previously debated among social partners in the National Tripartite Council for Social Dialogue and in the specialised committees of the Romanian parliament. Bogdan Hossu, the leader of Cartel ALFA, argued that the new calculation formula flattens pension levels and will lead to 65% of employees receiving the minimum pension. Dumitru Costin, the leader of the National Trade Union Bloc (BNS), raised a similar concern and claimed that the law will punish future generations. Concerned about the rising deficit of the social insurance fund and the aforementioned ruling of the Constitutional Court, the BNS asked the government to perform an in-depth analysis of the sustainability of the social security system in early June.
Several employer organisations, including members of the Coalition for Romania’s Development, were also critical of the law and the sustainability of the pension system.
Industrial actions are occurring against a background characterised by severe labour shortages that increase the negotiating power of workers and legal provision. One year after its submission, the draft social dialogue law (which includes more permissive provisions for industrial action) is still being debated with social partners in the Chamber of Deputies. This is contrary to the expectations of trade unions, who anticipated a quicker adoption.