Builders’ Social Fund, Romania
The Builders’ Social Fund (Casa Socială a Constructorilor, CSC) was established in 1998 as a privately run welfare organisation to which the representative trade unions and employer organisations in the construction and building materials sector contribute equally. This framework offers the conditions for a multi-dimensional approach to combating illegal work. Welfare services are only made available to legally employed persons.
Most of the surveys on undeclared labour in Romania, as well as all of the inspection activity of the Labour Inspectorate (Inspecţia Muncii, IM), led to the conclusion that the construction sector has one of the highest proportions of illegal work.
For example, in 2001, a study was conducted by Manuela Sofia Stănculescu and Simone Ilie on the Informal sector in Romania, sponsored by the United Nations Development Programme (UNDP) and the Research Institute for the Quality of Life (Institutul de Cercetare a Calităţii Vieţii, ICCV). The report was based on information compiled from multiple sources and examines the sectoral distribution of informal employment; it shows that the greatest proportion of undeclared work is found in retail, transport and construction.
Indeed, the construction sector appears as the ‘flag bearer’ of undeclared work in a study carried out in 2004 on Undeclared work in Romania, under the aegis of the European Employment Observatory (EEO).
Similarly, inspections carried out by IM over the period 2000–2006 for the detection of undeclared work show that the economic sectors featuring the highest rates are, in decreasing order, construction, forestry and woodworking, agriculture, textiles and small retail trade. These sectors are thus eligible for special inspection rounds.
Trade unions and employer organisations in the construction sector confirm the large extent of undeclared work. The Construction Sector Social Agreement for 2007–2009 (Acordul Social Sectorial pentru Construcţii 2007–2009), signed by the sectoral social partners on 27 December 2006, estimates that undeclared work accounts for one third of the active labour force in the sector. The agreement emphasises the importance of concerted action on the part of the social partners and relevant authorities for the prevention and reduction of this problem.
The Romanian Association of Employers in Construction (Asociaţia Română a Antreprenorilor de Construcţii, ARACO) signed the sectoral agreement on behalf of employers. On the trade union side, the signatories included the Anghel Saligny National Trade Union Federation in Construction and Erection Works (Federaţia Naţională a Sindicatelor din Construcţii Montaj ‘Anghel Saligny’, FNSCM Anghel Saligny) and the FAMILIA General Federation of Trade Unions (Federaţia Generală a Sindicatelor FAMILIA, FGS FAMILIA).
The Builders’ Social Fund (Casa Socială a Constructorilor, CSC) was established in 1998 as a privately run welfare organisation to which the representative trade unions and employer organisations in the construction and building materials sector contribute in equal measure. It creates a favourable framework for joint actions by the social partners and enables a multi-dimensional approach to combating undeclared work.
The CSC members are construction work companies and manufacturers of building materials. The welfare services offered by the CSC provide them with an alternative to winter-time unemployment between November and March, when the construction sector slows down considerably.
To avail of the services of this private welfare fund manager, the contributors must produce evidence that their employees are legally employed – that is, that they have employment contracts with their personnel, registered with the local labour inspectorates, and that the social security contributions due by the employer and employees have been paid.
The overt purpose of the social partners, as clearly stated in the sectoral agreement, is to reduce the proportion of illegal work in construction.
The first step was to set up the CSC and to create a social welfare fund with distinct records for each member of the CSC. The rule is that no personal contribution may be transferred to another member. Corporate contributors pay 1.5% of their turnover and employees contribute 1% of their gross base salary.
The second step was to enter, in 2006, into the Construction Sector Social Agreement for 2007–2009, as part of which a Permanent Committee of equal representation for the control of undeclared work was appointed.
The committee members, in cooperation with representatives of the Ministry of Finance (Ministerul Finanţelor, MF) and labour inspectors, will be involved in explaining the disadvantages of undeclared work and in identifying cases of illegal work.
Evaluation and outcome
Achievement of objectives
In 2008, the CSC had a membership of 573 corporate entities, which represented 40% of all employment in the construction and building materials industries.
The number of companies paying contributions to the CSC welfare fund grew from 64 enterprises in 1998 to 175 companies in 2000, 282 in 2004 and 322 in 2007. The number of employees recorded with these companies has fluctuated over the years due to the migration of labour.
The number of welfare service recipients for the period 1 November to 1 March has gradually increased from 31,117 persons in 1998 to 110,000 individuals in 2000 and 126,000 in 2002. This figure declined to 93,801 recipients in 2004 and rose again to 102,387 persons in 2007.
Obstacles and problems
The main challenge for the future activity of the CSC is to increase the proportion of employees and companies from the construction sector that are covered by the fund.
This joint initiative enables the parties to tackle together the problems specific to the construction sector, with the aid of this structural framework.
In its 10-year old existence, the CSC has developed as a Secretariat of the entire Self-regulatory system in the construction sector (Sistem de Autoreglementări Sectoriale în Construcţii, SASEC). The latter also includes the following members:
- Vocational Institute of Builders (Casa de Meserii a Constructorilor, CMC);
- Builders’ Sectoral Vocational Training Board (Comitetul Sectorial pentru Formare Profesională în Construcţii, CSFPC);
- Builders’ Fund for Health and Safety at Work (Casa pentru Siguranţa în Mediul de Muncă a Constructorilor, Casimmco);
- Builders’ Holidays Fund (Casa de Concedii a Constructorilor, 3C);
- Joint Committee for Migrant Workers (Comitetul Paritar pentru Muncitori Migranţi, CPMM);
- Joint Committee for Combating Undeclared Work (Comitetul Paritar pentru Combaterea Muncii Neînregistrate, CPCMN);
- Joint Committee for Transnational Companies (Comitetul Paritar pentru Transnaţionale, CPT);
- Builders’ Pensions Fund (Casa de Pensii a Constructorilor, CPC).
This cooperation offers the conditions for a multi-dimensional approach to undeclared work. Providing welfare services during the cold winter season, when work is scarce, to legally employed persons contributes to reducing undeclared work in the construction sector.
As mentioned above, the number of welfare service recipients for the period 1 November to 1 March has gradually increased from 31,117 persons in 1998 to 110,000 individuals in 2000 and 126,000 in 2002. The number declined to 93,801 recipients in 2004 and rose again to 102,387 persons in 2007. These workers are legally employed in the construction sector in Romania.
Social pacts and welfare funds may have positive effects on other economic sectors affected by seasonality of work, such as agriculture, forestry, and hotels and restaurants. Moreover, such tripartite structures for cooperation between the social partners could serve as a relevant example in other countries.
Builders’ Social Fund (Casa Socială a Constructorilor, CSC)
President of Advisory Board: Laurenţiu Plosceanu
As these associations and committees are set up by the social partners, it is likely that they will help to resolve current and future issues concerning industrial relations in the construction and building materials sector.
Acord Social Sectorial pentru Construcţii 2007–2009 [Construction Sector Social Agreement for 2007–2009], 27 December 2006, available online (in Romanian) at: http://customer.kinecto.ro/CASOC/2006.12/actualitate.html.
CSC, Casa Socială a Constructorilor – Raport anual 2007 [CSC – Annual report 2007], Bucharest, 2008, available online (in Romanian) at: http://www.casoc.ro/rapoarte%20de%20firma/raport%202007%20csc.pdf.
Ghinăraru, C., Undeclared work in Romania, Thematic article, European Employment Observatory, Brussels, August 2004.
Labour Inspectorate (IM), Raport de activitate a Inspecţiei Muncii – 2007 [Labour Inspectorate report of activities –2007], Bucharest, 2008, available online (in Romanian) at: http://www.inspectmun.ro/RAPORT%20ANUAL/RAPORT%20IM%202007web.pdf.
Parlevliet, J. and Xenogiani, T., with contributions of Ghinăraru, C. and Stanculescu, M., Report on informal employment in Romania, Working Paper No. 271, Organisation for Economic Co-operation and Development (OECD) Development Centre, July 2008.
Stanculescu, M. and Ilie, S., Informal sector in Romania, United Nations Development Programme (UNDP) and Research Institute for the Quality of Life, Bucharest, 2001.
Constantin Ciutacu, Institute of National Economy, Romanian Academy