EMCC European Monitoring Centre on Change

Romania: ERM comparative analytical report on Public support instruments to support self-employment and job creation in one-person and micro enterprises

  • Observatory: EMCC
  • Topic:
  • Published on: 12 January 2012



About
Country:
Romania
Author:
Constantin Ciutacu
Institution:

Disclaimer: This information is made available as a service to the public but has not been edited by the European Foundation for the Improvement of Living and Working Conditions. The content is the responsibility of the authors.

The first instruments design to sustain self-employment and job creation, including those for one-person and micro enterprises, are promoted by Act 76/2002 regarding unemployment benefits and stimulation of employment. Even if the Ministry of Economy, Commerce, and Business Environment, through the Agency for the Implementation of Projects and Programmes for Small and Medium Enterprises is developing multi annual programmes for entrepreneurship development and self-employed persons (some started in 2002), the low level of the available budgetary resources affected the results. In times of crisis, some measures promoted by the government, as a result of the loan agreement with International Monetary Fund and European Commission represents new challenges for companies, especially for micro enterprises. In particular, in 2010 and 2011, the number of projects financed from European funds with cofinancing from national public budget increased, and new initiatives to support micro enterprises and self-employed persons were promoted by the government.

QUESTIONNAIRE

Part 1: Overall policy context

This section aims at giving a brief overview of the general development and status quo of the policy discussion and thereof resulting instruments, measures or initiatives in the field of fostering self-employment and job creation in one-person and micro enterprises (less than 10 employees). Focus is mainly on the developments during the last decade, that is before the global recession. In addition we are asking for your indication of change of policy focus since the recession.

1. General policy approach in the area of self-employment, one-person and micro enterprises at the national level


1.1. Has there been a policy focus/debate on the specific challenges facing entrepreneurship as tool for job creation before the global recession? If so, since when and for how long?

An important progress towards supporting self-employed persons and creating new jobs in business ventures at large was made when Act 76/2002 regarding unemployment benefits and stimulation of employment was enacted. This piece of legislation was a step forward from a passive approach of unemployment policies to an active approach, through mechanisms designed to stimulate corporate businesses, including micro enterprises, and to create jobs. It also provides for measures of support to private self-employment initiatives (self-employed workers, sole proprietorships).

Pursuant to tripartite debates, while the Act was in effect, and prior to the onset of the economic crisis, new measures were added to stimulate the creation of new jobs.

Another range of instruments/measures meant to help entrepreneurship and the appearance of new jobs in micro enterprises were put in place with the aid of the Agency for the Implementation of Projects and Programmes for Small and Medium Enterprises (Agenţia pentru Implementarea Proiectelor şi Programelor pentru Întreprinderi Mici şi Mijlocii, AIPPIMM), an extension of the Ministry of Economy, Commerce, and Business Environment (Ministerul Economiei, Comerţului şi Mediului de Afaceri, MECMA).

Table 1: Presence of policy focus/debate on entrepreneurship as facilitation for job creation before the crisis
 

Yes, continuously since xx? (Please indicate year)

Yes, on and off in the last 10 years

(Please indicate ‘X’ where it applies)

Yes, has been in focus, but since xx it is no longer part of the policy focus (Please indicate year)

No, it has never had policy focus before the recession

(Please indicate ‘X’ where it applies)

Self-employment

2002

     
Hiring the first employee

2002

     
Hiring additional employees/creating additional jobs in micro enterprises

2002

     


1.2. What is the main focus in policy documents or strategies in relation to public or social partner based support instruments for fostering self-employment or job creation in one-person and micro enterprises? (Please indicate ‘X’, multiple answers possible)

Table 2: Main focus in the policy documents or strategies
 

Entrepreneurship (Business development in general)

Job creation (Employment)

Growth (Competitiveness)

Others (please specify)

Self-employment

X

X

X

 
Hiring the first employee

X

X

X

 
Hiring additional employees/creating additional jobs in micro enterprises

X

X

X

 

1.3. Please elaborate on the answer given above (with a focus on those developments aimed at employment creation and growth) and indicate if the financial recession has caused a change of focus:

Table 3: The policy content and significance of the financial recession
Self-employment
Elaboration of content (please describe and also indicate whether it is treated explicitly/implicitly)

Art. 71 of Act 76/2002, regarding unemployment benefits and stimulation of employment, provides the right to free consultancy and technical assistance services to those who wish to start a sole proprietorship or a business venture, to job seekers, and to students applying for low-interest loans from the unemployment benefit fund. Such services may cover legal advice, marketing, financial counselling, etc. - explicit provisions regarding self-employed workers

Art. 86 of Act 76/2002, regarding preferential conditions for loan facilities, provides that entrepreneurs may benefit, for their new or expanded independent activities, from investment loans for a repayment period of maximum three years at an interest rate of 50% of the National Bank of Romania’s reference interest rate, provided that at least 60% of the jobs they so created be assigned to unemployed persons, and that the applicant entrepreneurs conduct their business in manufacturing, services or tourism.

For such loans, a preferential treatment is given to the unemployed who wish to start a business.

If the applicant is or will be conducting business in geographical areas of Romania where the unemployment rate is above the national average, the interest rate will be 25% of the reference interest rate of the National Bank of Romania (Banca Naţională a României, BNR).

Another category of individuals that qualify for preferential loans are students below the age of 30.

Explicit provisions regarding self-employed workers

The AIPPIMM is the body that oversees the 'National Multiannual Programme 2002-2012 for the development of entrepreneurship among youths and smoothing their access to funding'. The following segments are eligible to the Programme: individuals, licensed individuals, sole proprietorships, family companies, micro-enterprises.

The aim of the programme is to help the best business plans come to fruition through non-refundable finance subject to the following conditions: 50% of the eligible expenses, up to a ceiling of RON 60,000/recipient (according to BNR, annually average exchange rate RON/EUR for 2010, approximately € 14,250/recipient); bank loan in the worth of 37.5% of the eligible expenses, but no more than RON 45,000/recipient (€ 10,700), granted by a bank acknowledged by AIPPIMM. The recipient’s own contribution must be at least 12.5% of the total worth of eligible expenses.

Change due to the financial recession

Please tick:

Yes: □

No: X

If ‘Yes’, please elaborate:

Hiring the first employee
Elaboration of content (please describe and also indicate whether it is treated explicitly/implicitly)

Act 76/2002, Art. 86, which refers to preferential loans, provides that the creation of new jobs through the establishment or expansion of small and medium enterprises, cooperative associations, family companies, and independent activities carried out by licensed individuals entitles such individuals to loans for a repayment period of maximum three years, for investment purposes, at an interest of 50% of the reference interest rate of the BNR, provided that at least 60% of the jobs so created be assigned to unemployed persons, and that the applicant entrepreneurs conduct their business in manufacturing, services or tourism.

For such loans, a preferential treatment is given to the unemployed who wish to start a business.

If the applicant is or will be conducting business in geographical areas of Romania where the unemployment rate is above the national average, the interest rate will be 25% of the reference interest rate of the BNR.

Another category of individuals that qualify for preferential loans are students below the age of 30.

Financial aid from non-refundable resources is also granted to projects aimed at creating jobs for the unemployed in geographical areas where unemployment rate is high, provided that the recipient should contribute at least 25% of the worth of the project, and that employment is offered for at least four years.

Act 76/2002, Art. 87, provides that family companies may receive preferential loans or non-refundable finance pro rata to the number of their members. Licensed individuals may receive preferential loans or non-refundable finance to cover expenses related to their own workplace. After repayment of the first loan, they may apply for a new one.

Provisions implicitly covering the issue of hiring the first employee

Change due to the financial recession

Please tick:

Yes: □

No: X

If ‘Yes’, please elaborate:

Hiring additional employees/creating additional jobs in micro enterprises
Elaboration of content (please describe and also indicate whether it is treated explicitly/implicitly)

Act 76/2002, Art. 86, which refers to preferential loans, provides that the creation of new jobs through the establishment or expansion of small and medium enterprises, cooperative associations, family companies, and independent activities carried out by licensed individuals entitles such individuals to loans for a repayment period of maximum three years, for investment purposes, at an interest of 50% of the reference interest rate of the BNR, provided that at least 60% of the jobs so created be assigned to unemployed persons, and that the applicant entrepreneurs conduct their business in manufacturing, services or tourism.

For such loans, a preferential treatment is given to the unemployed who wish to start a business.

If the applicant is or will be conducting business in geographical areas of Romania where the unemployment rate is above the national average, the interest rate will be 25% of the reference interest rate of the BNR.

Another category of individuals that qualify for preferential loans are students below the age of 30.

Financial aid from non-refundable resources is also granted to projects aimed at creating jobs for the unemployed in geographical areas where unemployment rate is high, provided that the recipient should contribute at least 25% of the worth of the project, and that employment is offered for at least four years.

Act 76/2002, Art. 87, provides that family companies may receive preferential loans or non-refundable finance pro rata to the number of their members.

Licensed individuals may receive preferential loans or non-refundable finance to cover expenses related to their own workplace.

After repayment of the first loan, they may apply for a new one.

Explicit provisions regarding creation of jobs in micro enterprises

Act 76/2002, Art. 80, regarding subsidies to job creation, provides that employers who hire, for an indefinite term, holders of higher learning degrees within 12 months of graduation, will be exempt from payment of unemployment contributions for a period of 12 months (18 if the recruits are also disabled persons), and will receive a monthly amount per such employee equal to the value of the reference social indicator (which is 1:1 for graduates of first ten years of compulsory schooling, and for graduates of schools of crafts and trades; 1,2:1 for graduates of high school and post-high school education; and 1,5:1 for graduates of higher education institutions). The reference level of such amounts was, until 14 October 2008, the gross minimum wage at national level; since then, the reference indicator is the social indicator, the value of which is approximately 75% of the national minimum wage.

The payment of moneys due for the employment of fresh graduates is subject to continued employment for at least 3 years.

If, during these 3 years, the employee attends any form of vocational training, the expenses related thereto are covered from the unemployment insurance budget.

For each of the next two years of continued employment, the employers are entitled to receive financial aid in an amount equal to the amount of social security due to the state budget for such employees (social security, health care, labour accident and professional disease insurance, unemployment benefit).

Implicitly for micro enterprises, Act 76/2002 provides, in Art. 85, that employers who hire, for an indefinite term, unemployed persons aged 45 and over, or unemployed persons who are single parents will be exempt, for a period of 12 months, from the payment of unemployment insurance contribution related to such persons, and will receive, also for a period of 12 months, an amount equal to the value of the reference social indicator, provided that employment is continuous for at least two years. The reference level of such amounts was, until 14 October 2008, the gross minimum wage; since then, the reference indicator is the social indicator, the value of which is approximately 75% of the national minimum wage.

Employers that hire unemployed persons who, within the next three years from employment, qualify for anticipated retirement, will receive, monthly, for the entire period of employment, an amount equal to the reference social indicator.

Change due to the financial recession

Please tick:

Yes: □

No: X

If ‘Yes’, please elaborate:

2. Disincentives for self-employment and job creation

The following two questions will investigate whether there has been a change in the political agenda which has forced new political initiatives that may result in disincentives for job creation and business development (e.g. considerations regarding public budget).


2.1 Have public measures (e.g. with the aim to increase public revenue or cut public spending) led to disincentives for self-employment or job creation in one-person or micro enterprises before the financial recession? (Please briefly describe the major developments/initiatives (max. 300 words)

Prior to the economic recession, people running small and medium enterprises (SME), including micro enterprises, often complained about:


  • a persisting bureaucratic procedure for the set up of a business, be it small or medium (which made the simplification of incorporation procedures, particularly of micro enterprises, one of the recurring demands on the agenda of the social partners);a continuously high level of social security contributions, both on the employers’ and employees’ sides (despite the slight decreasing tendency in January 2008, when, for example, the social security contribution for normal working conditions was 29%, of which 19.5% was payable by employer, and 9.5% by employee; for special working conditions was 34%, of which 24.5% payable by employer, and 9.5% by employee; and for exceptional working conditions was 39%, of which 29.5% payable by employer, and 9.5% by employee);
  • countless difficulties encountered by SMEs seeking to access sources of finance, and in finding collateral/security instruments accessible to them, with no preferential treatment tailored to the needs of micro enterprises;
  • constantly growing overhead expenses due to increasing prices of energy, fuels, etc., as a consequence of convergence with European prices;
  • rigid provisions of the Labour Code, which do not allow a flexible work schedule for SME employees, etc.

2.2 Have public measures (e.g. with the aim to increase public revenue or cut public spending) led to disincentives for self-employment or job creation in one-person or micro enterprises as a result of the financial recession? (Please describe – max. 300 words)

After the economic crisis set in, due to budget constraints, the measures taken with effect from 2008 generated new challenges for corporate businesses, including SMEs.

Following successive amendments to the Tax Code (Act 571/2003), the revenue tax for micro enterprises grew from 2% in 2007 (a year of economic boom), to 2.5% in 2008, and to 3% in 2009 and 2010 (peak years of the crisis).

Similarly, with effect from 1 May 2009 (through Government Emergency Ordinance 34/2009, regarding 2009 budget rectification, and certain financial and tax measures), a minimal flat tax is levied on the annual revenues of micro enterprises.

In this way, the tax payers whose profit tax calculated pro rata to total revenues was lower than the amount of minimal tax payable for total revenues according to the flat tax grid, had to pay the minimal tax stipulated by the Tax Code.

The amounts of minimal tax determined according to total revenues on record at 31 December of the previous year were as follows:

Total annual revenues (€) Minimal annual tax (€)

0- 12,093

512

12,094 – 50,000

1,000

50,001-100,000

1,512

100,001 – 1,000,000

2,000

1,000,001 – 5,000,000

2,558

5,000,001-30,000,000

5,116

More than 30,000,000

10,000

Source: Authors’ own calculations based on data from the Tax Code and on the RON/EUR annual average rate of exchange.

Employers’ organisations have estimated that this taxation formula adversely affected some 40,000 micro enterprises, some of which went into dissolution.

The flat tax was abrogated, at the request of employers’ organisations and trade unions by an act passed in 2010 (Act 76/2010). Currently, micro enterprises pay an annual tax 3% of their annual revenues.

Another step that had a negative effect on the business of micro enterprises was the increase, with effect from 1 July 2010, of the value added tax from 19% to 24%, which the Government motivated as necessary for the reduction of the budget deficit.

The result was that Romania had the highest annual inflation rate of all EU Member States, the purchasing power and the demand dropped, all of which caused a large number of bankruptcies, particularly among micro enterprises.

By emergency ordinance, and modifying the provisions of the Tax Code, with effect from 1 July 2010, all non-salaried revenues from professional activities have been subject to a tax of 16%. Same revenues are also subject to deductions (totalling about 16.5%) for individual social security contributions, such as pension, health and unemployment funds. The basis for calculating this is the aggregate amount of five gross average national salaries. The taxation base will be the gross revenues, minus 20% as deductible expenses. Prior to these new regulations, the copyright tax was 10%, the deductible share was 40%, and copyright holders did not pay social security contributions. The measure distinguishes between freelances who derive their earnings exclusively from independent activities, and individuals whose main source of income is a salary, which they supplement with freelancing.

According to estimations in the media, the new regulations will affect the revenues of some 80,000–100,000 people paid under copyright law, with the effect of cutting their earnings by about 25%, as a result of the increased income tax rate and the new social security contributions.

Scientists, artists, teaching staff and academics should be subject to distinct taxation rules, specifically tailored for them.

3. Representation of/lobbying for self-employed and micro enterprises


Are self-employed and micro enterprises in your national context explicitly or implicitly (e.g. entrepreneurs or SMEs in general) represented by the following types of organisations (e.g. for lobbying, defending their interest etc.)?

Table 4: Representation of self-employed and micro enterprises
 

Self-employed

Micro enterprises

Employers’ organisations

Yes, implicitly, by the representative organisations of small and medium enterprises, and of private entrepreneurs:

The Romanian National Council of Private Small and Medium Enterprises (Consiliul Naţional al Întreprinderilor Mici şi Mijlocii din România, CNIPMMR)

The Young Romanian Employers Organisation (Patronatul Tinerilor Întreprinzători din România, PTIR)

The National Federation of Family Doctors Employer Organisations (Federaţia Naţională a Patronatelor Medicilor de Familie, FNPMF)

Yes, implicitly, by the representative organisations of small and medium enterprises, and of private entrepreneurs:

CNIPMMR

PTIR

FNPMF

Employees’ organisation

Yes, implicitly

The National Trade Union Confederation Meridian (Confederaţia Sindicală Naţională Meridian, CSN Meridian)

The associated cooperatives of self-employed persons have an agreement with CSN Meridian to support their rights

Yes, implicitly

In agriculture, for example, the sector with the highest number of self-employed persons, a prominent place is held by the National Federation of Trade Unions in Agriculture, Food, Tobacco and Related Industries AGROSTAR (Federaţia Naţională a Sindicatelor din Agricultură, Alimentaţie, Tutun, Domenii şi Servicii Conexe AGROSTAR, Federaţia AGROSTAR), a professional, democratic, non-political organisation of national recognition, to which members adhere by their free will, and which brings together workers from commercial farming units, agricultural research institutes and experimental farms, catering and chain food and tobacco providers, farm producers, as well as persons who exercise a trade or a profession

No.

Not-for-profit organisations

Generally speaking, implicitly, by professional associations of liberal professionals, and licensed individuals (similar to one-person enterprises, or similar to micro enterprises, if they hire work).

For example, the interest of chartered accounts, be they employed or self-employed, are represented by the Corps of Chartered and Expert Accountants of Romania (Corpul Expertilor Contabili si Contabililor Autorizati din Romania, CECCAR), the interests of notaries public are represented by the National Union of Notaries Public of Romania (Uniunea Naţională a Notarilor Publici din România, UNNPR), the interests of physicians are repressented by the Collegium of Romanian Physicians (Colegiul Medicilor din România, CMR), journalists by The Union of Professional Journalists of Romania (Uniunea Ziariştilor Profesionişti din România, UZPR), writers by the Union of Romanian Writers (Uniunea Scriitorilor din România, USR), musicians by the Union of Composers and Musicologists of Romania (Uniunea Compozitorilor şi Muzicologilor din România, UCMR). There are also county associations of family doctors.

Generally speaking, implicitly, by professional associations of liberal professionals, and licensed individuals (similar to one-person enterprises, or similar to micro-enterprises, if they hire work).

For example, the interest of chartered accounts, be they employed or self-employed, are represented by CECCAR, the interests of notaries public are represented by UNNPR, the interests of physicians are repressented by CMR, journalists by UZPR, writers by USR, musicians by UCMR. There are also county associations of family doctors.

Others

No information available

No information available

Part 2: Identification and description of relevant recent support instruments

The following section asks for the identification of public or social partner based support instruments initiated during or after the recent economic crisis (that is, 2008 onwards). These measures might have, but must not necessarily have been triggered by the recession. Measures may also have been initiated earlier, but changed in order to adapt to the recession or other recent developments. Rather than a comprehensive list of all instruments available at national, regional or local level, the most important, most innovative, most interesting and most effective tools are to be described. Thereof, a selection of up to three ‘Good Practices’ to be described in more detail is to be made.

1. Selection of region(s) when total coverage of the entire regional and local level is too comprehensive

When providing the brief overview and the three ‘Good Practices’ in this section of the questionnaire, measures and instruments at national level have to be included. We would in addition ask you to include regional and local level initiatives where relevant. Nonetheless, a complete coverage of regional and local levels may not be possible for all countries (e.g. because of a high degree of decentralisation resulting in a wide range of respective measures characterised by considerably heterogeneity). At the same time, it can be assumed that for instruments targeting at supporting self-employment and the creation of employment in one-person and micro enterprises the local administrative level is of considerable importance. If so, such measures will be designed to fit to the local characteristics and needs, resulting in a wide variety of different approaches. In this case, one or few local areas or regions may be selected to be covered in this report. Details on the selection are given in table 5.

Table 5: Administrative level/region(s) covered for the following research (max. 50 words per region)

Administrative level relevant for the rest of the questionnaire

National level

If a specific regional/local are is selected, please provide the following information

Name of region

 
Motivation for selecting this region

Facts about the region e.g.

- Geographic location

- No. of inhabitants

- Business structure (sector, size)

- Labour market

- Specific characteristics if applicable

 

2. Brief overview of recent instruments to foster self-employment or job creation in one-person and micro enterprises


2.1. Please provide a brief description (max. 800 words) of public or social partner based instruments recently initiated (2008 onwards) to support self-employment and job creation in one-person or micro enterprises.

Measures covered by the European Employment Observatory Review on self-employment 2010, European Commission, Directorate-General for Employment, Social Affairs and Equal Opportunities are to be omitted to avoid duplication (see Part 3 of this questionnaire).

Table 6: List of recent instruments

Title

Government Emergency Ordinance 6/2011 on stimulating the establishment and development of micro enterprises by young entrepreneurs (Ordonanţa de urgenţă nr. 6/2011 pentru stimularea înfiinţării şi dezvoltării microîntreprinderilor de către întreprinzătorii tineri)

Aim/objective

To encourage young people to set up and develop micro enterprises

Description of support

Support consists of:

non-refundable finance (from the budget of the MECMA) equal to maximum 50% of the business plan related to the project, and no more than € 10,000;

guarantees provided by the National Credit Guarantee Fund for Small and Medium Enterprises (Fondul Naţional de Garantare a Creditelor pentru Întreprinderi Mici şi Mijlocii, FNGCIMM), covering a maximum of 80% of the loans engaged, and no more than € 80,000;

exemption from payment of social security contributions owed by employers for the earnings of maximum four employees working under an open-ended employment contract, up to a ceiling of four average gross national salaries at national level;

exemption from payment of taxes charged by trade registry offices for the incorporation of micro enterprises;

counselling, training, and support AIPPIMM and its local branches.

Target group

Young persons up to the age of 35 years, who start a limited liability company for the first time, who have never been shareholders or who have never held a management position in any other corporate business in the European Economic Area

Initiator and other actors involved

MECMA, AIPPIMM and its local branches, FNGCIMM

Duration (please also indicate whether the measures has been initiated due to the recession)

For the period 2011 – 2012, according to a statement by government officials, non-refundable finance will be allocated from the MECMA budget for 1,100 micro enterprises.

This initiative was taken to support young persons and to generate jobs during the crisis period.

Title

The Mihail Kogălniceanu programme for small and medium enterprises, as laid down in Government Emergency Ordinance 60/29 June 2011

Aim/objective

To create a favourable environment for the creation and development of small and medium enterprises, by smoothing access to finance, in the unfavourable economic context generated by the financial and economic crisis

Description of support

Access to a credit line of maximum RON 125,000/company (€ 30,000/company), with partial subsidies to the interest owed, and, where applicable, with state guarantee for the credit line, according to the following scheme:

subsidy for a maximum of 70% of the interest rate on the loan the company plans to engage, but no more than 6.5% per year;

state guarantees from the FNGCIMM, for a maximum of 80% of the worth of the loan, but no more than RON 100,000 (€ 24,000).

The amounts drawn from the credit line may be used, inter alia, to cover wage-related and similar costs, payments of taxes, contributions and other dues to the central state budget.

Target group

Small and medium companies at large, including micro enterprises, which fulfil all of the following conditions: are not in financial difficulty; the amount of de minimis state aid received in the past three years does not exceed the equivalent of € 200,000 (€ 100,000 for SMEs operating in the road transport sector); have been in operation for at least two consecutive years; possess property that can be pledged as collateral to the credit institutions for at least 40% of the worth of the loan.

Initiator and other actors involved

MECMMA, FNGCIMM, and AIPPIMM

Duration (please also indicate whether the measures has been initiated due to the recession)

2011 – 2013, a total budget of RON 165,000,000 (€ 39,200,000)

Yes, the measures have been taken to alleviate the effects of the crisis

Title

The Sectorial Operational Programme for the Development of Human Resources, Axis 3, Increasing adaptability of workers and enterprises, Key Area of Intervention 3.1. Promoting Entrepreneurial Culture (Programul Operaţional Sectorial Dezvoltarea Resurselor Umane, Axa 3 Creşterea adaptabilităţii lucrătorilor şi a întreprinderilor, Domeniul major de intervenţie (DMI) 3.1 Promovarea culturii antreprenoriale)

Aim/objective

To promote entrepreneurial culture, thereby helping individuals to increase their capacity to translate business ideas into facts.

It aims at encouraging not only the creation of new businesses, but also at helping existing ones to expand.

Managers of micro enterprises will thus acquire the necessary knowledge of how to best use business opportunities, and become more competitive on the market.

Description of support

The initial financial allocation for the time span 2007 – 2013 was € 180.2 million, of which € 152.7 million came from the European Social Fund (ESF), € 9.7 million came from the state budget, and € 17.8 million was the project developers’ own contribution.

Corporate businesses may receive non-refundable finance of an amount of € 450,000 – 4,500,000 (RON 1.85 million – 18.5 million)/ strategic project; natural persons may receive non-refundable finance in an amount of € 45,000 – 450,000/grant. Projects must be completed in maximum three years.

The project is financing training activities for employees and management staff from SMEs and for persons seeking to start their own business.

Target group

Employees; management staff, particularly in small, medium and micro enterprises; entrepreneurs; persons seeking to start a business of their own.

Initiator and other actors involved

Ministry of Labour Family and Social Protection (Ministerul Muncii, Familiei şi Protecţiei Sociale, MMFPS); the Management Authority for the Sectoral Operational Programme Human Ressources Development (AMPOSDRU), Ministry of Education Research and Youth (Ministerul Educaţiei, Cercetării şi Tineretului, MECT) /The Intermediate Body for the Sectoral Operational Programme Human Ressources Development (OIPOSDRU)

Duration (please also indicate whether the measures has been initiated due to the recession)

The time span 2007 – 2013, by way of successive calls for project applications.

The measure was designed in 2006-2007, when the economic crisis was not anticipated.

The difficulties encountered by SMEs and particularly the micro enterprises made it necessary for the Government to supplement non-refundable allocations by some € 255 million.

Title

The National Rural Development Programme, Axis III, Improvement of quality of life in rural areas, and diversification of rural economy, Measure 312 Support to creation and development of micro enterprises (Programul Naţional de Dezvoltare Rurală, Axa III – Îmbunătăţirea calităţii vieţii în zonele rurale şi diversificarea economiei rurale, Măsura 312 - Sprijin pentru crearea şi dezvoltarea de microîntreprinderi)

Aim/objective

General aim: sustainable development of rural economy by encouraging non-agricultural activities, for the purpose of increasing the number of jobs and additional revenues.

Specific aims are to:

1. Create micro enterprises, and help expansion of existing, non-agricultural, businesses operating in rural areas;

2. Encourage business initiatives, particularly those undertaken by youths and women;

3. Stimulate traditional crafts and occupations;

4. Reduce the level of dependence on agriculture.

Description of support

Non-refundable finance for investment in tangible and/or intangible assets in non-agricultural business in rural areas.

Worth of funding:

- € 50,000/project, for licensed individuals;

- € 200,000/project for non-agricultural micro enterprises (€ 100,000/project for road transport micro enterprises).

The recipient must contribute 30% of eligible expenses.

Target group

Micro enterprises staffed with 10 or less employees, which have a net turnover of, or possess assets that total, € 2 million in RON equivalent, and whose registered office and business place are in the country side.

Individuals unincorporated as business owners, who undertake to license themselves as self-employed by the date of execution of the financial agreement, and to conduct business as micro enterprises with a head office and business place in the country side.

Initiator and other actors involved

Financers: Government of Romania (Guvernul României, with a share of 20% earmarked from the state budget) and the European Union (with a share of 80% earmarked from the European Fund for Agriculture and Rural Development)

Duration (please also indicate whether the measures has been initiated due to the recession)

2010 – 2013, with calls for application, and designed to help overcome the economic crisis

Title

The Sectorial Operational Programme for the Improvement of the Competitiveness of Enterprises, Key Area of Intervention 23 Support for innovative start-ups and spin-offs (Programul Operaţional Sectorial Creşterea Competitivităţii Economice, DMI 2.3 Sprijin pentru start-up-uri şi spin-off-uri inovative)

Aim/objective

To help create innovative start-ups and spin-offs (based on transfer of technologies developed in higher educational establishments) designed to create new products and services

Description of support

Grant in the maximum worth of € 200,000 for any of the following:

incorporation of a new business entity (only for spin-offs);

research and development, or acquisition of R&D services;

services for R&D;

acquisition of consultancy services for innovation in: management; technical assistance; technological transfer; education and training; acquisition, protection, and trading of intellectual property rights and use of standards;

acquisition of support services for innovation (testing and inspection techniques in specialised laboratories, market research, etc.);

practical application of research products;

access to sources of information, etc.

Recipient must contribute a minimum of 10% of the eligible expenses

Target group

Start-ups being defined as innovative businesses that have been in operation for no more than 3 years, and that implement (manufacture and market) the results of research and development activities.

Spin-offs being defined as business entities newly created by a research group in a public research institute or academic establishment, for the purpose of manufacturing and marketing the results of their own R&D activities.

Initiator and other actors involved

The Government of Romania and the European Union

Duration (please also indicate whether the measures has been initiated due to the recession)

2010 – 2013

Taken during and against the crisis

Permanent call for project submission.

Title

The UNCTAD Programme (The United Nations Conference for Trade and Development, Programul UNCTAD, Conferinţa Naţiunilor Unite pentru Comerţ şi Dezvoltare) /EMPRETEC – Romania for support to small and medium-sized companies

Aim/objective

To support the development of small and medium enterprises, generate new jobs, increase the number of small and medium enterprises fit to cope with competition constraints in a globalised market.

Description of support

Stage I is devoted to allocation of finance to workshops on subjects of interest for the development of entrepreneurship, so that the trainees acquire the requisite entrepreneurial knowledge and skills needed to start and continue a business.

The admission fee to such workshops is RON 1,000 (€ 240).

Stage II consists of funding in the maximum amount of RON 100,000/ project granted for the best business plans submitted by the trainees. Stage II is also open to applicants that did not attend Stage I.

Target group

Individuals

Initiator and other actors involved

The Government of Romania, c/o AIPPIMM and UNCTAD

Duration (please also indicate whether the measures has been initiated due to the recession)

The budget for the year 2011 is RON 350,000 (€ 83,000). The measure is not recession specific.

Title

The National Programme for Rural Development, Axis I, Increasing the competitiveness of the agricultural and forestry sectors, Key Area of Intervention 112 Settlement of Young Farmers (Programul national de Dezvoltare Rurala – PNDR- Axa I Creşterea competitivităţii sectorului agricol şi forestier, DMI 112 Instalarea tinerilor fermieri)

Aim/objective

General aims:

improve and develop competitiveness in the agricultural sector by helping young farmers settle down/remain in the country side and upgrade their farms in line with the legislation governing protection of environment, health and welfare of livestock, work safety;

improve the management of industrial farms by appointing new managers.

Description of support

Non-refundable finance of maximum € 10,000/farmstead with a minimum size of 6 UDE (UDE = economic unit equal to € 1,200)

Settling-down aid of € 2,000/UDE

Total amount of aid may not exceed € 25,000/farmstead

Target group

Farmers aged up to 40 years, who, as individuals, licensed individuals, or incorporated businesses, conduct mainly farming activities, and whose farmsteads range in size between 6 and 40 UDE.

Initiator and other actors involved

The Government of Romania and the European Union

Duration (please also indicate whether the measures has been initiated due to the recession)

2010 – 2013; the measure is not recession specific


2.2. In-depth description of ‘Good Practices’

Please choose up to three examples from the above list that can be considered as ‘Good Practice’ (e.g. because of their effectiveness, innovative character or beneficial cooperation among different stakeholders) and describe them in detail.

Example 1: Suppport to create and develop micro-enterprises

Name of the programme/instrument

In national language and English

The National Programme for Rural Development, Axis III, Improvement of the quality of life and diversification of rural economy, Measure 312- Support to create and develop micro-enterprises (Programul Naţional de Dezvoltare Rurală, Axa III – Îmbunătăţirea calităţii vieţii în zonele rurale şi diversificarea economiei rurale, Măsura 312 - Sprijin pentru crearea şi dezvoltarea de microîntreprinderi)

Is the instrument explicitly addressing any of the following: Self-employment Hiring the first employee Hiring additional employees/creating additional jobs in micro enterprises
Please ‘X’ and/or describe if relevant X X X
Operational level Local Regional National
Please ‘X’ and/or describe if relevant     X

Rationale/motivation for the instrument

(please describe)

The need to stimulate the development of non-agricultural activities in the rural areas.

Purpose and aims for the instrument (please describe)

General aim: to help the sustainable development of rural economy by encouraging non-agricultural activities, for the purpose of increasing the number of jobs and additional revenues

Specific aims:

Create micro enterprises, and expand the existing ones that operate in non-agricultural business in the country side;

Encourage business initiatives particularly among youths and women;

Encourage crafts and traditional occupations;

Reduce the level of dependence on agriculture.

Initiator
Please ‘X’  

X

 

X, structural funds EU

Other stakeholders actively involved in implementation (please name them and describe their roles)

Not applicable

Target groups        
Please describe the target groups (sector, age, level of education, gender)

Micro enterprises staffed with 10 or less employees, which have a net turnover of, or possess assets that total, € 2 million in RON equivalent, and whose registered office and business place are in the country side.

Funding        
Please describe the funding of the instrument/programme (national and European sources, budget available)
Activities    
Please describe the activities of the programme or institutional initiative as detailed as possible

Non-refundable finance for investments in tangible and/or intangible assets in non-agricultural business in rural areas.

The worth of the funding:

€ 50,000/project, for licensed individuals;

€ 200,000/project for non-agricultural micro-enterprises (€ 100,000/project for road transport micro-enterprises).

The recipient must provide 30% of the eligible expenses.

Results (Effectiveness)      
Please describe the results e.g. number of beneficiaries, advised enterprises

Funds in the total worth of € 385.2 million have been allocated for the period 2007 – 2013.

The first call for projects took place at the end of 2008.

Challenges in order to reach the objectives e.g. for the organisation offering the instrument, the entrepreneurs (Please describe); and if available how these have been overcome

Due to some recipients’ failure to comply with contractual clauses, by 30 June 2011, 36 such contracts (1.76% of all contracted projects) had been cancelled , in a total worth of € 5.2 million (1.8% of total worth of contracted projects).

Assessments of the effectiveness e.g. investments made in order to reach the objectives of the programme (outcome vs. investment) (Please base this assessment on evaluations when possible)

The very large number of applications for finance from non-refundable sources for this Axis is a proof of the adequacy of the programme’s aims. Both in 2009 and in 2010, the large number of projects submitted required additional calls for project submission.

After the sessions scheduled in October – November 2009, and November – December 2009, when a number of 328, and, respectively, 455 projects were accepted for finance, in a total worth of € 48 million, and, respectively, € 47.9 million, an additional call was held, during which 473 new projects were selected, in a total worth of € 88.2 million.

Similarly, for the June – July 2010 call, the initial number of 814 projects accepted in a total worth of € 96 million was supplemented by another 152 projects in the worth of € 10.2 million.

Outcomes (Efficiency)  
Increasing self-employment, growth and employment e.g. number of start-up and/or jobs created etc. (please describe, preferably based on evaluations, otherwise on experts’ assessment)

For example, 145 of the 814 projects initially selected in the June – July 2010 session are especially designed for the creation of micro enterprises for non-agricultural business (civil engineering, automotive services shops, veterinary surgery rooms and clinics, dental practices, wood processing, landscaping, craftsmen workshops, plastic material processing, manufacture of paper, textile, footwear items, management consultancy offices, etc.)

Please provide link to evaluation documents if possible
Example 2: Promotion of entrepreneurial culture

Name of the programme/instrument

In national language and English

Sectorial Operational Programme for the Human Resources Development, Axis 3, Improve adaptability of workers and businesses, Key area of Intervention 3.1, Promotion of entrepreneurial culture (Programul Operaţional Sectorial Dezvoltarea Resurselor Umane, Axa 3 Creşterea adaptabilităţii lucrătorilor şi a întreprinderilor, Domeniul major de intervenţie 3.1, Promovarea culturii antreprenoriale)

Is the instrument explicitly addressing any of the following: Self-employment Hiring the first employee Hiring additional employees/creating additional jobs in micro enterprises
Please ‘X’ and/or describe if relevant X   X
Operational level Local Regional National
Please ‘X’ and/or describe if relevant     X

Rationale/motivation for the instrument

(please describe)

Low rate of adult participation in life-long training.

According to the objectives of the Lisbon Strategy, 15% of the adult persons in Romania were supposed to take part in life-long training programmes. A report of the European Commission reveals that, in 2008, the rate of adult participation in life-long training was only 1.5%.

Purpose and aims for the instrument (please describe)

Promotion of entrepreneurial culture for the purpose of helping individuals translate their business ideas into fact.

This is possible not only through setting up new business entities, but also through the change of the current scope of business.

Micro enterprise managers acquire knowledge of how to best use business opportunities and success factors for them to be competitive on the market.

Initiator
Please ‘X’    
Other stakeholders actively involved in implementation (please name them and describe their roles)

Not the case

Target groups        
Please describe the target groups (sector, age, level of education, gender)
Funding        
Please describe the funding of the instrument/programme (national and European sources, budget available)

The initial financial allocation for the time span 2007 – 2013 was € 180.2 million, of which € 152.7 million came from the European Social Fund (ESF), € 9.7 million came from the state budget, and € 17.8 million was the recipients’ own contribution.

The non-refundable finance for corporate businesses ranges between € 450,000 – 4,500,000 (RON 1.85 million – 18.5 million)/strategic project; the non-refundable finance for individuals ranges between € 45,000 – 450,000/grant. Projects must be completed in maximum three years.

Activities    
Please describe the activities of the programme or institutional initiative as detailed as possible

Awareness campaigns; seminars; surveys and studies on the opportunities to develop entrepreneurship, particularly in new occupations and in emerging sectors (sustainable tourism, green energy, etc.); research activities; incentives to start a business (subsidies for fees to register the company, etc.); vocational training, counselling, consultancy, technical assistance and post-assistance for starting an independent business and operating as a self-employed person; courses for update of knowledges for the employees of micro enterprises, etc.

Results (Effectiveness)      
Please describe the results e.g. number of beneficiaries, advised enterprises

The recipients of non-refundable finance are: micro enterprises, public authorities, licensed providers of training services, entrepreneurship research and development centres, public and private universities, organisations of the social partners, professional associations, NGOs, various bodies and agencies of the MMFPS, etc.

Since the date of the first call for projects (2009) until June 2011, a number of 117 projects qualified for and obtained the funding, which totalled some € 180 million.

The average worth of project finance is € 1.5 million.

Challenges in order to reach the objectives e.g. for the organisation offering the instrument, the entrepreneurs (Please describe); and if available how these have been overcome

A first issue was the belated call for projects and the late arrival of finance; the first contracts were signed in 2009, more than two years after Romania’s accession to the EU.

This is the reason why, in 2009, there was a dramatic shortfall of the targets proposed, respectively:

the number of trainees in business start-ups was 230, against the panned number of 9,900;

the number of trainees in management and labour management courses was only 540, from the planned 4,900;

the number of trainees in refresher courses was 1,523, from the planned 92,500;

only 5.2% of the training graduates actually started a business, compared to the contemplated 25%.

Assessments of the effectiveness e.g. investments made in order to reach the objectives of the programme (outcome vs. investment) (Please base this assessment on evaluations when possible)

The large number of project submissions for this Axis required supplemental funding.

In 2010, the number of contracted projects was double from 2009, and the largest worth of funding applied for was for the development of entrepreneurial culture.

Outcomes (Efficiency)  
Increasing self-employment, growth and employment e.g. number of start-up and/or jobs created etc. (please describe, preferably based on evaluations, otherwise on experts’ assessment)

The data available are insufficient for the assessment, in exact figures, of the efficiency with which the financial support was used over a relatively short span of time since inception.

The very large and increasing number of requests of financing starting with 2010 is a prove for the interest and the future efficiency of the instrument.

Please provide link to evaluation documents if possible  

Example 3: Stimulating start-ups and expansion of micro enterprises by young entrepreneurs

Name of the programme/instrument

In national language and English

Government Emergency Ordinance 6/2011 on stimulating the establishment and development of micro enterprises by young entrepreneurs (Ordonanţa de urgenţă nr. 6/2011 pentru stimularea înfiinţării şi dezvoltării microîntreprinderilor de către întreprinzătorii tineri)

Is the instrument explicitly addressing any of the following: Self-employment Hiring the first employee Hiring additional employees/creating additional jobs in micro enterprises
Please ‘X’ and/or describe if relevant X   X
Operational level Local Regional National
Please ‘X’ and/or describe if relevant     X

Rationale/motivation for the instrument

(please describe)

The high unemployment rate among persons of up to 35 years of age.

Purpose and aims for the instrument (please describe)

Support young persons to set up and expand micro enterprises, and develop their entrepreneurial skills.

Initiator
Please ‘X’      
Other stakeholders actively involved in implementation (please name them and describe their roles)
Target groups        
Please describe the target groups (sector, age, level of education, gender)

Beginners in business aged up to 35 years, who open a limited liability company for the first time, and who have never been a shareholder or who have never held a management position in any other corporate venture in the European Economic Area.

Funding        
Please describe the funding of the instrument/programme (national and European sources, budget available)

The budget of the MECMA– for the non-refundable finance, and guarantees provided by the FNGCIMM

Activities    
Please describe the activities of the programme or institutional initiative as detailed as possible

Financial support to create micro enterprises, and counselling, training, and assistance from the AIPPIMM and its local branches.

Results (Effectiveness)      
Please describe the results e.g. number of beneficiaries, advised enterprises

In two months since the enactment of these support measures (February – April 2011), a number of 3,205 applications for incorporation of micro enterprises were received by the National Office of the Trade Registry (Oficiul Naţional al Registrului Comerţului, ONRC). Of these, 1,859 were incorporated (most of them having as a scope of business services, catering, road cargo forwarding, civil engineering); AIPPIMM’s site was accessed by 7,661 applicants for the on-line submission of business plans, and 700 business plans were actually submitted.

Until 20 April 2011, 70 contracts for non-refundable finance to young applicants had been signed (of a total number of 1,100 micro enterprises for which support resources have been laid aside for the period 2011 – 2012).

Challenges in order to reach the objectives e.g. for the organisation offering the instrument, the entrepreneurs (Please describe); and if available how these have been overcome

From the results obtained so far, it appears that young entrepreneurs do not choose manufacturing for their micro enterprises due to the insufficient amount of financial aid.

Assessments of the effectiveness e.g. investments made in order to reach the objectives of the programme (outcome vs. investment) (Please base this assessment on evaluations when possible)

The short time since the inception of the programme makes it difficult to assess its efficiency beyond the brief evaluations above.

Outcomes (Efficiency)  
Increasing self-employment, growth and employment e.g. number of start-up and/or jobs created etc. (please describe, preferably based on evaluations, otherwise on experts’ assessment)

The short time since the inception of the programme makes it difficult to assess its efficiency beyond the brief evaluations above.

The very large number of applicants in the first call of projects proves the interest for this measure.

Please provide link to evaluation documents if possible  

Part 3: Annex: Update on recent self-employment study

The recent European Employment Observatory Review on self-employment 2010, European Commission, Directorate-General for Employment, Social Affairs and Equal Opportunities provides insight into support instruments for self-employment. To avoid duplication of this information, we ask you as National Correspondent to omit these measures already covered in your research (Part 2 of this questionnaire), and only update or add any additional details or measures that exceed the information already provided in this report.

Table 8: Additional information on specific instruments to the EEO national report on self-employment:

Title of the instrument

 
Additional information

Table 9: Please add any other comments to the EEO national report on self-employment:
 
Table 10: Please indicate ‘X’ if you have no additional information to the EEO national report on self-employment:

Please indicate ‘X’ if you have no additional information to provide

X

Commentary

Due to the economic crisis, European funds are the main chance for micro enterprises, and for the self-employed, both in the urban environment and in the non-agricultural occupations that can be developed in the rural areas.

The creation of support axes for micro enterprises and for the development of entrepreneurship at large, as part of the operational programmes financed from European funds and devoted to human resources, business competitiveness, stimulation of the business environment, and to regional development, are expected to be conducive to the creation of new jobs.

As the economy recovers, the Government makes efforts to encourage the business environment, to render financial support to young people, and to foster business activities that may generate new employment opportunities.

Constantin Ciutacu, Institute of National Economy, Romanian Academy



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