2004 Annual Review for Romania
This record reviews 2004's main developments in industrial relations in Romania.
Local legislative elections were held in June 2004 and parliamentary and presidential elections in November, with a run-off in the presidential elections at the beginning of December.
In the local elections, the ruling Social Democrat Party (Partidul Social Democrat, PSD) obtained 54.3% of the total number of mayoral seats, 37.8% of county council seats and 37.5% of local council seats. The Justice and Truth Alliance (Alianta pentru Dreptate si Adevar, Alianţa DA PNL-PD) - comprising the National Liberal Party (Partidul Naţional Liberal, PNL) and the Democrat Party (Partidul Democrat, PD) - obtained 26.2% of mayoral seats, 35.5% of county council seats and 32.5% of local council seats. The other parliamentary parties obtained the following results: the social-liberal Romanian Humanist Party (Partidul Umanist Român, PUR) 5.9% of mayoral seats, 5.1% of county council seats and 6.1% of local council seats; the Democratic Union of Hungarians in Romania (Uniunea Democrată a Maghiarilor din România, UDMR) 3.95%, 7.8% and 6.2% respectively; and the Great Romania Party (Partidul România Mare, PRM) 2.6%, 9.0% and 7.2% respectively.
For the parliamentary elections, PSD and PUR formed the PSD-PUR Alliance (Alianţa PSD-PUR). Following the poll, the seats in the Chamber of Deputies were distributed as follows: Alianţa PSD-PUR 39.7%; Alianţa DA PNL-PD 33.8%; PRM 14.5%; and UDMR 6.6%; with the remaining 5.4% of seats allocated to ethnic minorities other than Hungarian. In the upper house of Parliament, the Senate, the seats were distributed as follows: Alianţa PSD-PUR 41.9% (PSD 33.8%, PUR 8.1%); Alianţa DA PNL-PD 35.3%; PRM 15.4%; and UDMR 7.4%. The presidents of the two chambers are both PSD members.
In the second ballot of the presidential elections, between the candidates of PSD and Alianţa DA PNL-PD, Traian Basescu of Alianţa DA PNL-PD won. The new President appointed Călin Popescu Tăriceanu as Prime Minister, representing Alianţa DA PNL-PD. Following negotiations with UDMR (a former ally of PSD in the 2001-4 government) and PUR (a former PSD ally in the parliamentary elections), the two parties agreed to join the government. On 28 December 2004, parliament ratified the new government, which comprises: the Prime Minister from PNL, three ministers of state (deputy prime ministers) from PD, UDMR and PUR respectively, 15 ministers (for 15 ministries) and 6 delegate ministers. The number and names of the ministries remain the same as in the previous government. The new government is supported by a very frail majority in parliament.
December 2004 also saw the finalisation of negotiations for Romania’s accession to the European Union. Romania will sign the Accession Treaty in April 2005, together with Bulgaria, with the actual accession set to take place on 1 January 2007.
Collective bargaining over a 2004 national intersectoral collective agreement - an accord that provides a minimum basic framework for employment conditions - proved an arduous process (RO0401104F) and was not successful (RO0407101N), with divergence of opinion on the issue of minimum wages. A tripartite 'social stability pact' setting many important economic and social strategy goals was agreed, albeit in the absence of some major trade unions (RO0406101F). Furthermore, a national intersectoral collective agreement for 2005 was signed in December 2004, which set the minimum wage at ROL 3.3 million (approximately EUR 85) per month (RO0501101N)
In 2004 there were 9,191 company-level collective agreements in force, 21 agreements at sector level and 21 for groups of companies (RO0412102S). Compared with 2003, the number of company-level agreements fell by 2,618 while the number of sectoral and group agreements remained the same.
Disputes over pay ranked high in collective bargaining in 2004 and were the main cause of trade union protests (see below under 'Industrial action').
In the absence of a national collective agreement, the national minimum wage in 2004 was set by government decision (RO0401104F), 12% higher than the previous year in nominal terms and 2.5% higher in real terms (against an average annual inflation rate of 9.3% in 2004). The nominal increase of the minimum wage in 2005 is set at 17.9% RO0501101N- taking into account the estimated rate of inflation, the real increase could amount to 10%.
The nominal pay increase, stipulated in sectoral, company or group collective agreements was generally lower in 2004 than 2003, but allowed higher gains in real terms as, for the first time since 1990, inflation fell to a single-digit annual percentage.
No significant bargaining developments took place in terms of working time during 2004. All collective agreements stipulate eight working hours per day, 40 hours per week and around 171 hours per month. There are, however, two types of exceptions: in mining - six hours a day and 30 hours a week; and in construction, trade and agriculture, where in some seasons the working day may extend to 10 hours, compensated by pay and time off.
According to surveys, in the second quarter of 2004 the actual working week was 41.2 hours for all employees, 41.4 hours for full-time employees and 23.9 hours for part-time employees.
The legal framework governing collective redundancies in enterprises undergoing restructuring and privatisation has been repeatedly amended. According to an agreement signed with the IMF, in 2004 more than 24,000 people were made redundant in the state sector alone, more or less equally distributed between the railway sector, the mining sector and the state-owned companies about to be privatised. Major 2004 privatisations included the National Oil Company PETROM SA (Societatea Naţională a Petrolului - PETROM SA), Distrigaz Nord and Distrigaz Sud, Electrica Banat and Electrica Dobrogea.
Collective agreements stipulate equality of opportunities and equal treatment for employees, in accordance with the regulations in force. New agreements have introduced special clauses on the protection of pregnant women in the workplace, in accordance with the Law no. 25 of March 2004 ( RO0404102F), the provisions of which are seen as minimal in some quarters.
Training and skills development
In the area of vocational training rights and other provisions in the field of competence and skills development, recently-concluded collective agreements were upgraded to bring them into line with the relevant provisions of the 2003 Labour Code (RO0401107F).
In 2004, parliament promoted and passed more than 400 laws. Legislation on employment and unemployment benefits was twice amended in the course of 2004, by Law no. 107 and Law no. 580. The principal changes were:
- the extension of unemployment benefits to temporary agency workers and part-time workers;
- total or partial funding, under certain conditions and within certain limits, of employers’ expenditure on training and skills development for their employees;
- the granting of free mediation services for both unemployed people and employees; and
- the granting of low interest rates or non-reimbursable credits under special conditions.
March saw the adoption of the latest in a series of measures revising the system of leave and benefits for pregnant women and new mothers (RO0404102F). The aim is to provide better protection for women during maternity and child raising, but some of the changes benefit only women earning below average wages. The context for the various amendments is an attempt to address the country's falling birth rate.
The organisation and role of the social partners
2004 witnessed major events in the representation of employers. At the end of 2003, there were 12 nationally representative organisations ( RO0310103F), and a further organisation was established in the course of 2004: the Confederation of Employers in Industry, Services and Trade (Confederaţia Patronatelor din Industrie, Servicii şi Comerţ, CPISC) (RO0404101F). In addition, by amending the statute of a former employers’ organisation - the Confederation of Romanian Employers (Confederaţia Patronatului Român, CPR) - a new peak-level organisation was established: the Alliance of Employers’ Confederations in Romania (Alianţa Confederaţiilor Patronale din România, ACPR), which is a member of the International Organisation of Employers (IOE) and since June 2004, of the Union of Industrial and Employers’ Confederation of Europe (UNICE). The president of ACPR, Gheorghe Copos, was appointed minister of state in the recently-formed government, representing PUR (see above under 'Political developments').
Further, six employers’ organisations jointly set up the Union of Romanian Employers (Uniunea Patronatului Român, UPR). One of the six founding organisations, the General Union of Romanian Industrialists 1903 (Uniunea Generală a Industriaşilor din România 1903, UGIR 1903) joined the Federation of European Employers (FedEE) in July 2004 (RO0411102F).
In the case of both ACPR and UPR, member organisations retain their national representativeness so that currently there are 14 nationally representative employers’ organisations.
The rest of the employers’ organisations remain independent from the new groupings, for the time being at least. The president of the National Union of Romanian Employers (Uniunea Naţională a Patronatului Român, UNPR) was involved in the Romanian presidential race and lost.
Trade unions also became more involved in politics during 2004. The National Trade Union Bloc (Blocul Naţional Sindical, BNS) decided to set up a political party, the National Democratic Bloc (Blocul Naţional Democrat, BND) (RO0406102F) and gained seats in parliament. A planned merger between BNS and the National Confederation of Free Trade Unions in Romania 'Brotherhood' (Confederaţia Naţională a Sindicatelor Libere din România Frăţia, CNSLR Frăţia) (RO0409101N) was postponed at the very last moment to 2005 (RO0411101N). At the end of 2004, the Civil Servants Trade Union of Romania (Uniunea Sindicatelor Funcţionarilor Publici din România, USFPR) (RO0407102F) declared its intention to withdraw from BNS, rejecting any political involvement.
A downwards trend in industrial action continued during 2004: the number of 'disputes of interest' (RO0403103T) fell from 141 in 2000 and 121 in 2003 to 79 in 2004; the total number of employees involved dropped from 236,900 in 2000 to 177,200 in 2004 (RO0412101F). The average length of conflicts has also decreased considerably. The three sectors most affected by industrial action were machinery, transports and metallurgy.
Industrial action in the state budget-funded sector, as well as in companies where the state is a majority shareholder, was more concentrated and given widespread media coverage. These involved principally mining (RO0402102F), railways (RO0403101N), education (RO0405101N and RO0410103F), public services (RO0407102F and RO0409102F) and healthcare (RO0410101N). In most cases, a sector-wide strike was avoided at the last minute and a complete resolution of trade unions’ claims (mainly pay-related) was postponed.
At company level, conflicts were often spontaneous and generated by unsuccessful privatisation exercises or restructuring, redundancies and especially delays in payment of wages.
Employees’ rights to representation and information, guaranteed by collective agreements and the 2003 Labour Code, were not amended or otherwise modified in 2004. However, these rights were extended to temporary agency workers, on the basis of a special government decision (see below under 'New forms of work').
In July 2004, the Ministry of Labour, Social Solidarity and Family (Ministerul Muncii, Solidarităţii Sociale şi Familiei, MMSSF) submitted for debate a draft law on European Works Councils, which seeks to transpose entirely EU Directive 94/45/EC and should come into force by the date set for Romania’s accession to the European Union.
Absence from work
Absence from work was not included on the priority agenda of social partners in 2004. Employers did, however, reiterate their request to amend certain relevant provisions of the Labour Code (RO0308102N). Criticism focused on the procedure employers must follow to initiate disciplinary sanctions for unauthorised absence from work, which are seen as cumbersome. Employers are requesting amendments to the law, thus enabling less complicated termination of the employment contract in such circumstances.
A recent study carried out by a company providing medical services found that in Romania an average company with 100 employees suffers an annual loss of at least EUR 13,500 due to absence from work. The annual loss per employee varies between sectors (EUR 298 in telecommunications, EUR 290 in insurance, EUR 191 in metalworking and EUR 124 in trade).
The legal framework does not define psychological harassment at the workplace, but legislation has been amended and modified in terms of defining the offences of sexual or gender-biased harassment, and direct or indirect discrimination (Penal Code of 28 June 2004, Government Ordinance no. 84 of 19 August 2004, and the framework agreement for civil servants - RO0409102F).
Law no. 571 of 2004 on the protection of personnel in institutions and public authorities provides protection to employees who report their superiors for violations of the law and incriminates the following infringements related to psychological harassment:
- preferential or discriminatory practices or treatment;
- abusive use of human resources;
- political partisanship; and
- biased evaluation of personnel in the course of recruitment, selection, promotion, demotion or dismissal from work.
Under the law, employees may lodge complaints with trade unions or employers’ organisations.
So far, debate has focused on discrimination on the grounds of political criteria (RO0407102F), sexual harassment or sexual criteria and not on psychological harassment. The social partners have been less involved in these debates. A study by the Institute of Marketing and Polls (Institutul de Marketing şi Sondaje, IMAS), made public in 2004, found that in 90% of cases the victims of harassment were women, with the main aggressor being their direct superior (55% of cases) or the employer (25%). Only one victim out of 10 lodged a complaint with their manager, while none filed a complaint with a trade union, the police or a court of law.
New forms of work
The processes of reform and economic restructuring, as well as the persistence of an exceedingly large rural population have had a negative impact on employment. In the second quarter of 2004, out of an active population of over 10 million people, temporary employees represented 1.6 million, while 3 million people worked in agriculture.
Government Decision no. 938 of 10 June 2004 is the first legislative action to regulate the conditions governing the setting up and functioning of temporary employment agencies. Such agencies are authorised by MMSSF through its county subsidiaries. The rights of temporary agency workers are similar to those of other employees in terms of representation rights, collective bargaining and access to vocational training. Since the number of employees in Romania represents less than half the existing active population, many people are expected to benefit from this new form of work.
Mention should also be made of the establishment of the Department for Work Abroad (Departamentul pentru Muncă în Străinătate, DMS) (RO0410102N). Between 2002 and 2004 about 89,000 employment contracts abroad were granted, worth a total of EUR 268 million. In August 2004 over 3,000 foreign citizens had been granted work permits in Romania.
Other relevant developments
The trade unions’ agenda also included the following issues in 2004: correlation of minimum wages with the 'minimum consumer basket'; the resolution of issues emerging from the tripartite administration of healthcare funds; and the recalculation of pensions (RO0412101F).
Employers’ top priorities included demands to lower wage taxation RO0401106F and amend the Labour Code and the law on national representativeness of the social partners, as well as policies to boost competitiveness as a main challenge in relation to joining the EU (RO0411102F).
The years 2005-6 will be decisive for Romania’s accession to the European Union to become effective and not to be postponed to 2008.
The new government has initiated discussions with social partners on the amendment of laws regarding the Economic and Social Council (Consiliul Economic şi Social, CES), national representativeness of social partners and the Labour Code. It has also introduced a fixed-rate income tax (RO0310102F) (16% for wages and profits). The chances are high that wage-related and collective redundancy-related claims will remain industrial relations priorities in 2005. (Luminiţa Chivu, Institute of National Economy)