Ministry of Labour reviews activity over 2001-4

Download article in original language : RO0412101FRO.DOC

In October 2004, the Romanian Ministry of Labour, Social Solidarity and Family published its activity report for 2001-4. The report presents the main advances in social security, employment and social partnership over the four-year period in question.

At a press conference held on 25 October 2004, the Ministry of Labour, Social Solidarity and Family (Ministerul Muncii, Solidarităţii Sociale şi Familiei, MMSSF) issued an activity report for the period 2001-4. The reports gives an account of the current state of social security, employment and social partnership, and of the major advances by comparison with the period 1997-2000 and the earlier years of transition in Romania.

Main issues

The report runs to over 100 pages and examines the objectives set and reached by MMSSF in various areas, as follows:

  • workforce - employment, migration reform, vocational training and equal opportunities;
  • wage incomes - pay policy in the state budget-financed system, the gross national minimum wage and pay increases in the competitive market sector;
  • employment relations - identification, prevention and reduction of undeclared work, elimination of child labour, labour inspection and control, and bringing labour legislation into line with the 'acquis communautaire' (the body of EU law);
  • health and safety at work - control, supervision and standardisation of working conditions;
  • pensions and social security - reform and administration of the public pensions system, increases in pensions and diversification of optional occupational pension schemes;
  • social care and child benefits - providing support for families and institutionalised children, protection for people with special needs, social aid, national solidarity fund and social services;
  • protection of children in very difficult conditions;
  • protection of people with special needs;
  • European and international affairs; and
  • social dialogue.

Main conclusions

Throughout the four years under discussion, in order to implement its social and employment policies, MMSSF’s expenses ran to a total of over EUR 15 billion or approximately 8.8% of Romanian GDP. In 2004, the figure exceeded EUR 5 billion and 9.1% of GDP. In addition, 19 specific projects were implemented, with financing of more than EUR 145 million, through both the EU PHARE programme (EUR 118.6 million) and national co-financing (EUR 26.4 million).

Employment

Some objectives remained top-priority throughout the entire four-year period:

  • increasing job creation for young people and people over 45 who are more exposed to structural and technological changes in the economy;
  • cutting unemployment among women living in rural and disadvantaged areas;
  • promoting equal opportunities;
  • legal access to the European labour market;
  • training and retraining of the workforce, in particular adult training; and
  • securing active social protection for unemployed people and other vulnerable groups threatened by labour market changes.

Every year of the period 2001-4 witnessed the creation of over 400,000 jobs, and the number of unemployed people fell from 1,033,000 on 1 January 2001 to 550,000 people on 30 August 2004. The unemployment rate was reduced from 10.1% to an estimated 7% by 30 December 2004.

Expenses for unemployment benefit grew from ROL 7,931 billion in 2001 to ROL 16,822 billion in 2004, while compensation payments linked to collective redundancies were reduced, over the same period, from ROL 3,186 billion to ROL 1,063.8 billion. In the total unemployment budget, the share of active measures grew from 2% to 21%.

The National Commission for Employment Promotion (Comisia Naţională pentru Promovarea Ocupării Forţei de Muncă, CNPOFM) was set up as a tripartite advisory body in charge of designing employment strategy, and the Office for Labour Force Migration (Oficiul pentru Migraţia Forţei de Muncă, OMFM) was established as a public institution monitoring workforce migration. A National Action Plan for employment was drawn up. An employment strategy was designed for the period 2001-10, and subsequently approved by government decision. The additional protocol to the 1979 United Nations Convention on the elimination of all forms of discrimination against women was ratified. Law no.202/2002 on equal opportunities was passed and a National Action Plan for equal opportunities for men and women was adopted by government decision (RO0312102F).

Wage income

In 2003, for the first time since 1990, there was average annual wage growth in real terms, of 3%, and the growth will continue in 2004. Over 2000-4, the monthly net minimum wage grew from approximately EUR 41 to EUR 69 in 2004 and the monthly net average wage increased from EUR 109 to EUR 143.

Pensions

The pension scheme has been undergoing profound legislative and institutional reforms. The growing number of pensioners and the decreasing number of employees has damaged the balance of resources in the public pensions budget. These are the reasons why a new law on pensions was passed in 2000, Law no. 19/2000, while alternative private pensions schemes are in the process of becoming operational. The National House of Pensions and Social Insurance (Casa Naţională de Pensii şi alte Drepturi de Asigurări Sociale, CNPAS) was set up early in 2001. The provisions of Law no. 19/2000 have triggered a recalculation of all pensions in order to remove discrepancies resulting from the application of a range of different methods during the years of transition.

European integration

MMSSF played the role of negotiator for two of the chapters of the document on Romania’s accession to the European Union: 'free movement of people' and 'social and employment policies'. MMSSF experts also took part in negotiating the chapter 'vocational education and training for young people'. All these chapters have been successfully closed.

Social dialogue

Three main new laws aimed to enhance the institutional framework of social dialogue over 2001-4 - the Labour Code (RO0308102N), the law on the organisation of trade unions (RO0401107F) and the law on employers’ associations (RO0310103F). A delegate minister position was created for relationships with social partners, and two government decisions were passed on local social dialogue and the establishment and operation of social dialogue commissions. In 2001 and 2002 the government concluded 'social agreements' with certain trade union confederations and employers’ associations and in 2004 a social stability pact was signed (RO0406101F).

Commentary

Several aspects presented in the Ministry's report as achievements have been repeatedly criticised by social partners. While employers are seeking amendments to the Labour Code, trade unions are adamant that it should remain unchanged, while criticising pensions and pay policies in general (RO0401104F and RO0407101N).

In December 2000, the average state social security pension represented in real terms 47% of what the pension amounted to in 1990. By September 2004, it reached 59.3%. In October 1990, the average pension represented 51% of the net average wage. In December 2000, it was 37% and went up to 41.8% by September 2004. In the past few years, wages have indeed grown in real terms, yet they remain below the level of the early 1990s (approximately 58%). At present, Romania has the lowest wages of all the 27 countries in the future EU.

Despite these dramatic changes, Romanians have grown used to transition and seem to be regarding it as inevitable; the number of labour disputes 'of interest' has steadily diminished from 653 in 1999 to 54 in 2004, whilst the number of employees involved in such disputes has decreased from 1.5-1.6 million in 1998-9 to 161,300 in 2004. (Luminita Chivu, Institute of National Economy)

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