An atypical labour market; fixed-term contracts and other forms of atypical work on the Romanian labour market


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Presentation by Prof Dr Catalin Ghinararu (National Scientific Research Institute on Labour and Social Protection of Romania) on the occasion of the EESC LMO conference on "Typical and atypical work contracts - advantages and disadvantages from the labour market perspective" in Warsaw, Poland, on 8/9 April 2013.

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An atypical labour market; fixed-term contracts and other forms of atypical work on the Romanian labour market

  1. 1. Atypical Contracts – Atypical Labor Market The case of ROMANIA Presentation by Dr. Catalin Ghinararu, Scientific secretary National Labor Research Institute of Romania (INCSMPS) Bucharest, ROMANIA Warsaw seminar of the European Social and Economic Committee, POLAND 8-9 Apr. 2013
  2. 2. A Labor Market Apart∗ Romania’s labour market features simultaneously:∗ Low Participation and∗ Low unemployment Rates∗ At least from a purely statistical point of view, agriculture makes for almost one third of total employment;∗ Outward mobility (workers abroad) remains high: Preferred destinations - EU countries (e.g.: Italy, Spain, Germany, France, UK and Ireland);∗ Most of it however remains, at least in statistical terms, short-term (less than 6 months);∗ Permanent (un-determined duration) contracts considered as THE RULE ( Labor Code) while Temporary ones (determined duration) as THE EXCEPTION!
  3. 3. Statistics at a Glance Long-term average (2005,q1-2011,q4) average values 2011 latest as of 2012 Q2Job vacancy rate 0,2 0,6 0,59Employment rate 15-64 58,6 58,5 60Employmen rate 15+ 50,8 50,3 51,5Total Employment (mil.pers.) 9,3 9,1 9,36Unemployment rate (harmonized) 6,9 7,4 6,9Unemployment rate (national def.) 5,6 5,3 4,68
  4. 4. Growth, Job Churning andJob Generation; What’s thedifference? (1) Growth or crisis made no much of difference in terms of job generation which remained rather subdued; Employment rates have moved inside a rather narrow band of variation for the 15-64 throughout a period between q1.2005 and q4.2011; When removing seasonal variation, employment rates for the working age show a stable line, insensitive to growth or decline in economic activity; Job vacancy or what we call job churning, has shown itself more dynamic and sensitive to variations in the pace of growth; However this only means that better skilled workers have been more dynamic and seized opportunities created by growth (inter-job mobility) rather than genuine job generation (creation of new jobs) taking place;
  5. 5. Growth, Job Churning and JobGeneration; What’s the difference?(2) All major LM aggregates show a certain, quite significant sensitivity to variations in economic activity (proxy by GDP %); However while unemployment rates (both national and harmonized) as well as job vacancy rate move in conjunction with the rate of growth, job generation (proxy Employment Rate) remains stagnant (seasonal variations only); Main explanation for this, the buffer role still played by agriculture apart: modest job generation due to substitution of labor by capital throughout growth years between 2000 and 2008; Consequently – All movements took place inside a RESTRICTED POOL OF ACTIVE LABOUR, something which also explains the low recourse to temporary work;
  6. 6. Determined and Non-determined, Does it really matter?Non-determined duration contract Determined duration contract (“permanent worker” status) (“temporary worker” status)∗ No time-limit for the labor contract; covered ∗ Maximum time limit 36 months; No more by the collective labor agreement; than 3 successive contracts with the same∗ No restriction in terms of activities to be employer! performed in the enterprise, except for the ∗ Activities have to be clearly specified ones resulting from own status; (limitations-though rather loose, incl. in the∗ Dismissal/Redundancy according to Labor Code); provisions of the Labor Code ∗ Dismissal/Redundancy may only occur in (dismissal/redundancy may occur at any cases of gross non-performance; Cessation time, legal requirements observed); of activity before the contractually agreed∗ Collective dismissal/redundancy according to termination date: difficult! provisions of labor law and collective labor ∗ Collective dismissal rules for permanent agreement; workers apply; Temporary workers covered equally by collective labor agreements;
  7. 7. Statistics at a Glance Employees on Temporary contracts 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010EU 27 average 12,2 12,4 12,4 12,6 13,2 14,0 14,5 14,6 14,1 13,6 13,9POLAND 5,6 11,9 15,4 18,9 22,5 25,6 27,3 28,2 26,9 26,4 27,2ROMANIA 2,9 3,0 0,9 2,1 2,8 2,4 1,8 1,6 1,3 1,0 1,1
  8. 8. An antechamber ofPermanent work? Transition of workers to permanent status (EUROSTAT data) 2006 2007 2008 2009Share of workers on determined durationcontracts very low in RO; Only a fractionof EU-27 average;Explanation rests with the practical lack ofdifferentiation between the two EU 27 average : 17,5 17,2 17,9categories of workers;Little distinction with regard tocontractual terms is made by RO law;Generally regarded as an ante-chamber of POLAND 33,8 29,7 33,3 33,1permanent contract, a sort of a trialperiod for the employee;The fact that tasks for temporary(determined duration) workers have to beclearly specified also places a restrictionon their hiring; ROMANIA : : 28,8 31,9In practical terms, IT IS FAR MUCH EASIERto fire a non-determined duration workerthan a determined-duration one!
  9. 9. Looking towards the future∗ It is clear that a major change has to occur in the terms of the RO labor law;∗ Temporary contracts have to be given EQUAL STATUS and thus regarded as also the RULE and not as mere EXCEPTION!∗ Rules for the use of the temporary workers have to be relaxed so as to enable their use in practical all activities according to the needs of the firm;∗ The limit on the number of temporary contracts has to be relaxed, or alternatively, the number of temporary contracts to be concluded inside a given time-frame (deemed as statutory) made un-limited!
  10. 10. A tentative End Note∗ Recourse to temporary work has been, to date, limited on the RO labor market;∗ Likely causes: lack of sufficient job generation & legal limitations, only recently relaxed and to a insufficient degree;∗ Future may however favor this type of contract as a scarred economy finds hard to recover from crisis;∗ Temporary contracts may prove a solution if some of the remaining restrictions are lifted, while in the meantime some reasonable degree of protection for temporary employees is maintained (implicit clauses that limit possibilities for abusive dismissal before contract termination);