Romania is in the penultimate place in the EU in terms of the need for uncovered labor force

Romania is part of a group of EU countries where the unemployment rate in the third quarter of 2022 was less than 2%, according to a report by the Eurofound foundation. The document does not explain where these differences come from, but there are only two explanations: either the jobs, in Romania, for example, are not put on the market because they are offered illegally, or the job offer is very thin. In this group, the job vacancy rate has seen only small increases over the past decade, with the key labor market problems being high levels of unemployment and informal employment rather than generalized labor shortages.

The lack of labor force is an obstacle in the activity of many employers in the member countries of the European Union. Thus, the labor shortage limits production and the provision of services in several sectors, and the fight for talent is particularly acute in countries such as Austria, Belgium, the Czech Republic, Germany and the Netherlands, shows a report by Eurofound – the European Foundation for the Improvement of Living Conditions Work and Life.

The Eurofound report shows that the battle for talent is fierce in Austria, Belgium, the Czech Republic, Germany and the Netherlands. Romania is in the penultimate place in the EU in terms of unmet labor needs, with a vacancy rate of 0.9% in the third quarter of 2022, down 0.1 percentage points compared to the same quarter of 2022 2021. In last place was Bulgaria, with a vacancy rate of 0.8% in Q3 of 2022, the same level as in the third quarter of 2021.

Emilia Stroe, HR director of Sphera Group, the franchise system operator of the KFC, Pizza Hut and Taco Bell restaurant chains in Romania, spoke at the ZF HR Trends 2023 conference about how the industry in which her company operates is always at the forefront of the fields with the most jobs available.

“HoReCa is one of the fields of activity with a large number of constantly available jobs. HoReCa is among the last fields in terms of income, but it is a very good school for other fields”, she said during the conference.

The level of labor shortage, reflected by the vacancy rate, shows a high degree of variation between European countries. Within the EU, three groups of countries can be identified according to this indicator. In the first group are the countries where the deficits have grown very large in the last decade and where the vacancy rate is currently over 4%. This is the case in Austria, Belgium, the Czech Republic, Germany and the Netherlands.

The Czech Republic is the only country in this group that recorded a decrease (of 0.6 percentage points) in vacancy rates as a result of the decrease in economic activity triggered by the energy crisis, which negatively affected its manufacturing and construction sectors. However, as of the third quarter of 2022, the vacancy rate in the Czech Republic remains one of the highest in Europe, indicating that the deficits in the country are structural in nature.

The second group includes Cyprus, Estonia, Finland, Hungary, Italy, Latvia, Luxembourg, Malta, Slovenia and Sweden. These are countries where the vacancy rate in the third quarter of 2022 was between 2% and 3%, in line with the European average.

In the third group, which includes Bulgaria, Croatia, Greece, Ireland, Lithuania, Poland, Portugal, Romania, Slovakia and Spain, the vacancy rate is less than 2%. In this group, the job vacancy rate has seen only small increases over the past decade, with the key labor market problems being high levels of unemployment and informal employment rather than generalized labor shortages.

“Lack of labor is particularly widespread in sectors with difficult working conditions, such as health. Low levels of investment, together with the impact of the pandemic and a gender-segregated labor market are contributing to the shortage of health workers in a sector where the EU’s aging population and workforce are set to exacerbate these shortages in continuation in the coming years”, writes the Eurofound report.

The pandemic has also contributed to the labor shortage by reducing the workforce, particularly in high-touch sectors such as retail and hospitality. By the end of 2021, these sectors still had a shortfall of about 1.4 million workers compared to the last quarter of 2020. This could reflect health concerns as well as a shift in worker preferences. Given the tight labor market and the availability of jobs in other sectors, some workers may want to move away from low-paying, low-quality jobs.

“The strong recovery of European labor markets following the COVID-19 pandemic has been accompanied by a sharp increase in labor shortages. By the third quarter of 2022, the extent of the shortage in the EU, as reflected by the job vacancy rate, was 2.9% – more than double the level in the same quarter in 2013 and up 0.8 points percentages above the vacancy rate in the third quarter of 2019, before the COVID-19 pandemic”, Eurofound researchers also write.

The labor shortage in the EU increased between 2014 and 2019, and especially after 2015, when the recovery from the previous global financial crisis gained momentum. While the pandemic and associated shutdowns reduced economic activity and reversed the upward trend in labor shortages, this was short-lived. By the second quarter of 2021, the EU job vacancy rate had already matched pre-pandemic levels and reached historic levels by the second quarter of 2022.

Amid the growing challenges posed by the war in Ukraine, supply chain bottlenecks, the energy crisis and inflationary pressures, the job vacancy rate fell slightly between the second and third quarters of 2022. However, given the scale despite these concurrent challenges, this change is modest, indicating that European labor markets remain tight and are likely to remain so, despite the forecast moderate recession likely to affect the EU and especially the euro area in 2023.

“The persistence of labor shortages amid a potential recession points to the likelihood that they will become structural and remain high in the coming years and could be exacerbated as a result of demographic trends.”

As the factors causing these shortages vary by sector, occupation and region, measures to address them must respond in different ways, from developing skills, making certain sectors and occupations more attractive, activating the underutilized workforce and a more good matching of demand and supply.

“Many measures to tackle shortages in the health and care sectors focus on pay and working conditions. While initiatives to address low wages in some CEE countries have helped slow the number of people considering working abroad, focusing on salary alone is often insufficient without other quality-of-life factors that make more attractive work, such as educational infrastructure, greater autonomy over working hours, access to training and career progression, and more meaningful work.”

Existing workforce utilization measures are particularly important in IT&C and in the context of the green and digital transition, where skills mismatch is the biggest driver of shortages.

“Given the rapidly evolving technological developments and the growing need to identify future skills needs in a green economy, joint efforts between governments, social partners and training providers will be essential to identify existing skills needs and to to forecast future ones.”

Measures targeting underutilized groups in the labor market must provide holistic support that addresses factors that prevent participation in the labor market, such as health problems and lack of access to affordable care, as well as training and experience needs the work. This requires close collaboration between the social partners and other relevant bodies in the context of wider measures such as work-life balance policies and tax and benefit incentives.