Labour Market and Social Policies in Romania.

177 Pages·2000·0.956 MB·English

by  OECD

«
Labour Market
and Social Policies
in Romania
EMPLOYMENT
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OECD CENTRE FOR CO-OPERATION WITH NON-MEMBERS
Labour Market
and Social Policies
in Romania
ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT
ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT
Pursuant to Article 1 of the Convention signed in Paris on 14th December 1960, and
which came into force on 30th September 1961, the Organisation for Economic Co-operation
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– to achieve the highest sustainable economic growth and employment and a rising
standard of living in Member countries, while maintaining financial stability, and thus
to contribute to the development of the world economy;
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Publié en français sous le titre:
LA POLITIQUE SOCIALE ET LA POLITIQUE DU MARCHÉ DU TRAVAIL EN ROUMANIE
© OECD 2000
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FOREWORD
The strong interaction between Romania’s social and economic
problems is an important finding of this Review. While economic growth is
evidently a sine qua non for resolving many current social challenges, poor
economic performance can also be rooted in unfavourable social conditions, for
example, low purchasing power of the population, distorted relative incomes
and low labour mobility.
Labour market and social policies in Romania have many of the same
features as similar policies found in the OECD countries, but conditions for
their implementation differ. This publication discusses the relevance of
international policy experience for Romania, and identifies several points on
which it appears justified to consider solutions specific to the Romanian
situation. In general, this Review notes that Romania has done well in laying the
foundations of a legal and administrative framework in accordance with
international “best practices”. However, concerning budgetary priorities and the
implementation of policy, the Review recommends a stronger focus on the most
urgent short-term problems, many of which require immediate action. Chief
among the high-priority goals for Romania must be the facilitation of industrial
restructuring, even in the face of job losses, and the provision of direct support
to those suffering extreme hardship.
The Review of Labour Market and Social Policies in Romania was
carried out under the auspices of the Centre for Co-operation with Non-
Members (CCNM). This publication is one of a series of reviews on Central and
Eastern Europe countries designed to permit comparison among transition
countries in the region as well as with OECD Member countries. The OECD
has published similar reviews on Poland (1993), the Czech Republic and
Hungary (1995), before their accession to the OECD, as well as on the Slovak
Republic (1996), Slovenia (1997) and Bulgaria (1998).
The OECD Employment, Labour and Social Affairs Committee
discussed this Review in Bucharest in February 2000. It is published on the
responsibility of the Secretary-General of the OECD.
Eric Burgeat
Director
Centre for Co-operation with Non-Members
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TABLE OF CONTENTS
Introduction and summary........................................................................11
Chapter 1.
Romania’s economic transition
The need to persevere in a difficult situation................................................17
A problematic heritage..................................................................................19
The structure of the labour market................................................................24
Labour force participation and employment..................................24
Human capital investment.............................................................29
Unemployment and under-employment........................................31
The incomes of the population......................................................................33
Concluding remarks......................................................................................35
Chapter 2.
Mobility and inertia in the labour market
The changing structure of urban employment...............................................49
Relative wages and productivity...................................................................53
Labour mobility.............................................................................................57
Some policy implications..............................................................................63
Chapter 3.
Labour market policies
What can be learnt from OECD countries....................................................73
The legal framework for employment...........................................................75
Individual employment contracts...................................................75
Industrial relations and wage setting.............................................78
Administrative obstacles to starting business................................81
Passive and active labour market programmes.............................................82
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Unemployment compensation.......................................................82
Severance pay................................................................................87
The National Agency for Employment and Vocational Training.................91
Active labour market policies (ALMPs)........................................95
Concluding remarks......................................................................................98
Chapter 4.
Social insurance and social assistance
The question of need in a policy perspective..............................................102
Spending and financing...............................................................................106
The case for pension reform........................................................................109
Old-age pensions.........................................................................109
Disability pensions.......................................................................115
Sickness and maternity benefits...................................................115
Social assistance..........................................................................................116
Means-tested cash benefits..........................................................116
Child and family allowances.......................................................121
Children in institutions: from orphanages to family care............123
Policies for adults with handicaps...............................................126
Concluding remarks....................................................................................126
Bibliography..............................................................................................133
Annex
A poverty profile of Romania
Estimating consumption expenditures........................................................137
Equivalence units and economies of scale..................................................138
Poverty line.................................................................................................139
Poverty indicators........................................................................................140
Dominance testing.......................................................................................140
Deflating expenditures by CPI....................................................................143
Decomposition of the change over time......................................................143
Poverty regressions.....................................................................................146
Poverty dynamics........................................................................................147
Results.........................................................................................................147
Concluding remarks....................................................................................159
Bibliography................................................................................................173
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Tables
Table 1.1 Structure of employment and GDP...........................................36
Table 1.2 Contribution to GDP and the weight of the intermediate
consumption..............................................................................37
Table 1.3 Composition of Romania’s foreign trade.................................38
Table 1.4 Main trade partners...................................................................39
Table 1.5 Labour force participation and unemployment in some
OECD countries........................................................................40
Table 1.6 Labour force participation, employment, unemployment........41
Table 1.7 Labour force participation, employment and
unemployment in urban and rural areas....................................42
Table 1.8 Working time............................................................................42
Table 1.9 The educational attainment of the labour force........................43
Table 1.10 Education enrolment.................................................................44
Table 1.11 Unemployment rate by educational attainment........................45
Table 1.12 Indicators of living standards....................................................46
Table 1.13 The food share in household consumption...............................46
Table 1.14 Structure of the average household’s income by the
labour market state of the household head in1997...................47
Table 1.15 Structure of the household expenditure
by the labour market state of the household head, 1997...........48
Table 2.1 Employment in large and small enterprises..............................64
Table 2.2 Dependent employment in industry..........................................65
Table 2.3 Trends in labour productivity and real wages...........................66
Table 2.4 Relative wages in private compared with state
owned enterprises.....................................................................67
Table 2.5 Persons changing jobs types between 1996 and 1997..............68
Table 2.6 Individuals who changed labour markets states
between 1996 and 1997............................................................69
Table 2.7 Migration between judets.........................................................70
Table 2.8 Geographic mobility: persons changing local
community of residence............................................................71
Table 2.9 Unemployment and its duration in romania’s main
regions, 1998............................................................................72
Table 4.1 Public expenditure on social programmes..............................128
Table 4.2 Number of pensioners.............................................................129
Table 4.3 Average monthly pension.......................................................129
Table 4.4 Social support and related municipal programmes.................130
Table 4.5 Child and family allowances..................................................130
Table 4.6 Institutions for children and youths...........................................131
Table 4.7 Children in institutions and foster care
in selected countries................................................................131
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Table A1 Test of restricted dominance by region, pooled
data ordinates up to median....................................................160
Table A2 Test of restricted dominance by region,
pooled data ordinates up to median using alternative CPI......160
Table A3 Percentage distribution of total households
and poor by region using per capita expenditures..................161
Table A4 Headcount, poverty gap, and severity indexes by
household size.........................................................................161
Table A5 Headcount index by gender of household head......................162
Table A6 Headcount index by household head age group.....................162
Table A7 Headcount index by education of household head.................162
Table A8 Percent distribution of poor persons by
education of household head......................................................163
Table A9 Headcount index by employment status of
household head.......................................................................163
Table A10 Test of restricted dominance by occupation
of household head, pooled data ordinates up to median............164
Table A11 Percent distribution of poor by employment status
of household head...................................................................164
Table A12 Headcount index and percent distribution
of poor persons in employee-headed households,
by occupation, 1997................................................................165
Table A13 Headcount index and percent distribution of
poor persons in employee-headed households,
by economic sector, 1997.......................................................165
Table A14 Gini coefficients using per capita expenditures......................166
Table A15 Decomposition of changes in the poverty index.....................167
Table A16 Regional decomposition of year-to-year changes
in the headcount index using per capita expenditures............167
Table A17 Regression of urban households, 1997...................................168
Table A18 Regression of urban households, 1997...................................169
Table A19 Regression of rural households, 1997.....................................170
Table A20 Regression of urban households, 1997...................................171
Table A21 Poverty spells..........................................................................172
Table A22 Poverty transition matrix, 1995-1996.....................................172
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