About the ILO in Romania

High growth rates might resume, but key social policy challenges remain

The democratic transition in Romania comprised difficult economic and social reforms including the restructuring of entire industries. Since the 1990s, Romania has seen periods of very fast growth being considered as one of Europe’s few tiger economies. However, this growth track has been very volatile with several setbacks due to inconsistent reforms and recessions of the global economy. Overall, GDP per capita rose from 30% of EU average in 1995 to 72% in 2020. Recently, the country moved from middle to high-income status.

The Romanian labour market benefited from the strong economic growth of the past years before the outbreak of the Covid-19 pandemic. The employment rate is approaching the EU average (67% vs 74% in 2019) and the unemployment rate dropped to 4% (2019), at its lowest level in the last 20 years. However, youth unemployment remained relatively high (17% in 2019) and inactivity remains one of the highest in the EU especially for women (female inactivity rate of 41% vs. EU average of 32%, 2020). The persistent negative population growth and the outward migration of labour have generated significant labour shortages.

The Covid-19 pandemic pushed the Romanian economy into a recession in 2020 with a 4% decline of GDP (EU: 6%). Forecasts predict a very quick recovery of GDP growth (6% in 2021) as the country is an important manufacturing hub for Europe and global trade is quickly expanding. However, uncertainty is high, as these predictions assume that Romania will achieve a high vaccination rate while the current vaccination rate remains one of the lowest in EU.   Continue reading