Bloomberg: Romania supplies the EU with labor but covers own shortages with Asian workers
Low-skilled workers have been at the forefront of the workforce exodus from Romania to the EU, forcing the Romanian government to plan to bring half a million workers from countries like Bangladesh and Nepal to cover internal labor shortages.
An analysis of Romania’s labor market in the famed business magazine Bloomberg explains the shortages of workers and highlights future challenges.
Since joining the EU in 2007, Romania has lost 11% of its population. Many of those who left in search of better wages were low-skilled workers. They left behind a weaker labor market, and Romania is now facing severe labor shortages.
The free movement of people in the EU has led to a brain drain in Eastern Europe. The millions displaced by Russia’s invasion of Ukraine offered a temporary solution to these workforce shortages. Over 370,000 Ukrainians have found employment in Poland, and another 100,000 in the Czech Republic. Only a few thousand Ukrainians chose to remain and work in Romania, by comparison.
“We’re going to need a few hundred thousand extra workers,” said Cristian Erbasu, head of an association of construction companies, as well as his own company, Constructii Erbasu SA.
Romania, the second poorest of the 27 EU states at the time of its accession 15 years ago, has seen spectacular economic growth. The country recently surpassed Latvia, Slovakia, and Greece in GDP per capita relative to purchasing power, reaching 73% of the EU average. The average net salary quadrupled in this period, reaching EUR 900 per month.
Nevertheless, poverty in Romania’s rural regions still makes up to 100,000 leave the country annually. Meanwhile, unemployment sits at 5.2%, close to record lows. The service industry, as well as tourism, construction, and agriculture, are bearing the brunt of the workforce shortages.
Romania is also set to receive a EUR 80 bln injection from the EU through the recovery mechanism and structural funds. A third of the money must be spent on key infrastructure over the next five years. To meet its goals, Romania aims to expand its workforce by a tenth and bring 500,000 foreign workers from Asia, mainly Nepal and Bangladesh.
Workers from these countries manage to send home the extra money they make in Romania, just as Romanians send home money they earn in Western Europe.