Romania’s ILO unemployment rises to 2.5-year high

The ILO unemployment rate in Romania, in seasonally adjusted terms, rose to 4.8% in April, the highest level in 2.5 years, the statistics office INS reported.

The ILO unemployment rate increased by 0.9 pp compared to April 2019. The indicator could further rise in May and, particularly, in June - after the Government discontinues the technical unemployment subsidies for most economic sectors.

To mitigate the effects of economic slowdown on the labor market, the Government will take "active measures" to stimulate employers to keep their workers previously under technical unemployment (by de facto waiving taxes and social contributions), Agerpresreported. Labour minister Violeta Alexandrescu outlined the measures aimed at helping companies retain their workers and employ people in the disadvantaged age groups (young and old) as well as Romanians who have returned from abroad.

Some 350,000 Romanians who have returned to the country amid the COVID-19 pandemic could seek jobs, according to the Government's estimates.

Still, as the relaxation accelerates and Romanians start looking for jobs abroad again, the expectations shift toward smaller figures. Nearly 432,000 Romanians of working age were actively looking for jobs in April, according to INS data - 21% or 76,000 more than one year earlier.

For an accurate picture of the labor market, INS explained that 725,000 labor contracts were registered as suspended at the end of April (meaning the respective employees had not lost their jobs).

The high number of suspended contracts (under "technical unemployment") was prompted by companies suspending activity and, at the same time, receiving state subsidies to keep their employees amid the COVID-19 outbreak.

However, some of the people under technical unemployment (over 1 million in early May) risk losing their jobs after the Government terminated the subsidies as of June 1.

The Government's "active measures" could somehow cushion the plunge in employment figures, but it all depends on the speed of economic recovery.

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